Counsel and witnesses

Are the parties typically represented by lawyers in commercial mediation? Are fact- and expert witnesses commonly used?

There are no comprehensive statistics of the ratio of overall commercial mediation cases available In Japan. In 40.6 per cent of the cases, the counsel (mostly lawyers) were involved on the claimant’s side, and 36.6 per cent on the respondent’s side in civil mediation (not limited to commercial mediation) managed in the district courts (2017). In cases managed in the summary courts, it was 47.7 per cent for claimant’s side and 29.5 per cent for the respondent’s side (2017).

For mediation cases in private mediation, as an example, according to data from the ADR Centre organised by local bar associations, at least one side of the parties were represented by lawyers in 60.7 per cent of all cases (in which mediator was appointed after the respondent’s acceptance to proceed mediation proceedings). Generally speaking, the larger the size of the dispute, the higher the ratio of the lawyer’s representation.

The background of the case is expected to be provided to the mediator via the parties to the proceedings in Japan. While not impossible, expert witnesses and also fact witnesses are rarely used. Experts are often appointed as mediators, however.

Procedural rules

Are there rules governing the mediation procedure? If not, what is the typical procedure before and during the hearing?

The Civil Conciliation Act governs the mediation proceedings managed at courts. In private mediation, each organisation has its own set of procedures. Some set forth detailed procedures like the Commercial Arbitration Rules (revised in 2020) of the Japan Commercial Arbitration Association (JCAA). Some simply stipulate the authority to proceed with mediations and leave the details to the parties and the mediator’s discretion.

Generally speaking, each party is allowed to submit briefs and evidence in support of its allegations and will have conferences with the mediator. Under the Commercial Mediation Rules of the JCAA, at the beginning of the procedure, the parties and the mediator shall discuss the process of the proceeding including (i) the language of the mediation; (ii) the schedule and the manner of exchanging the written statements and documents; (iii) the date and place of the mediation session; (iv) whether the mediator shall suggest to all the parties its proposals for settlement and, if so, the timing thereof; and (v) the time limit for concluding the mediation (article 21(ii) of the Commercial Mediation Rules of the JCAA).

Caucus sessions are commonly used in judicial mediation in Japan. They are also common in private mediation, although it depends on the private mediation organisation and the character of the mediators.

Tolling effect on limitation periods

Does commencement of mediation interrupt the limitation period for a court or arbitration claim?

The following provisions prevent the situation where the parties would lose the chance to file a lawsuit if the mediation were unsuccessful and the limitation period had run during the procedure.

Parties who consider mediation should be aware that the limitation period is not necessarily suspended in all mediation proceedings in Japan. The limitation period is suspended until six months following the termination of judicial mediation proceedings.

The filing of the petition for the accredited private mediation is deemed to have an effect on the interruption of the limitation period only if the party files a complaint at the court within one month after termination of the accredited private mediation. In administrative ADR, the timings depend on the specific laws that set forth each administrative ADR.  

Commencement of the non-accredited private mediation does not suspend the limitation period. However, the parties’ agreement in writing to enter into private mediation or non-accredited ADR may suspend the limitation period to some extent if it satisfies all the requirements for ‘suspension of the completion of the limitation period based on the agreement to discuss’ set forth in article 151 of the amended Civil Code (which came into effect on 1 April 2020). Please note that the amended Civil Code will not be applied to such agreement entered into before 1 April 2020. Further, since the amendment came into effect recently, no specific case precedents in which the court made a determination on this point exist.

Enforceability of mediation clauses

Is a dispute resolution clause providing for mediation enforceable? What is the legal basis for enforceability?

It is difficult to provide a general answer to this question. There are no expressed provisions nor decisions of the Supreme Court on the enforceability of a dispute resolution clause providing for mediation under Japanese law.

With respect to effect of the agreed dispute resolution clause including mediation, there are conflicting court decisions. In one case, the parties agreed to a multiple-layered dispute resolution clause in which the parties shall enter into mediation before bringing their dispute at the court. The plaintiff filed an action against the defendant without commencing mediation, and the defendant filed a motion to dismiss the case without merit on the ground of the plaintiff’s non-compliance with the agreed dispute resolution clause.

The Tokyo District Court dismissed the plaintiff’s action, interpreting the above clause as the obligation to proceed mediation prior to the court action, and found no circumstances violating public policy. Conversely, the Tokyo High Court admitted the plaintiff’s action, mentioning the following points: the agreed process of negotiation and mediation does not lead to a final resolution of the dispute, unlike an arbitration agreement, which secures means of dispute resolution alternative to lawsuit; and in the case where the given process of the negotiation and mediation is absent, admitting the effect of lacking the prerequisite for judgment on the merits in civil procedure lacks consistency with the Act on Promotion of Use of Alternative Dispute Resolution and is not appropriate.

Confidentiality of proceedings

Are mediation proceedings strictly private and confidential?

Civil mediation proceedings are, in principle, private procedures and third parties are not allowed to have access to the case unless the parties disclose it to them.

Generally speaking, there are no statutory laws prohibiting the parties from using the briefs and exhibits obtained through the mediation in subsequent court litigation or arbitration after termination of the mediation proceedings.

In judicial mediation, the parties are entitled to observe and take copies of records of the proceedings (article 12-6(i) of the Civil Conciliation Act), and the parties are not prohibited from submitting them as evidence in subsequent litigation or arbitration proceedings. Rather, particularly in certain types of judicial mediation that utilise an expert’s opinion, the results of the mediation procedure (including the views of the mediation committee) are expected to be utilised in the subsequent court proceedings, especially in cases where the court referred the case to mediation. In Japan, the court often refers the pending case to mediation of judicial mediation for the purpose of obtaining the opinion and expertise of the members of the mediation committee.

Since many practitioners in Japan are more familiar with mediation proceedings at the court than those in private mediation, the parties should pay particular attention to the confidentiality of the proceedings and restrictions on the information obtained through the private mediation proceedings to the subsequent litigation or arbitration proceedings. As an example, the Commercial Mediation Rules of the JCAA expressly prohibit the parties from submitting the facts, settlement proposal, etc, of the other party presented through the mediation proceeding, to the subsequent litigation or arbitration proceedings. Not all of the mediation rules of the accredited private mediation organisations set out express confidentiality obligations.

Success rate

What is the likelihood of a commercial mediation being successful?

The success rate of commercial mediation at courts was approximately 56.4 per cent in 2018. While there is no integrated data for overall private mediation, as an example, according to the JCAA’s website (as of May 2020), the success rate is about 72 per cent for cases in which the other party agreed to enter into mediation and mediators were appointed. According to the Tokyo Bar Association’s Dispute Resolution Centre (as of May 2020), the success rate of cases in which the other party accepted entering into the mediation is approximately 58 per cent.