New Reforms for Enforcing Mediation Settlement Agreements in Japan

Mediation is a structured, interactive process where an impartial third party assists disputing parties in resolving conflict through the use of specialised communication and negotiation techniques. All participants in mediation are encouraged to actively participate in the process.

1. Proposals for New Legislation to Enforce Mediation Settlement Agreements

In February 2022, the Committee on the Reform of International Arbitration in Japan (the “Committee”) issued their proposals for new legislation to enforce settlement agreements concluded in mediation (the “Proposals”). This is part of a series of initiatives by the Japanese government to improve its international dispute resolution mechanism, which have been ongoing since 2017.

In 2021, the Committee submitted their proposals for reforms to the Arbitration Act of Japan to update the Act in line with the UNCITRAL model arbitration law (2006). The bills on the reforms of both arbitration and mediation are expected to be submitted to the Diet later in 2022 or in the following year.

2. Responding to the Singapore Convention on Mediation

In September 2020, the United Nations Convention on International Settlement Agreements Resulting from Mediation (the “Singapore Convention”) came into force to provide a mechanism to enforce settlement agreements concluded by international mediation. While Japan is not a signatory of the Singapore Convention as of today, mediation and arbitration have gained more attention in Japan as instruments for solving international business disputes. The Proposals recommend that the new legislation stipulate the enforcement process of settlement agreements resulting from international mediation under certain requirements before Japanese courts. The recommendation is a response to the requirements in the Singapore Convention. However, the Proposals suggest that the new legislation is applicable only when the parties of mediated settlement agreements have agreed that the enforcement process may be carried out in accordance with the Singapore Convention or its implementation act in Japan. It appears that the Proposals are based on the assumption that Japan would declare a reservation pursuant to Article 8 of the Singapore Convention when it would sign the Convention.

3. Enforcement Mechanisms for Settlement Agreements Concluded by Domestic Mediation

Domestic mediation in Japan is often used for settling relatively small disputes between individuals or between companies. Under the current mediation mechanism in Japan, the parties may not be represented by attorneys in some cases. Considering such practices, the Proposals are cautious about the scope of the mediated settlement agreements which shall be enforceable. The Proposals recommend that the Japanese courts enforce only mediated settlement agreements made in a certified alternative dispute resolution process based on a specific act.

The Proposals also suggest that the new legislation is applicable only when the parties of mediated settlement agreements have agreed that the enforcement process may be carried out in accordance with the settlement agreements.