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Looking Toward the Establishment of the Singapore Convention on Mediation and the Ratification by Japan

Kimimasa Hata
Professor, Faculty of Law, Chuo University
Areas of Specialization: Civil Procedure Law, ADR (Alternative Dispute Resolution), Proceedings for Partitioning of Property in Co-Ownership

1. Establishment of the Singapore Convention on Mediation

In the event of a legal dispute with an external element (for example, a dispute concerning a contract between a foreign corporation and a Japanese corporation), the question of how to resolve the dispute is a major issue for a corporation. Since there is no global code of civil procedure for dealing with external cases, there are not always clear standards as to which country's courts litigations can be filed to, except in cases where a treaty has been concluded between nations.1) Moreover, even when excluding the issue of international jurisdiction, it is not difficult to imagine the existence of extremely complicated issues such as the cost and time required for legal proceedings, language issues, and differences in legal proceedings systems. Therefore, for the purpose of avoiding such risks, it has been said that international arbitration is often used in place of legal proceedings in order to resolve international civil disputes.

However, such understanding seems to be changing in recent years. This is because much greater caution is now being applied to the performance of procedures for international arbitration, resulting in a time-consuming and costly situation. As a result, many countries are trying to promote mediation, which is a form of dispute resolution by consensus, as the next method of dispute resolution.

Amidst such circumstances, the so-called Singapore Convention on Mediation was adopted by the United Nations in December 2018, and was put into effect in September 2020.2) Composed of 16 articles, the Convention is a common framework of countries that are parties to the Convention. For cases involving the internationality of commercial business and based on mediation (reconciliation) agreements established mainly by private mediators or mediation organizations, the Convention states that countries that are parties to the Convention must approve compulsory execution in that country, as long as there are no reasons for refusal of execution. In other words, although the target cases are limited, the execution authority is affirmed under certain conditions based on mediation (reconciliation) agreement established by the private alternative dispute resolution (ADR) organizations (please refer to Figure 1).

Figure 1: Assuming that Japan has ratified the Convention, this figure shows the case of a mediation (reconciliation) agreement between X (a foreign corporation) and Y (a Japanese corporation) stating that Y will pay 3 million yen to X as compensation for an international commercial case at a private mediation organization.


2. Status of domestic law regarding the effect of the mediation (reconciliation) agreement

Let's assume that reconciliation is reached between the parties to a dispute and one party promises to pay the other party 3 million yen as compensation. Even if this promise is not fulfilled, the other party cannot immediately enforce the promise. This is because the reconciliation agreement between the parties to the dispute (Article 675 of the Civil Code) is not enforceable. However, compulsory execution is possible when such agreements are reached through court mediation (Article 16 of the Civil Conciliation Act, Article 267 of the Code of Civil Procedure and Article 22-7 of the Civil Execution Act). Now, what if a mediation (reconciliation) agreement is reached at a private ADR organization? As expected, similar to reconciliation between the parties to the dispute, it is not possible to petition for compulsory execution (refer to Table 1 below). Therefore, if Japan ratifies the Singapore Convention on Mediation, it could lead to a major shift in the concept of domestic law.

Table 1: Dispute resolution through agreement and the efficacy thereof

Reconciliation among parties to the dispute Mediation at private ADR organizations Court mediation Court reconciliation
Efficacy of agreement
(legal basis)
Civil Code, Article 695 Civil Code, Article 695 Civil Conciliation Act, Article 16 Code of Civil Procedure, Article 267
Is compulsory execution possible? No
(not enforceable)
(not enforceable)

Nevertheless, there is controversy in Japan regarding concepts like those found in the Singapore Convention on Mediation; that is, regarding the granting of execution authority to mediation (reconciliation) agreements reached by private ADR organization. Currently, per the Act on Promotion of Use of Alternative Dispute Resolution, there are groups in Japan that are certified as private ADR organizations (certified ADR organizations)3) and groups that are not certified. From the process of enacting the Act on Promotion of Use of Alternative Dispute Resolution in the early 2000s to the present, there has been debate regarding whether the mediation (reconciliation) agreement at the certified ADR organizations should be granted execution authority after some measures are taken.

3. Issues when granting execution authority to an international commercial mediation (reconciliation) agreement

(1) Rationale for granting execution authority

As mentioned above, the current understanding of domestic law is that the mediation (reconciliation) agreement reached by a private ADR organization is merely a contractual reconciliation. Therefore, in theory, the question is how to explain why such a reconciliation can be enforceable. According to legal scholars on litigation, the type of documents that should be enforced (whether or not to recognize the title of debt) depends on the policy consideration of the legislator. Moreover, the target is not limited to official documents prepared in court and may also include private documents. It is also understood that the probability of existence of rights and the procedural guarantee of the execution debtor constitute substantive grounds.4) In this regard, Article 5 of the Convention allows an authoritative organization to examine the existence of reasons for refusal of execution when petitioning for compulsory execution in a country that is a party to the Convention based on a mediation (reconciliation) agreement, and then to approve execution when no such reason exists. Even so, it remains a question as to whether or not such system design is sufficient, or whether it is necessary to reconsider the nature of the mediation (reconciliation) agreement itself at private ADR organizations.

(2) Adoption of reservations (Article 8 of the Convention)

One problem with ratifying the Convention is that it contains almost no provisions regarding mediation organizations, mediators, or procedures. Such omissions are a major concern from the perspective of Japan. In this regard as well, there was a major conflict between the opt-out approach and the opt-in approach in the process of drafting the Convention. From the standpoint of emphasizing the expansion of scope of application of the Convention as much as possible, the former approach considers that the execution authority of the mediation (reconciliation) agreement is denied only when the parties explicitly deny the application of the Convention. Conversely, the latter approach emphasizes respect for the autonomy of the parties and the conclusion of a mediation (reconciliation) agreement after understanding the application of the Convention. In this approach, the Convention is applied only when the parties have explicitly expressed their intention to apply the Convention. Ultimately, the Convention adopted the former approach. However, as an adjustment to this conflict, Article 8 of the Convention states that the parties shall declare reservations; in other words, that the Convention shall be applied only if the parties agree to apply the Convention. Therefore, when ratifying the Convention, the question is whether or not Japan should declare reservations. In addition to how the Convention stipulates almost no conditions regarding the qualifications of mediation organizations, mediators, or mediation procedures, there is also the possibility that the execution debtor will be subject to unexpected compulsory execution. Consequently, it seems appropriate to ratify the Convention after declaring reservations.

(3) Issue of amending the Act on Promotion of Use of Alternative Dispute Resolution

When ratifying the Convention, granting execution authority to the mediation (reconciliation) agreement in domestic commercial cases and amending the Act on Promotion of Use of Alternative Dispute Resolution are issues in considering the balance between international commercial cases and domestic commercial cases. When assuming that execution authority is also granted to the mediation (reconciliation) agreement in a domestic commercial case, if emphasis is placed on domestic discussions that have been held thus far, it seems that there are few problems if a mediation (reconciliation) agreement reached by private certified ADR organization is regarded as a mediation (reconciliation) agreement with execution authority and, similar to the Convention, a system for court examination of reasons for refusal of execution is introduced. (The current Act stipulates an enforcement decision system for arbitration; Article 46 of the Arbitration Act.) On that basis, if the mediation (reconciliation) agreement comes from a certified ADR organization, the execution authority is not uniformly granted; rather, the organization that has satisfied certain conditions are certified as a Specified Certified ADR Organization (provisional name) based on a petition contingent on the voluntary judgment of the organization which considers such a legal effect to be desirable. This ensures the independence and diversity of ADR in a way which will be of benefit to users.

1) The jurisdiction of Japanese courts is stipulated in Article 3-2 and subsequent paragraphs of the Code of Civil Procedure. However, these provisions are only a standard for proceedings in Japan. It is not clear whether or not the proceedings can be held in the courts of other countries.
2) United Nations Convention on International Settlement Agreements Resulting from Mediation (the "Singapore Convention on Mediation" 2018. As of March 2021, Japan has not signed or ratified this Convention. However, the Convention has already been signed by 53 countries, including the United States, China, and Singapore. 6 of those countries have enacted domestic laws and have begun actual procedural operations.
3) By March 2021, a total of 167 organizations had been certified, of which 158 are continuing their activities (statistics accessed on the Japanese Ministry of Justice website on April 13, 2021).
4) Refer to Teiichiro Nakano, Civil Execution Act (published by Seirin Shoin, Supplementary New Edition (5th Edition), 2006), p. 157 and thereafter, and to Kazuhiko Yamamoto, The Execution Authority of ADR Reconciliation: Theoretical Issues of ADR Legislation (published by Yuhikaku Publishing, 2018), p. 199 and thereafter.

Kimimasa Hata
Professor, Faculty of Law, Chuo University
Areas of Specialization: Civil Procedure Law, ADR (Alternative Dispute Resolution), Proceedings for Partitioning of Property in Co-Ownership

Kimimasa Hata was born in Yokohama City, Kanagawa Prefecture in 1975.
In 1997, he graduated from the Faculty of Law, Aoyama Gakuin University.
In 1999, he completed the Master’s Program in the Graduate School of Law, Waseda University.
In 2002, he completed the Doctoral Program of the same graduate school.
He served as Assistant Professor in the Faculty of Law, Heisei International University, Associate Professor in the Faculty of Law, Chuo University and other positions before assuming his current position in 2014.
His current research themes include a comparative study of Japan and Germany as regards the partitioning of property in co-ownership and partitioning of an estate, the recent developments in ADR (Alternative Dispute Resolution) in Germany and more.