CONTENTS
PRE-ACTION CONSIDERATIONS
EARLY ACTION
PRE-ACTION CONSIDERATIONS
Applicable laws
The New York Convention
Japan is a party to the New York Convention. Article VII(1) of the New York Convention permits a party seeking the enforcement of a foreign arbitral award to choose a local law, whether by treaty or otherwise, that is less restrictive than the New York Convention (Tokyo High Court, 1 October 2024 (Reiwa 6 (Ra) No. 149)) [1].
The Arbitration Act
The Arbitration Act is Japan’s legislation implementing the New York Convention, which incorporates most provisions of the UNCITRAL Model Law (2006). Although Japan made the reciprocity declaration under Article I(3) of the New York Convention, the Arbitration Act does not distinguish between awards rendered in contracting states and those rendered in non-contracting states. Further, although the grounds for refusal of enforcement under the Arbitration Act are almost identical to those under the New York Convention, the document requirements are less restrictive (see Preparing Documents). In most cases, therefore, the Arbitration Act is chosen as the applicable law.
Bilateral treaties
Japan is also a party to many bilateral treaties containing provisions on arbitration. Most of these provisions only affirm the obligations under the New York Convention or local law (see the 1962 Japan-UK Treaty and the 1974 Japan-China Trade Agreement [2]). However, for example, the 1953 Japan-U.S. FCN Treaty sets out its own requirements for enforcement of an arbitral award made in the other country [3]. These requirements can be read as more restrictive in terms of requiring double exequatur and less restrictive in terms of not requiring an arbitration agreement in writing.
Procedural laws
Under Article III of the New York Convention, the procedural matters are governed by local law (i.e., the Arbitration Act, the Rules of Procedures for Arbitration-Related Cases, the Code of Civil Procedure, and the Civil Execution Act).
Time limit
No statutory time limit applies to an application for the enforcement of an arbitral award, whether domestic or foreign. This contrasts with the 3-month time limit for an application for setting aside an arbitral award rendered in Japan [4].
Asset location
It is always important to consider enforcement strategy even before commencing arbitration. If, however, an award creditor becomes aware of the need to enforce an award only after the award debtor has failed to comply with the award, the award creditor must locate and evaluate the award debtor’s assets before proceeding with enforcement. Even where the award debtor is located outside Japan, if its available assets are located in Japan, the award creditor should consider enforcing the award in Japan.
Costs
The court fee for an application for enforcement of an arbitral award, whether domestic or foreign, is ¥4,000. In contrast to the court fee for enforcement of a foreign judgment, which is calculated based on the amount of the claim, this exceptionally low fee for enforcing an arbitral award may reflect Japan’s arbitration-friendly policy. An advance payment of approximately ¥6,000 for court postage is also required. Attorney’s fees vary by law firm.
EARLY ACTION
Asset preservation
It is highly advisable to preserve the award debtor’s assets before filing an application, if they have not already been preserved. As the award debtor has not complied with the arbitral award, it is reasonable to assume that it may take steps to interfere with enforcement, such as transferring its assets to another company under its control. Asset preservation measures typically include provisional attachment of real estate and bank accounts.
Asset investigations
In order to apply for provisional attachment, the award creditor is required to identify the assets to be preserved. If, therefore, the award creditor is not aware of any assets suitable for preservation, it must first investigate the award debtor’s assets. Depending on the result of the investigations, the award creditor may need to reconsider its enforcement strategy, including whether to abandon enforcement altogether.
Debtor tracing
As explained later, courts normally hold a hearing at which both parties may appear, and therefore, a written application must be served on the respondent before proceedings may be commenced. Although the award debtor’s whereabouts are generally identified in the arbitration procedure, s/he could have moved from the address thereafter. In such cases, the award creditor must first trace the award debtor’s whereabouts.
Preparing documents
Under the Arbitration Act, an applicant must submit the following documents [5].
- a copy of the arbitral award.
- a certificate confirming that the copy conforms to the original (the arbitral institution will generally issue one upon request).
- a Japanese translation of the written arbitral award unless it is written in Japanese (no specific form is required; further, the court may, after hearing from the respondent, dispense with the translation, in whole or in part.)
The document requirements above are less restrictive than those under the New York Convention, which additionally requires the submission of an original or certified copy of the arbitration agreement (Article IV(1)(b)) and sets out specific requirements for translations of the arbitration award—namely, that they be certified by an official or sworn translator or by a diplomatic or consular agent (Article IV(2)).
Under the Code of Civil Procedure, in addition, if the applicant is a company, it must prove the authority of the representative to act on behalf of the company [see Litigation in Japan]. Applicants generally submit a certified copy of a company registration certificate proving that the representative is the CEO, the managing director, or equivalent of the company. If a lawyer is acting for the applicant under a power of attorney, the lawyer must prove its authority by submitting the original power of attorney [see Litigation in Japan].
PROCEEDINGS
An arbitral award has the same effect as a final and binding judgment. However, in order to enforce it against the award debtor’s assets, for example, attaching funds in an award debtor’s bank account, an award creditor must first apply for an execution order (i.e., a court order granting enforcement of an arbitral award) [6]. Once an execution order has been obtained, the award creditor can enforce the arbitral award against the debtor’s assets in the same manner as a domestic judgment.
Choice of court
The following district courts have exclusive jurisdiction over an application for an execution order for a foreign arbitral award [7].
- the district court with jurisdiction over the location of the respondent.
- the district court with jurisdiction over the location of either (i) the respondent’s seizable assets or (ii) the subject matter of the claim.
- the district court determined by an agreement between the parties.
- the Tokyo District Court or the Osaka District Court, provided that the location of the respondent, the respondent’s seizable assets, or the subject matter of the claim is in Japan.
Commencing proceedings
Applicants must submit a written application with the documents listed in Preparing Documents to the competent court and pay a court fee of ¥4,000 and an advance payment of approximately ¥6,000 for postage expenses.
Service of the written application
The written application must be served on the respondent before proceedings may be commenced. The service of court documents is subject to the same rules as an ordinary lawsuit, as set out in the Code of Civil Procedure (see Service of the Complaint). If the respondent is located outside Japan, the service of court documents is subject to the Hague Service Convention and bilateral treaties, as applicable.
Form of the proceedings
The proceedings on an application for an execution order are adversarial, rather than ex parte [8]. The court normally holds a hearing at which both parties may appear, but which is not open to the public. In a contested case, the parties submit briefs and evidence in preparation for hearings, which are generally held online every 4 to 6 weeks until the parties have completed their submissions. Witness examinations are rarely, if ever, conducted.
Grounds for refusing enforcement of an arbitral award
The grounds for refusing enforcement of an arbitral award set out in the Arbitration Act are almost identical to those under Article V of the New York Convention [9].
- the arbitration agreement is not valid due to the limited capacity of a party.
- the arbitration agreement is not valid on grounds other than the limited capacity of a party under the laws designated by the parties as applicable to the arbitration agreement.
- the party did not receive the notice required under the laws of the seat of arbitration during the procedure of appointing arbitrators or during the arbitration procedure.
- the party was unable to present a defence during the arbitration procedure.
- the arbitral award contains a decision on matters beyond the scope of the arbitration agreement or of the request during the arbitration procedure.
- the composition of the arbitral tribunal or the arbitration procedure is in violation of the laws of the seat of arbitration.
- Under the laws of the seat of arbitration, the arbitral award is not final and binding, or the arbitral award has been set aside or its effect has been suspended.
- the request filed in the arbitration procedure is concerned with a dispute that may not be subject to an arbitration agreement under Japanese laws.
- the content of the arbitral award is contrary to public policy in Japan.
Translation of documentary evidence
Where a document written in a foreign language is submitted as documentary evidence of the existence or non-existence of any of the grounds above, the court may, after hearing from the respondent, dispense with a Japanese translation of the document [10]. This differs from the requirement for a Japanese translation in ordinary civil proceedings (see also a Japanese translation of the written arbitral award in Preparing Documents).
Length of enforcement proceedings
The length of the enforcement proceedings, from the filing of the application to the first-instance court’s decision, depends largely on how the respondent responds to the application. If the respondent does not attend hearings or does not dispute the application, the applicant is likely to obtain an execution order within 1 to 3 months. However, if the respondent raises one or more grounds for refusing enforcement of the arbitral award, the proceedings may take 1 year or longer for the court to reach a decision.
Appeals
A party may appeal a district court’s decision at first instance to a high court [11]. An appeal must be filed within 1 week of receiving notice of the decision [12]. Although a further appeal to the Supreme Court may be available on limited grounds, this differs from the three-tiered system applicable to ordinary litigation. Accordingly, once the respondent’s appeal has been dismissed by the high court, the award creditor can commence enforcement proceedings against the award debtor’s assets in the same manner as a domestic judgment [13].
Notes
[1] The full text of the original judgment (in Japanese) is available at miyake.law/jp/tokyo-high-court-2024-10-1. Article VII(1) of the New York Convention is internationally known as the ‘more-favourable-right’ provision.
[2] Article 24 of the Treaty of Commerce, Establishment and Navigation between Japan and the United Kingdom of Great Britain and Northern Ireland, 1962 provides as follows:
Nothing in the present Treaty shall be construed so as to derogate from the obligations undertaken by either Contracting Party towards the other by virtue of the provisions of the Protocol on Arbitration Clauses signed at Geneva on 24th September. 1923, or of the Convention on the Execution of Foreign Arbitral Awards signed at Geneva on 26th September. 1927, or of any multilateral agreement amendatory or supplementary thereto, so long as such provisions are in force between the Contracting Parties.
Article 8(4) of the Trade Agreement between Japan and the People’s Republic of China, 1974 provides as follows:
Each Contracting Party shall enforce arbitral awards through the competent authorities in accordance with the conditions prescribed by the laws of the country in which enforcement is sought. (translated from the Japanese text).
[3] Article 4(2) of the Treaty of Friendship, Commerce and Navigation between Japan and the United States of America, 1953 provides as follows:
Contracts entered into between nationals and companies of either Party and nationals and companies of the other Party, that provide for the settlement by arbitration of controversies, shall not be deemed unenforceable within the territories of such other Party merely on the grounds that the place designated for the arbitration proceedings is outside such territories or that the nationality of one or more of the arbitrators is not that of such other Party. Awards duly rendered pursuant to any such contracts, which are final and enforceable under the laws of the place where rendered, shall be deemed conclusive in enforcement proceedings brought before the courts of competent jurisdiction of either Party, and shall be entitled to be declared enforceable by such courts, except where found contrary to public policy. When so declared, such awards shall be entitled to privileges and measures of enforcement appertaining to awards rendered locally. It is understood, however, that awards rendered outside the United States of America shall be entitled in any court in any State thereof only to the same measure of recognition as awards rendered in other States thereof.
[4] AA, Article 46(2) (currently Article 44(2))
[5] AA, Article 48(2) (currently Article 46(2))
[6] AA, Article 47(1) (currently Article 45(1))
[7] AA, Article 48(4) (currently Article 46(4)) and Article 5(1)
[8] AA, Article 48(9) and Article 46(4) (currently Article 46(9) and Article 44(4))
[9] AA, Article 48(7) and Article 47(2) (currently Article 46(7) and Article 45(2))
[10] Rules of Procedures for Arbitration-Related Cases, Article 5
[11] AA, Article 48(5) (currently Article 46(5))
[12] CCP, Article 332
[11] CCE, Article 22(vi)-2
Statutes
- Arbitration Act (Act No. 138 of 2003) (‘AA’)
- Rules of Procedures for Arbitration-Related Cases (Supreme Court Rule No. 27 of 2003)
- Code of Civil Procedure (Act No. 109 of 1996) (‘CCP‘)
- Code of Civil Execution (Act No. 4 of 1980) (‘CCE’)
You can find English translations of these statutes here: Japanese Law Translation