While arbitration provides a cost effective and faster alternative to filing a lawsuit in court, there are some similarities between the two systems. Two of the biggest similarities are the way notice is served and the participation of expert witnesses.
All arbitrations held in Japan are governed by the Japan Arbitration Act. However, this Act merely governs the process and rules of arbitration and, for the most part, does not touch on the content of the dispute. When it comes to the law being applied to the dispute between the parties, an arbitration in Japan can apply the law of any country, not just that of Japan.
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.