What is International Arbitration? Explaining What You Should Know When Involved in a Dispute

International arbitration is widely used as a means to resolve international disputes and issues. Deepening our knowledge of international arbitration is beneficial for facilitating smooth international communication and solving various problems that may arise around the world.

This article provides a clear explanation of the key points and advantages of international arbitration procedures that should be grasped during disputes.

What is International Arbitration?

International arbitration is a form of Alternative Dispute Resolution (ADR) used to settle international disputes.

When disputes arise from international transactions and other cross-border activities, they are often resolved not in a court of law but by an independent arbitration tribunal. An arbitration institution is an entity dedicated to dispute resolution, and the proceedings are conducted by arbitrators chosen by the parties involved. Arbitration is based on international law and the relevant contracts, and its international recognition is a defining personalityistic.

Parties select arbitrators by mutual agreement, ensuring expertise and mutual trust. Arbitration institutions are expected to maintain a fair and neutral stance, making decisions without being influenced by the parties’ opinions or nationalities.

International arbitration is widely used in business and international relations to resolve disputes fairly and effectively, taking into account different legal systems and cultures.

About International Commercial Arbitration

International commercial arbitration is a dispute resolution procedure used by companies based in different countries or regions to resolve commercial disputes.

Typically, international commercial arbitration takes place at an independent arbitration institution. At these institutions, arbitrators are appointed who are professionals in business and possess extensive knowledge and experience in commercial matters.

International commercial arbitration is essential in international business for obtaining fair and swift judgments across different legal cultures and language barriers.

Parties can consider which institution to designate based on the arbitration clause in their contract. An arbitration clause is a legal provision where parties agree to resolve disputes through arbitration.

Below are examples of prominent international commercial arbitration institutions:

These arbitration institutions offer various services to effectively and fairly resolve international commercial disputes. For more details, please check each center’s website.

The Advantages of International Commercial Arbitration

The advantages of international commercial arbitration are as follows:

• Swift proceedings by experts
• Ensured neutrality
• Well-established international infrastructure

International commercial arbitration is an effective means for the rapid and efficient resolution of commercial disputes and for ensuring the enforceability of the outcomes. It also serves as a means to protect the confidentiality of commercial secrets. Below, we will explain each of these points in more detail.

Swift Proceedings by Experts

One of the advantages of international commercial arbitration is the speed of the proceedings.

In resolving disputes, specialized arbitrators make quick and efficient decisions, and the arbitration tribunal effectively manages the process to minimize delays. Arbitral awards are internationally recognized, allowing for a swift transition to practical implementation after conclusion. Another benefit is the ability to seek reliable judgments on the application of the governing law and international commercial customs, which are generally not well-known.

Furthermore, efficiency can be enhanced with the support of interpreters and translators to facilitate smooth communication between the parties.

Ensured Neutrality

Another merit of international commercial arbitration is the ability to ensure neutrality through the careful selection of arbitrators, taking into account nationalities and other factors.

International commercial arbitration has a system in place for selecting neutral arbitrators. Parties can jointly select arbitrators, considering the nationality, cultural background, and connections to the countries involved. This process ensures that the arbitrators involved in dispute resolution can be expected to make fair and neutral judgments, creating an equitable environment for both parties. The fairness and neutrality of arbitral decisions are trusted by courts in other countries, making the proceedings more manageable.

Well-Established International Infrastructure

International commercial arbitration is supported by the “Convention on the Recognition and Enforcement of Foreign Arbitral Awards” (commonly known as the “New York Convention”), which ensures the international validity of arbitral decisions. This provides an international infrastructure for respecting arbitration agreements and recognizing and enforcing arbitral decisions.

As a result, an efficient and reliable means of resolution is provided for commercial disputes arising in different countries. This is an important point from the perspective of enhancing stability and predictability in international business transactions.

International Arbitration Procedures in Japan

In Japan, the primary organization involved in international arbitration procedures is the Japan Commercial Arbitration Association (JCAA)[ja]. Based in Tokyo, the JCAA leads international arbitration and ensures the fair and neutral progression of arbitration procedures. In international arbitration, the parties have the opportunity to select arbitrators who are experienced and possess specialized knowledge to resolve disputes.

Japanese international arbitration procedures adhere to international legal standards while respecting Japanese legal culture and business customs. They are personalityized by their flexibility and the ability to tailor proceedings to the needs of the parties involved.

Furthermore, the JCAA facilitates smooth dispute resolution in an international context by supporting proceedings conducted in English.

Initiatives for the Revitalization of International Arbitration and Mediation

The main initiatives aimed at revitalizing international arbitration are as follows:

• Amendments to the Foreign Lawyers Act and Arbitration Law
• Enactment of amendments to the Special Measures Law

We will explain each of these points in detail below.

Amendments to the Foreign Lawyers Act and Arbitration Law

In efforts to revitalize international arbitration, amendments to the Foreign Lawyers Act (Foreign Attorney Recognition Act) and Arbitration Law are noteworthy.

Amendments to these laws can lead to the streamlining of procedures and the reduction of legal barriers. They may also include measures to ensure compatibility with international legal frameworks and treaties.

These amendments aim to encourage the use of international arbitration and enhance its efficiency and reliability. By aligning the amendments with international standards and requirements, we can expect smoother and more effective resolution of disputes.

Amendments to the Special Measures Law

In May 2020 (Reiwa 2), the “Special Measures Law Concerning the Handling of Legal Business by Foreign Lawyers (Foreign Lawyers Act)” was amended. The handling of legal affairs by foreign lawyers has been partially relaxed, allowing them to undertake a broader range of legal services than before.

For example, foreign lawyers can now be involved in a wider range of legal disputes, and the registration procedures necessary for them to practice law in Japan have been simplified.

With foreign lawyers being able to engage more actively in legal services in Japan, we can expect flexible and effective responses in international arbitration as well.

Conclusion: Consult a Lawyer for International Arbitration Procedures

International arbitration is a means of resolving disputes fairly and effectively, taking into account different legal systems and cultures. There is also international commercial arbitration for resolving commercial disputes.

International commercial arbitration offers benefits such as smooth procedures, ease of recognition and enforcement, and the ability to impose confidentiality obligations.

Guidance on Measures by Our Firm

Monolith Law Office is a legal practice with extensive experience in IT, particularly in both the internet and legal fields. In recent years, global business has been expanding increasingly, and the need for legal checks by specialists is growing more than ever. Our firm provides solutions related to international legal affairs.

Areas of practice at Monolith Law Office: International Legal Affairs & Overseas Business[ja]