3. Arbitration

3. Arbitration
   3.1. Sources of Law
        3.1.1. Legislation
        3.1.2. International Conventions
        3.1.3. Bilateral Treaties
        3.1.4. Legal Effect of Ratified International
               Conventions and Bilateral Treaties
   3.2. Choice of Law in International Arbitration
        3.2.1. Arbitration Agreements
        3.2.2. Arbitration Procedure
        3.2.3. Substantive Liability
   3.3. Recognition and Enforcement of Arbitration Agreements
        3.3.1. Recognition
        3.3.2. Enforcement
   3.4. Establishment of the Arbitration
   3.5. Procedure of the Arbitration
   3.6. The Award
   3.7. Judicial Intervention
   3.8. Recognition and Enforcement of Foreign Awards
        3.8.1. Recognition
        3.8.2. Enforcement

3.1. Sources of Law

3.1.1. Legislation

Chapter 8 (arts. 786 to 805) of the Code of Civil Procedure (C.C.P.; Law No. 29, 1890) provides for arbitration but the C.C.P. contains no special provisions on arbitration agreements governed by foreign law and foreign arbitral awards. Moreover there is no special statute relating to such arbitration agreements and foreign arbitral awards.

3.1.2. International Conventions

Japan has signed and ratified the following International Conventions:

1. Protocol on Arbitration Clauses drawn up at Geneva on 24 September, 1923 and ratified on 4 June, 1928 (Treaty No. 3, 1928).
2. Convention on the Execution of Foreign Arbitral Awards adopted at Geneva on 26 September, 1927 and ratified on 11 July, 1952 (Treaty No. 11, 1952)[Geneva Convention].
3. Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted at New York on 10 June, 1958 and ratified on 20 June, 1961 (Treaty No. 10, 1961)[New York Convention].
4. Convention on the Settlement of Investment Disputes between States and Nationals of Other States, adopted at Washington on 18 March, 1965 and ratified on 17 August, 1967 (Treaty No. 10, 1967).

Under art. VII.2 of the New York Convention, the Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1279 have ceased to have effect between Japan and the other Contracting States.

3.1.3. Bilateral Treaties

Japan has signed and ratified the following bilateral treaties containing provisions on reciprocal recognition and enforcement of arbitral awards.

Country	Signed	Ratified	Related Article
Argentine	20 Dec., 1961	25 Sept., 1967	Art. VII
Bulgaria	28 Feb., 1970	5 Aug., 1970	Art. 9
El Salvador	19 July, 1963	1 July, 1964	Art. V
Hungary	20 Oct., 1975	9 Sept., 1976	Art. 9
Pakistan	18 Dec., 1960	18 Aug., 1961	Art. VI
Peoples Republic of China	5 Jan., 1975	9 Sept., 1976	Art. 8
Peru	15 May, 1961	18 Dec., 1961	Art. V
Poland	16 Nov., 1978	26 Oct., 1980	Art. 10
Rumania	1 Sept., 1969	15 July, 1970	Art. 9
Russia	6 Dec., 1957	9 May, 1958	Art. 14
U.K.	14 Dec., 1962	4 May, 1963	Art. 24
U.S.A.	2 April, 1953	30 Oct., 1953	Art. 4
Yugoslavia	28 Feb., 1959	26 Sept., 1960	Art. 16

3.1.4. Legal Effect of Ratified International Conventions and Bilateral Treaties

Article 98(2) of the Constitution of Japan provides inter alia that treaties concluded by Japan shall be faithfully observed. Article 73(3) of the Constitution requires that a treaty shall be ratified by the National Diet before or after being concluded by the Cabinet.

The prevailing opinion interprets these articles as giving an international convention or bilateral treaty on conclusion the validity of a domestic statute without the necessity of enacting any implementing legislation. Moreover they prevail over domestic law where any inconsistency arises between the international convention or bilateral treaty and a domestic law.10 Accordingly it is submitted that the abovementioned international conventions and bilateral treaties prevail over the C.C.P. if there is any inconsistency between them.

3.2. Choice of Law in International Arbitration

3.2.1. Arbitration Agreements

1. Characterization

   Arbitration agreements are characterized as an ordinary contract under the private law, or a special contract under the civil procedure law by commentators. All decisions of the Japanese courts except one in 1918 have characterized since 1935 arbitration agreements as an ordinary contract under the private law.

   Governing Law of Arbitration Agreements Characterized as an Ordinary Contract

   In accordance with art. 7 of the Horei the governing law of the arbitration agreement is determined to be the law designated expressly or impliedly by the parties to the arbitration agreement. Regarding the determination of the law impliedly designated by the parties, the prevailing opinion of commentators is that the law of the place of arbitration takes the first priority if the parties designated the place of arbitration, and that it is inferred from the surrounding situation of the arbitration agreement such as the governing law of the main contract which contains the arbitration clause.

   On the other hand there is a diversity of opinions of courts' decisions. For examples, the Tokyo High Court in its decision of 30 May, 1994 held that the governing law of the arbitration agreement was implied by the parties' designation of the place of arbitration. But the Yokohama District Court in its decision of 30 May, 1980(12) held that it was implied by the parties' designation of the main contract's governing law and of the place of arbitration. In this case the arbitration agreement provided for arbitration in New York City under the I.C.C. rules but did not designate it s governing law. However, the main contract itself provided that it was governed by the laws of the State of New York. The Yokohama District Court held that the governing law of the arbitration agreement was the laws of the State of New York. In the Tokyo District Court's decision of 25 January, 1958(15) the court found that the arbitration agreement was governed by Japanese law which was implied by the fact that the parties agreed to Tokyo as the place of arbitrators' appointment and the sales contract was made in Tokyo although there was no express agreement on the governing law of the arbitration agreement or the place of arbitration.

   In conclusion it can be said that the Japanese courts have held without exception since 1935 that an arbitration agreement is governed by the law designated by the parties and not by Japanese law as the lex fori and also that not only the validity of an arbitration agreement but also the meaning of a defined legal relationship and the arbitrability of the subject matter are also governed by the law designated by the parties under art. 7(1) of the Horei.

   An exception to the above conclusion is the capacity of parties to make the arbitration agreement, which must be determined in accordance with the law of their respective nationalities under art. 3(1) of the Horei.21

   Governing Law of Arbitration Agreements Characterized as a Special Contract under the Civil Procedure Law

   In this case an arbitration agreement was governed by Japanese law as the lex fori even if the parties designated foreign law for the arbitration agreement as shown in the 1918 decision of the Great Court of Cassaition, since the lex fori governs the procedure law.

   Severability of Arbitration Agreements

   Although there is no statutory provision in point, the Supreme Court made clear the severability of arbitration agreements in it s decision of 15 July, 1975.22 In addition there are many lower court decisions to the same effect.23 In the Supreme Court case the plaintiff (a Japanese manufacturer) concluded a distributorship contract with the defendant (a New York corporation) and the distributorship contract contained an arbitration agreement providing that any dispute arising under the contract should be settled by arbitration in Tokyo under the rules of the Japan Commercial Arbitration Association. The plaintiff brought an action for a declaration that the contract was not valid and that therefore the arbitration agreement was also invalid.

   The Supreme Court affirmed the lower court's decision and held that:

   Even if an arbitration agreement was concluded in conjunction with the main contract, the effect of the arbitration agreement should be separated from the main contract and decided independently. Unless there is a special agreement between the parties, a defeat in the formation of the main contract does not affect the validity of the arbitration agreement.

   The above decision of the Supreme Court related to an arbitration agreement governed by Japanese law, but the Tokyo District Court took the same attitude in relation to an arbitration agreement governed by United States federal law in its decision of 10 April,1953.24

   In the latter case, the plaintiff (a Panamanian shipowner) alleged that the arbitration agreement contained in the charter-party had lost its validity upon the termination of the charter-party. The court held that the validity of the arbitration agreement was governed by the United States Federal Arbitration Act but determined the severability of the arbitration agreement from the charter-party by Japanese law (the lex fori).

   Arbitration Agreements and the C.C.P.

   Under the C.C.P. both an agreement to submit an already existing dispute to arbitration and an agreement to settle future disputes by arbitration are considered arbitration agreements.

   Under arts. 786 and 787 of the C.C.P. an arbitration agreement is valid subject to the following requirements:

   1. that under it the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship.
   2. that it concerns a subject matter on which the parties have a right to make a compromise.

   It is noted that the C.C.P. does not require an arbitration agreement to be in writing.

   Summary

   The above discussion can be summarized as follows;

   1. The validity of an arbitration agreement, both under the New York Convention and apart from it, is determined by the governing law of the arbitration agreement.
   2. The governing law of an arbitration agreement is the law which is expressly or impliedly designated by the parties (under art. 7(1) of the Horei); and if the parties' intention is not certain, then the law of the place of acting governs an arbitration agreement (under art. 7(2) of the Horei).
   3. An arbitration agreement, which is valid under the governing law is under Japanese law and upon the defendant's request, given legal effect as a valid demurrer to an action commenced in breach of the arbitration agreement.
   4. Japanese courts have limited the application of the governing law of an arbitration agreement to its formation, validity and construction, and the severability of an arbitration agreement has been judged by Japanese courts under Japanese law.
   5. The four propositions above are based on Japanese judicial decisions which are supported by the prevailing opinion of commentators.
   6. The prevailing opinion of commentators is that the capacity of parties to make an arbitration agreement is to be determined in accordance with the law of their respective nationalities under art. 3(1) of the Horei.
   7. Since all court decisions related to the validity of arbitration agreements and did not discuss the meaning of a defined legal relationship and the arbitrability of the subject matter under the New York Convention, it is still an open question whether Japanese courts will apply the governing law of an arbitration agreement to decide the remaining two points. But it is quite likely that they will do so.

3.2.2. Arbitration Procedure

There is no statutory provision on the governing law of arbitration procedure, but art. 5(1)(d) of the New York Convention requires that the composition of the arbitral authority or the arbitral procedure should be in accordance with the agreement of the parties, or failing such agreement, be in accordance with the law of the country where the arbitration take place.

However in case where an arbitration procedure did not have any possibility to be involved in the application of the New York Convention, the Great Court of Cassation's decision of 15 April, 1918 held that the governing law of arbitration procedure was the law of the country where the arbitration take place. In case where the bilateral treaty between Japan and the United States was applicable, the Osaka District Court's decision of 22 April 1983 also held that the governing law of arbitration procedure was the law of the country where the arbitration take place under art.4 (2) of the treaty.

The prevailing opinion of commentators is as follows;

1. The governing law of arbitration procedure should be determined by the parties' express or implied agreement in accordance with art. 7(1) of the Horei.
2. In case of failing such parties' agreement, the governing law of arbitration procedure should not be determined in accordance with art. 7(2) of the Horei since it introduces the law of the place where the arbitration agreement was made. Because such law does not have any reasonable relationship with the arbitration procedure.
3. The governing law of arbitration procedure should be determined to be the law of the country where the arbitration take place.

3.2.3. Substantive Liability

Neither the New York Convention nor any other statutory provision requires arbitrators to determine the substantive liability in accordance with the law of any country. This means that arbitrators can apply lex mercatoria for determining the substantive liability and even can act as an amicable compositor at their discretion as long as they can give a reasonable reason to their awards. If failing such reason, the award is avoidable under art.801(1)(5) of the C.C.P. unless any reason is not required for the award by the parties agreement.

3.3. Recognition and Enforcement of Arbitration Agreements

3.3.1. Recognition

Article II.1 of the New York Convention stipulates that each Contracting State shall recognize arbitration agreements which meet certain requirements. It is not expressly confined to arbitration agreements governed by Japanese law. The requirements for the recognition of an arbitration agreement are:

1. that it be in writing;
2. that under it the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them respect of a defined legal relationship, whether contractual or not; and
3. that it concern a subject matter capable of settlement by arbitration.

Article II.3 further provides that the court of a Contracting State, when seized of an action in respect of which the parties have made an agreement under the Convention, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed.

However, the Convention is silent on the question of which law determines a defined legal relationship and the arbitrability of the subject matter, within art. II.1, and the validity of the arbitration agreement under art. II.3 of the Convention. There is no Japanese statutory provision in point but there are some decisions of Japanese courts relating to the question of the validity of the validity of arbitration agreements. These courts' decisions suggest that not only the validity of an arbitration agreement but also the meaning of a defined legal relationship and the arbitrability of the subject matter are also governed by the law designated by the parties under art. 7(1) of the Horei.

The prevailing opinion of commentators is that the obligation of Japan as a Contracting State to refer the parties to arbitration under art. II.3 is performed by Japanese courts when they give arbitration agreements under the Convention legal effect as a valid demurrer to an action commenced in breach of the arbitration agreement.11

Regarding the time limit for submitting a demurrer based on a valid arbitration agreement in a judicial proceeding, the Japanese courts have shown three different views.

First, in the Tokyo District Court's decision of 7 December, 1962(25) the court held that such demurrer should be submitted before the defendant started to plead on the merits in the first oral hearing. This view was supported by the Osaka High Court in a dictum of the decision of 20 February, 1974.26

Secondly, in the Tokyo High Court's decision of 27 February, 1975(27) the court held that such demurrer could be submitted after the defendant had started to plead on the merits but could not be submitted after there had been several hearings since he was then deemed to have waived the right to submit such demurrer.

Thirdly, in the Tokyo District Court's decision of 29 October, 1973(28) the court held that since there was no statutory provision on this matter such demurrer could be submitted after pleading on the merits and at the end of oral hearings unless such submission was made with the purpose of delaying the completion of the judicial proceedings or was against fair and equitable principles.

However, the second and third views were expressed in the context of contracts made between building contractors and private persons for the construction of domestic dwellings.

It is likely that a different view might be taken in the case of contracts involving merchants and it is therefore submitted that in case of business transactions between merchants such demurrer should be submitted before the defendant starts to plead on the merits in the first hearing.

In this connection it is noted that the Osaka High Court held in its decision of 20 February, 1974(29) that the defendant was not deemed to have waived the right to submit such demurrer even if he had not appeared in the court and an ex parte judgment was given against him.

Apart from Article II.1 of the Convention requires Contracting States to recognize arbitration agreements and art. II.3 requires a court when seized of a matter embraced within an arbitration agreement to refer the parties to arbitration at the request of one of the parties, the Convention is silent as to the enforcement of arbitration agreements.

On the other hand the C.C.P. contains a provision relevant to the enforcement of arbitration agreements as shown in the next chapter.

3.3.2 Enforcement

Article II.1 of the Convention requires Contracting States to recognize arbitration agreements and art. II.3 requires a court when seized of a matter embraced within an arbitration agreement to refer the parties to arbitration at the request of one of the parties. Apart from the latter provision, however, the Convention is silent as to the enforcement of arbitration agreements.

On the other hand the C.C.P. contains a provision relevant to the enforcement of arbitration agreements. Article 789(2) stipulates that where an arbitration agreement provides for the appointment of an arbitrator (or arbitrators) by each party and one party fails to appoint an arbitrator (or arbitrators) within seven days from the written notice of the appointment of an arbitrator(s) by the other party, then the latter can request a competent court to appoint an arbitrator(s) for the party who has failed to make an appointment. However, there is no statutory provision including whether art. 789(2) of the C.C.P. applies to arbitration agreements governed by foreign law. But there is some judicial authority.

The Tokyo District Court held in its decision of 25 January, 1958(32) that art. 789(2) of the C.C.P. was applicable to an arbitration agreement included in a sales agreement between a Japanese corporation and an Australian corporation an d providing that all disputes arising out of the agreement should be referred to two arbitrators appointed in Tokyo, one by each party respectively. The decision was based on the reason that the arbitration agreement was governed by Japanese law which was implied by the fact that the parties agreed to Tokyo as the place of the arbitrators' appointment and the sales agreement was made in Tokyo, although there was no express agreement on the governing law of the arbitration agreement itself nor on the place of arbitration.

If therefore is submitted that Japanese courts will appoint arbitrator(s) for the recalcitrant party in order to enforce an arbitration agreement if the arbitration agreement is governed by Japanese law and Japan is designated as the place of the arbitrator's appointment or as the place of arbitration and art. 789(2) of the C.C.P. is applicable. When a Japanese court appoints arbitrator(s) under art. 789(2) of the C.C.P., the court must select the arbitrator(s) according to the arbitration agreement between the parties but can select the arbitrator(s) at its discretion if the arbitration agreement is silent on the arbitrator's appointment.33

However, there still remains the question of whether the Japanese courts will appoint an arbitrator(s) for the recalcitrant party pursuant to arbitration agreements (even if the arbitration agreement is governed by Japanese law) in cases where the place of arbitration and the arbitrator's appointment is outside Japan.

The final question is which Japanese court is the appropriate one to make application to, under art. 789(2) of the C.C.P., for the appointment of an arbitrator(s) for the recalcitrant party. Article 805(1) provides that the summary court or the district court designated in the arbitration agreement is competent. If, however, no court is designated in the arbitration agreement then under art. 805(1) and (2) the competent court is the summary court or district court which would be competent to hear the substantive dispute between the parties (which forms the subject matter of the arbitration) if proceedings were instituted in a court rather than before arbitrators.

3.4. Establishment of the Arbitration

Article V(1)(d) and art. 788 of the C.C.P. expect that the arbitrator(s) is selected in accordance with the parties' agreement, but if failing such parties' agreement, art. 788 stipulates that each party can select one arbitrator.

Art.789(1) stipulates that if both parties are entitled to nominate an arbitrator(s) by their agreement or under art.788, but the nomination procedure is not agreed by the parties, the first proceeding party shall make his notice in writing to the other party of the arbitrator(s) nominated by him and require the other party to do so on his side within a period of seven days.

Art. 789(2) stipulates that where one party fails to appoint an arbitrator (s) within seven days from the written notice of the nomination of an arbitrator(s) by the other party, then the latter can request a competent court to nominate an arbitrator(s) for the party who has failed to make an appointment. However, there is no statutory provision including whether art. 789(2) applies to arbitration agreements governed by foreign law. But there is some judicial authority.

The Tokyo District Court held in its decision of 25 January, 1958(32) that art. 789(2) of the C.C.P. was applicable to an arbitration agreement included in a sales agreement between a Japanese corporation and an Australian corporation an d providing that all disputes arising out of the agreement should be referred to two arbitrators appointed in Tokyo, one by each party respectively. The decision was based on the reason that the arbitration agreement was governed by Japanese law which was implied by the fact that the parties agreed to Tokyo as the place of the arbitrators' appointment and the sales agreement was made in Tokyo, although there was no express agreement on the governing law of the arbitration agreement itself nor on the place of arbitration.

If therefore is submitted that Japanese courts will appoint arbitrator(s) for the recalcitrant party in order to enforce an arbitration agreement if the arbitration agreement is governed by Japanese law and Japan is designated as the place of the arbitrator's appointment or as the place of arbitration and art. 789(2) of the C.C.P. is applicable. When a Japanese court appoints arbitrator(s) under art. 789(2) of the C.C.P., the court must select the arbitrator(s) according to the arbitration agreement between the parties but can select the arbitrator(s) at its discretion if the arbitration agreement is silent on the arbitrator's appointment.33

However, there still remains the question of whether the Japanese courts will appoint an arbitrator(s) for the recalcitrant party pursuant to arbitration agreements (even if the arbitration agreement is governed by Japanese law) in cases where the place of arbitration and the arbitrator's appointment is outside Japan.

The final question is which Japanese court is the appropriate one to make application to, under art. 789(2) of the C.C.P., for the appointment of an arbitrator(s) for the recalcitrant party. Article 805(1) provides that the summary court or the district court designated in the arbitration agreement is competent. If, however, no court is designated in the arbitration agreement then under art. 805(1) and (2) the competent court is the summary court or district court which would be competent to hear the substantive dispute between the parties (which forms the subject matter of the arbitration) if proceedings were instituted in a court rather than before arbitrators.

The arbitrator(s) shall start the arbitration proceedings without undue delay and if the arbitrator(s) delays unduly his duty and the parties did not work out any remedial measures by their prior agreement, the arbitration agreement loses its effect under art.793(2) of the C.C.P. But the parties can challenge such arbitrator(s) if he is a court nominated arbitrator(s) under art.792(2) of the C.C.P.

There is no statutory provision on arbitrator's fee and it depends on the agreement between the arbitrator(s) and the parties in case of ad-hoc arbitration and the institution's arbitration rules in case of institutional arbitration.

3.5. Procedure of the Arbitration

Article V(1)(d) requires that the arbitral procedure should be in accordance with the agreement of the parties, and if failing such agreement, it should be in accordance with the law of the country where the arbitration took place. And art. 794 (2) of the C.C.P. stipulates that if there is no agreement between the parties on the arbitral procedure, the arbitrator(s) can decide it at his discretion. But there is no other statutory provision regulating the arbitral pleadings and submissions.

The arbitrator(s) is required to have a hearing to question the parties prior to making its award, and also to have other hearings, to the extent the arbitrator(s) deem necessary, for investing the matters which are the cause of the dispute under art. 794(1) of the C.C.P.

The arbitrator(s) can examine witnesses and experts who voluntarily appear before him, but is not empowered to administer oath to a witness or an expert under art. 795 of the C.C.P. If a witness or an expert does not voluntarily appear before the arbitrator(s), the parties can request the court having the jurisdiction on it by their motion to examine witnesses and experts under art. 796(1) of the C.C.P. And the court which ordered a witness or an expert to testify or to give evidence can render a necessary decision in case where the witness or expert refuses to testify or to give evidence under art. 796(2) of the C.C.P.

The arbitrator(s) can continue the arbitration procedure and make an award, even when the parties plead that the arbitration procedure should not be permitted, or particularly assert that no legally valid arbitration agreement has been concluded, the arbitration agreement has no concern with the dispute to be decided, or the arbitrator(s) is not empowered to act under art. 797 of the C.C.P.

However the parties can challenge the arbitrator(s) on the same grounds and conditions as they can challenge a judge under art.792(1).

3.6. The Award

The court decisions and the prevailing opinion of commentators agree that the award is governed by the governing law of the arbitration procedure since the award is the final stage of the arbitration procedure.

Art.799(1) of the C.C.P. stipulates that in order to finalize the award the arbitrator(s) shall make it in writing and enter the date and his signature into the award. Then the arbitrator(s) have to serve such award upon the parties and also to deposit the award with the court having the jurisdiction together with a certificate of service to the parties.

Under art.800 of the C.C.P. an award has the same effect as a final and binding court's judgment between the parties. And art. 802 stipulates that an award is executable by the Japanese courts in accordance with the execution procedure which is same to the case of a court's judgment.

3.7. Judicial Intervention

The following judicial intervention is admitted under the C.C.P. First, under art. 792 the parties can challenge an arbitrator(s) on the reasons listed therein.

Secondly, under art. 797 a party to an arbitration agreement can plead with the court having the jurisdiction that the arbitration procedure should not be admitted basing on such reason as that no legally valid arbitration agreement has been concluded, the arbitration agreement has no concern with the dispute to be decided, or the arbitrator(s) is not empowered to act as arbitrator. If this plead is successful, it becomes one of the reasons for cancellation of the award under art. 801.

Thirdly, under art.801 the parties can make a motion for cancellation of the award basing on the reasons listed in art. 801(1). The court having the jurisdiction is determined under art. 805.

3.8. Recognition and Enforcement of Foreign Awards

3.8.1. Recognition

1. New York Convention

   The New York Convention envisages the recognition as well as enforcement of arbitral awards. Article III requires each Contracting State to "recognize arbitral awards as binding...in accordance with the rules of procedure of the territory where the awards is relied upon...". However there is no specific statutory provision prescribing a procedure for the recognition of foreign arbitral awards in Japan and art. 800 of the C.C.P. simply provides that an arbitral awards has the same effect as a final and conclusive judgment of a court between the parties to the award. Accordingly a foreign arbitral award under the Convention had the same effect as a final and conclusive judgment of a court between the parties without any specific procedure being prescribed. The res judicata effect of a foreign arbitral award under the Convention is to be determined in accordance with arts. 199 and 201 of the C.C.P.

   Geneva Convention

   When an arbitral awards is made in a country which is not a party to the New York Convention but is a party to the Geneva Convention, such as New Zealand, the Geneva Convention applies to the recognition of such arbitral award. An arbitral award meeting the requirements under arts. 1 and 2 of the Convention has the same effect as a final and conclusive judgment of a court between the parties without any specific procedure being prescribed. The res judicata effect of such award is to be determined in accordance with arts. 199 and 201 of the C.C.P. These are the same as in case of arbitral awards under the New York Convention.

   Awards outside the Conventions

   In the case of foreign arbitral awards outside the New York Convention and the Geneva Convention but valid under their governing law there is no specific statutory provision for their recognition in Japan. However in its decision of 10 April, 1953(20) the Tokyo District Court held that it was reasonable and in accord with the prevailing opinion of commentators to apply arts. 800 and 802 of the C.C.P. to such awards. Foreign arbitral awards outside the Conventions are therefore given the same effect between the parties as a final and conclusive judgment of a court without any specific procedure being prescribed. Their res judicata effect would also be determined in accordance with arts. 199 and 201 of the C.C.P.

3.8.2. Enforcement

1. Enforcement under the a Geneva Convention

   As previously mentioned in this Chapter83 the Geneva Convention forms part of Japanese law. The requirements for the enforcement if foreign arbitral awards under the Convention are therefore subject to art. 1 and 2 of the Convention.

   The Tokyo District Court adopted this view in its decision of 20 August, 1959.84 The Tokyo District Court adopted this view in its decision of 20 August, 1959.84

   Enforcement under bilateral treaties

   A bilateral treaty also forms part of Japanese law. The requirements for the enforcement of foreign arbitral awards under a bilateral treaty are therefore subject to the relevant provisions of the treaty. In its decision of 27 November, 1961(85) the Osaka District Court held that the requirements for the enforcement of foreign arbitral award under art. 4(2) of Japan-U.S. Friendship, Commerce and Navigation Treaty were as follows:

   1. That there was an arbitration agreement valid under its governing law; and
   2. That the arbitral awards was made within the scope of the arbitration agreement; and
   3. That the composition of the arbitrator(s) and the arbitral procedure was in accordance with the arbitration agreement; and
   4. That the arbitral award had become binding and was enforceable under the law of the place where the arbitral award was made; and
   5. That the enforcement of the arbitral award was not against the public policy of Japan.

   Since there is no commentator's opinion which is against the above decision of the Osaka District Court, the above-mentioned requirements are helpful in considering the requirements for the enforcement of foreign arbitral awards under other bilateral treaties.

   It should be noted that bilateral treaties are only applicable to nationals of and the companies incorporated in countries that are parties to such treaties. Therefore, for example, art. IV2 of the Treaty of Friendship, Commerce and Navigation between Japan and U.S.A. is not always applicable to the enforcement in Japan of foreign arbitral awards made in the U.S.A. but only for the enforcement in Japan of foreign arbitral awards made in the U.S.A. under arbitration agreements entered into between Japanese nationals or companies and American nationals or companies.

   When a foreign arbitral award is subject to the New York Convention or the Geneva Convention as well as to a bilateral treaty, the party who requires the enforcement of the award can choose at its discretion whether it elects to comply with the requirements of the New York Convention, the Geneva Convention or the Bilateral treaty.

   Enforcement outside the New York and Geneva Conventions and bilateral treaties

   There are no statutory provisions specifically dealing with the enforcement of foreign arbitral awards falling outside the New York and Geneva Conventions and bilateral treaties. However in its decision of 20 August, 1959(86) the Tokyo District Court held that foreign arbitral awards were enforceable under art. 802(1) of the C.C.P. Dicta of the same court in its opinion of 10 April, 1953(87) reinforced the view that articles 800 and 802 of the C.C.P. could apply to foreign arbitral awards and that this opinion had the support of commentators. The court further mentioned that foreign arbitral awards were enforceable unless they were vacated under art. 801 of the C.C.P.88 Therefore an execution judgment will be rendered by Japanese courts for foreign arbitral awards under art. 802 of the C.C.P. even though the foreign awards do not fall within the New York or Geneva Conventions or any bilateral treaty.

   Article 801 of the C.C.P. provides for the vacation of an award in the following cases:

   1. where the arbitration procedure was not permissible;
   2. where the arbitration award orders a party to do an act prohibited by law;
   3. where the parties were not represented in the arbitration proceedings in accordance with the provisions of law;
   4. where a party was not heard in the arbitration proceedings;
   5. where the award does not contain reasons;
   6. where there is any one of the grounds for an action for a new trial under art. 420(4) to (8) of the C.C.P.

   Article 420 provides for an appeal against a final judgment by way of petition or a re-trial. The grounds stated in paras (4)-(8) apply mutatis mutandis to arbitral awards. They are:

   1. where the judge who participated in the decision of a case was guilty of a crime relating to his official duties in connection with that case;
   2. where a party by a criminally punishable act of another person was induced to make a confession or was prevented from producing the means of attack or defence which would have affected the decision;
   3. where a document or other object given in evidence for the judgment was forged or alterted;
   4. where the judgment was supported by a false statement of a witness, expert, interpreter or of a sworn party or legal representative;
   5. where a civil or criminal judgment or other judicial ruling or an administrative disposition on which the judgment was based was subsequently changed by a judicial ruling or an administrative disposition.

   However, these requirements for the enforcement of foreign arbitral awards, suggested by the Tokyo District Courts, have not met with the unanimous support of commentators. Kawakami argues that foreign awards outside the Convention have to meet the following requirements.89

   1. The arbitral award must be based on a valid arbitration agreement whose governing law is determined in accordance with the principles of Japanese private international law;
   2. The arbitral award must fall within the scope of the arbitration agreement;
   3. The composition of the arbitrator(s) and the arbitral procedure must be in accordance with the arbitration agreement;
   4. The arbitral award must be binding and enforceable under the law of the place where the arbitral award was made; and
   5. The enforcement of the arbitral award must not be contrary to the public policy of Japan.

   It will be noted that Kawakami does not require that the subject matter of the difference be capable of settlement by arbitration under Japanese law, which is one of the requirements under the New York Convention. However, it is questionable whether foreign arbitral awards enforced outside the Convention are subject to more lenient requirements than those prescribed for the enforcement of foreign arbitral awards under the Convention.

   It is submitted that both the Convention's requirements for the enforcement of arbitral awards and the C.C.P.'s requirements for the enforcement of domestic arbitral awards should be applied mutatis mutandis to arbitral awards outside the Convention or bilateral treaties. This is because it is reasonable to apply the most closely related provisions when there is no directly applicable statutory provision and because there is no compelling reason to make any distinction between the requirements for the enforcement between domestic arbitral awards and foreign ones absent an obligation to do so under an international convention or a bilateral treaty.

   Accordingly it is submitted that the requirements for the enforcement of foreign arbitral awards not under the New York or Geneva Conventions or bilateral treaties are as follows:

   1. The foreign arbitral award must meet the requirements for the enforcement under the Convention; and
   2. The requirements under art. 802(2) of the C.C.P. must be met; and
   3. The award must not be subject to vacation on any of the grounds stated in art. 801 of the C.C.P.

   The court in which enforcement proceedings may be instituted is determined in accordance with art. 805 of the C.C.P.90

   
   

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