ADR: Japanese Experience with Conciliation

Abstract

The usual first step which is accepted worldwide for resolving a commercial dispute is direct negotiation between the parties to the dispute. If the direct negotiation between the parties is not successful, the parties have to select a form of dispute resolution, such as conciliation or arbitration (ADR) or court litigation. In such a case, Japanese parties prefer conciliation to arbitration or court litigation. There are two types of conciliation in Japan. One is conciliation before the court and the other is conciliation outside the court. So far, conciliation before the court has been the most popular means of ADR in Japan. In this note, the reasons for success of Japanese conciliation before the court and also its remaining problems are analyzed; and such an analysis leads us to some helpful proposals on how to renovate conciliation outside the court. Many of these proposals were recently adopted by the Japan Shipping Exchange Inc. to establish its new conciliation rules for promoting the conciliation of commercial disputes outside the court.2 Japanese experience with conciliation may give some workable suggestions for improving international arbitration and other means of ADR of commercial disputes in other countries. In 1951 the Civil Conciliation Act (Law No. 222, 1951; ‘CCA’) was enacted to integrate several similar statutes relating to conciliation of civil and commercial disputes. The earliest statute was enacted in 1922 for conciliating disputes arising out of continuous relationships such as land-leases, house-leases or farm-tenancies. Article 1 of the CCA stipulates that its purpose is to settle amicably a civil or commercial dispute not by strictly applying law but by applying the general principles of justice and fairness as befitting the actual circumstances of the dispute. A conciliation under the CCA is called a conciliation before the court since the conciliation is conducted by …