Arbitration is a non-court alternative method of resolving disputes. Disputing parties agree that one or several individuals (i.e. arbitrator(s)) can decide about the dispute after receiving evidence and hearing arguments. Compared to court litigation, arbitration can usually be completed more quickly and is less formal.
If the amount in dispute is less than ¥50 million and the JCAA’s Commercial Arbitration Rules (‘the Rules’) are adopted, the expedited arbitration procedure is applicable. Under the expedited procedure, proceedings are generally conducted on a document-only basis (i.e. without witness testimony). Then, an arbitral award is given within 3 months from the arbitrator’s appointment. This is much faster than court litigation which takes 12 months on average.
Parties are free to select the language of the arbitration. This is also an advantageous feature for international parties. English is selected in around 60% of the arbitration cases administered by the JCAA. At court proceedings, on the other hand, only the Japanese language can be used.
Arbitration can be more costly than court litigation in Japan, taking into account arbitrators’ remuneration, administrative fees, and hearing facility fees. Under the Rules, however, the tribunal can make an award allocating the costs of the arbitration between the parties, including attorney’s fees. Therefore, the losing party is likely to pay the winning party’s costs, which is not common in court proceedings in Japan.
Further, in practice, Japanese translations of documentary evidence or interpretation of witness testimonies, required at court proceedings, are not necessarily arranged. This could save considerable costs and time, depending on the quantity of evidence.
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