Japan: A Dispute Resolution: International Overview

As one of the world’s leading economies, Japan has a robust and evolving system for international dispute resolution. Recent legislative reforms – including the 2023 amendments to the Arbitration Act and the implementation of Japan’s accession to the Singapore Convention – aim to strengthen alternative dispute resolution (ADR) procedures and align Japan with international standards adopted by regional disputes hubs such as Hong Kong and Singapore.

Japan’s dispute resolution landscape is also being shaped by global economic volatility, supply chain disruptions, geopolitical tensions and record levels of inbound investment. These factors have increased the likelihood of cross-border disputes and heightened the demand for efficient, enforceable dispute resolution mechanisms. Japanese corporates, particularly in manufacturing and technology sectors, are increasingly turning to ADR to manage legal and commercial risks.

Legislative Updates in Japan

Recent legislative changes have reinforced Japan’s ADR framework and reflect Japan’s commitment to competing as an international dispute resolution hub.

Arbitration

The 2023 Arbitration Act amendments updated Japan’s framework to align with the 2006 UNCITRAL Model Law, modernising provisions and harmonising Japan’s position with other major arbitration centres in Asia.

The key revisions include the following.

• Interim measures – Japanese courts now have clearer powers to grant different types of interim measures to support or protect Japan-seated arbitrations. These include freezing orders to prevent a party from disposing of its assets before the conclusion of an arbitration, and other interim relief to protect the integrity of the arbitration process. The amendments also enhance enforceability, by introducing a system to allow Japanese courts to enforce interim measures ordered by arbitral tribunals (whether seated in Japan or overseas) and to order penalties to penalise non-compliance.
• Arbitration-related court proceedings – Parties now have the option to apply to the Tokyo District Court and/or Osaka District Court, as well as to other competent courts within Japan, for arbitration-related court proceedings. The Tokyo District Court has also established a Business Court, consolidating arbitration-related cases in specialised divisions to improve expertise and efficiency. This centralisation is expected to enhance the quality and predictability of judgments in arbitration-related matters.
• Translation of documents for Japanese court proceedings – Japanese courts now have the discretion to waive the requirement for Japanese translations of arbitral awards and orders for interim measures in recognition or enforcement applications. This is intended to reduce time and cost burdens for parties in arbitrations where the chosen language is not Japanese.
• Requirements for arbitration agreement – In the case of a non-written contract, an arbitration agreement recorded in separate written or electronic form shall be deemed to meet the requirement that arbitration agreements must be made in writing.

While these reforms aim to enhance Japan’s attractiveness as an arbitration venue, their practical impact is still emerging. Government initiatives, such as the March 2024 policy paper promoting international arbitration and the introduction of an annual Japan International Arbitration Week from 2024, signal strong continued support for the growth of arbitration.

Mediation

On 1 October 2023, Japan deposited its instrument of accession to the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention”) – becoming the 12th state party to the Convention. The Singapore Convention is an international framework for enforcing settlement agreements arising from mediation in international commercial disputes. The Convention entered into force in Japan on 1 April 2024, and Japan’s accession is intended to facilitate the use of mediation, contribute to the expansion of Japanese companies’ overseas businesses, and further attract foreign investment into Japan.

In conjunction with its accession to the Singapore Convention, Japan introduced the Act for Implementation of the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Mediation Act”) to provide a legislative framework to implement the Convention into Japanese law.

The Mediation Act also came into force on 1 April 2024 and establishes a mechanism for the enforcement of international settlement agreements resulting from mediation in the Japanese courts. In particular, the Mediation Act permits Japanese courts to enforce international mediated settlement agreements where a party has submitted the settlement agreement together with other documents proving the settlement agreement arose from mediation.

Trends in Dispute Resolution

In line with the recent legislative focus in Japan, there has been a noticeable trend towards the use of ADR methods in Japan and by Japanese parties.

Use of ADR aligns well with Japan’s cultural preference to resolve disputes informally by extra-judicial means, and is driven by the desire to avoid lengthy and costly litigation processes – especially amid the introduction of tariffs, heightened geopolitical risks and global trade uncertainty. Mediation, in particular, has gained popularity due to its flexibility, confidentiality and the potential to preserve business relationships.

Similarly, there has been a growing interest in international arbitration in Japan, which is increasingly used due to its neutrality and enforcement. Japanese parties are regular users of international arbitration on the global stage (ranking 7th in the top ten foreign users at SIAC in 2024), and the number of international arbitration cases handled by the Japan Commercial Arbitration Association (JCAA) continues to increase. Notably, 58% of international arbitration cases at the JCAA were conducted in English from 2020 to 2024, rising to nearly 80% in 2024, reflecting the increasing internationalisation of ADR mechanisms in Japan (statistics available on the JCAA website). This trend is expected to continue, especially following the introduction of the amendments to the 2023 Arbitration Act and record levels of foreign investment into Japan.

Third-Party Funding

Third-party funding remains a developing area in Japan. While contingency fees are permitted, Japanese legislation neither expressly allows for nor expressly prohibits third-party funding, and there have been no reported decisions on the validity of third-party funding. The position in Japan differs from that of other pro-arbitration jurisdictions, such as Singapore and Hong Kong.

Nevertheless, third-party funding has been approved at a policy level. For example, the Ministry of Justice, the JCAA and the Japan International Dispute Resolution Centre (JIDRC) have indicated support, given that third-party funding may promote international arbitration in Japan by mitigating rising costs. Positive indications regarding the use of third-party funding by Japanese corporates have also been illustrated by several funded cases, including a 2025 ICSID claim by Japanese investors against Switzerland, funded by Litigation Capital Management. International litigation funders have been active in Japan for some time and 2024 also saw Japan’s first domestic litigation funder, Trailblaze Asset Management, enter the market.

Third-party funding is increasingly being viewed as a tool to manage risk, especially as arbitration costs rise, and the market for third-party funding in Asia is projected to reach USD30 billion by 2028. Active regulation in Japan may be required to guide cases involving third-party funding by helping to promote integrity and preserve confidentiality.

Economic Conditions and Challenges

Global economic uncertainty, supply chain volatility and geopolitical risks continue to affect Japanese businesses domestically and overseas. These pressures increase the likelihood of cross-border disputes where corporates face hurdles such as enforcement challenges and the need for specialised expertise when resolving disputes. Japan is also seeing record levels of foreign direct investment, with many international investors being unfamiliar with using the Japanese courts to resolve their disputes. These conditions make the evolving Japanese ADR system an increasingly attractive option for resolving domestic and international disputes.