Commercial mediation in Japan
What is the status of mediation in this jurisdiction?
There are three types of mediation (choutei) in Japan:
- mediation conducted and supported by the court (“Court Mediation”), which is categorised into two types: (a) Civil Affairs Mediation for all civil affairs (including commercial matters) other than family affairs; and (b) Family Mediation for family affairs only. Both are commonly used, with 34,019 Civil Affairs Mediations and 135, 793 Family Mediations commenced in 2018;
- mediation conducted and supported by government organisations other than the court (“Administrative Mediation”). Administrative Mediation is also common and is conducted by many governmental committees dealing with issues in specific areas, such as consumer or employment disputes; and
- mediation established and conducted by the private sector (including any foreign mediation bodies) (“Non-governmental Mediation”). Many private organisations undertake this form of mediation (e.g. the Japan Commercial Arbitration Association, regional Japanese Bar Associations’ Arbitration and Mediation Centres, and financial alternative dispute resolution under the Financial Instruments and Exchange Act). The Act on Promotion of the Use of ADR (Act No. 151 of 2004) (the “ADR Act”, see further below), which came into force on 1 April 2007, promotes and regulates this type of mediation.
How is a mediation conducted?
In Court Mediation, the mediation committee established for each case directs the procedure. A judge heads the mediation committee, with two other committee members being appointed from the local community by the court. The parties are not involved in the process of appointing committee members. However, if the committee members are related to the parties themselves (e.g. personal relatives) the parties can ask the court to exclude those members.
The parties themselves must attend the mediation process, irrespective of whether they are represented. By law, a representative can attend the mediation instead of a party only in exceptional cases (for example, if a party is unable to attend because of illness). In practice, it is common for lawyers to attend the commercial mediation together with the party they represent.
The mediation costs will be paid at the beginning of the mediation by the party who proposed it. Costs are determined according to the amount claimed by the party commencing the mediation.
Typically, the mediation committee will set the date and time of the process (usually once or twice a month) and notify both parties by mail. On the actual date, the parties are separated into two different waiting rooms. The mediation committee will then have each party come into the committee room in turn, assisting both to reach a mutually acceptable position.
The procedures for Administrative Mediation and Non-governmental Mediation vary according to the internal rules of the relevant mediation body; however, most procedures are generally the same as those in Court Mediation.
Is there any obligation on litigants to mediate?
Firstly, Japanese law specifies that parties must first attempt Court Mediation before commencing litigation in some categories of disputes (such as disputes regarding land/house rent, marriage, divorce, affiliation or adoption). If a party commences court proceedings for these types of disputes without mediating, the court will refer the dispute to Court Mediation. If Court Mediation fails, the parties can then commence legal proceedings.
Secondly, if the court considers it appropriate, it may of its own motion (and without obtaining consent from either party) transfer litigation of a civil dispute to mediation. However, if proceedings to identify issues and evidence have been completed, consent from both parties is required.
Thirdly, any pre-existing contractual arrangement between the parties to mediate a dispute will bind the parties.
Does the court have powers to support a mediation?
Are mediations confidential?
Yes. In Court Mediation, all proceedings and discussions are confidential and people may only attend with the permission of the mediation committee. Administrative Mediation and Non-governmental Mediation proceedings are also confidential, as set out in their own internal rules. A Non-governmental Mediation body can only be accredited under the ADR Act when it guarantees that its proceedings are confidential.
There is a strong argument that the information disclosed at mediation should not be used in subsequent litigation, as it will deter frank discussions between the parties in an attempt to reach settlement through mediation. Consequently, it is common practice for the mediation committee to decline to divulge information disclosed at a Court Mediation to the court handling the subsequent litigation.
Does failure to mediate attract adverse cost consequences?
Technically yes, but this is unlikely.
In Japan the unsuccessful party to litigation generally bears litigation costs (such as the cost of the court proceedings themselves, although not attorneys’ fees). However, the court at its sole discretion can impose on the successful party any costs resulting from the successful party’s unnecessary actions or failure to advance the proceedings without delay. Theoretically, therefore, if the successful party’s failure to mediate (e.g. refusal to engage in mediation) is deemed unnecessary or delayed the process, the court can impose on that successful party any costs resulting from the failure. Practically, however, it is still uncommon and unlikely for the court to deem a party’s failure to mediate “unnecessary” or “delayed the process”.
How are settlement agreements enforced?
All settlements achieved in Court Mediations are entered onto the court record. The record of settlement is equivalent to a court order and the settlement is enforceable in the same way as a court order.
A settlement achieved through Administrative Mediation or Non-governmental Mediation is considered to be a mere agreement between the parties. If a party breaches the settlement, the other party needs to obtain a court order before it can enforce the agreement.
Is there a system of accreditation and/or regulatory body for mediators?
Court Mediation is completely regulated and supported by the court.
Administrative Mediation is established and controlled under applicable regulations.
For Non-governmental Mediation, the ADR Act sets out an accreditation system whereby a private ADR body which satisfies certain requirements is accredited and recognised by the Japanese government. Any Non-governmental Mediation bodies (other than those managed by lawyers) must be accredited under the ADR Act in order for them to organise and manage mediation. The government will give a Non-governmental Mediation body accreditation after an examination of whether that body is capable of appropriately managing mediation processes in line with the requirements under the ADR Act.