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Arbitration is a very flexible and powerful tool for resolving many different kinds of disagreements but it does not apply to every type of legal dispute. Generally, arbitration agreements apply to civil disputes that can normally be resolved through a settlement agreement.

The Japan Arbitration Act governs arbitrations in Japan. In general the Act is similar to the arbitration laws of other countries because it is based upon the 1985 UNCITRAL Model Law. However, the Act differs in some key respects such as consumer protection and labor issues to reflect circumstances unique to Japan.

According to the Arbitration Act, arbitration agreements should be put in writing. However, this does not necessarily mean a separate written agreement different from a business contract is necessary. Many arbitration agreements are contained within another contract as an arbitration clause.