JAPAN Law and Practice Contributed by: Hironori Nishikino and Koji Kanazawa, Chuo Sogo LPC
9.4 Enforcement of Judgments A foreign judgment is required to be recognised in Japanese courts. To be capable of recognition and enforcement, a foreign judgment must satisfy the requirements of Article 118 of the Code of Civil Pro- cedure. Whether these requirements are satisfied will be determined by the court in an action for “execution judgment” under Article 24 of the Civil Execution Act. 9.5 Enforcement of Arbitration Clauses The Arbitration Act provides that an arbitration agree- ment must be in writing but does not require any spe- cific wording. Parties to the arbitration may not appeal to the courts regarding the decision of the arbitral tribunal. However, the Arbitration Act provides that the parties may file a petition to set aside the arbitral award to the court in some situations, such as invalid- ity of the arbitration award due to the limited capacity of a party. This is not applicable in Japan. 9.6 Enforcement of Awards Japan is a party to the New York Convention; arbitra- tion awards received in the member countries can be enforced in Japan. 9.7 Alternative Dispute Resolution Insurance alternative dispute resolution (ADR) is com- mon, especially in the field of consumer contracts. An increasing number of insurance-related disputes are resolved through ADR. 9.8 Penalties for Late Payment of Claims Japan has not introduced the concept of punitive damages. Late payment interest is recoverable in respect of claims. Before 31 March 2020, the rates for late payment interest were 5% per annum for non-commercial claims and 6% per annum for com- mercial claims. As of 1 April 2020, the amendment of the Civil Code became effective and a new structure for late payment interest was introduced, ie, 3% per annum with subsequent reviews every three years to reflect market interest rates. The current rate of 3% per annum is effective from April 2023 to March 2027.
9.9 Insurers’ Rights of Subrogation For non-life insurance, Article 24 of the Insurance Act provides that, where insured property is totally lost or destroyed, an insurer that has paid an insurance proceeds payment shall be subrogated to ownership and any other real right that the insured holds over the insured property, in accordance with the ratio of the amount of the insurance proceeds payment thus paid to the insured value (or the agreed insured value if there is any such amount). Article 25 of the Act provides that, when an insurer has made an insurance proceeds payment, the insurer shall be subrogated with regard to any claim acquired by the insured due to the occurrence of any damages arising from an insured event up to the smaller of: • the amount of the insurance proceeds payment made by the insurer; or • the amount of the insured’s claim. In Japan, the emergence of fintech was, at first, most pronounced in the banking sector. In fact, the Japa- nese government first responded to fintech by amend- ing the Banking Act so that banks could own tech- nology companies as their subsidiaries, which was previously restricted to some extent (the “Amended Banking Act”). The Amended Banking Act came into force on 1 April 2017. In 2021, the Insurance Busi- ness Act was amended in the same way for insurance companies to own subsidiaries that provide IT and other technology to enhance insurance activities and benefit the insurance companies’ customers. Adoption of New Technologies Japanese insurance companies are incorporating new technologies such as IoT (internet of things), big data and AI into their services. For example, Tokio Marine & Nichido Anshin Life Insurance Co Ltd has intro- duced a medical insurance policy where an insured might obtain cashback on the insurance fees if they walked a certain average number of steps on a daily basis. The insured would be required to use wearable 10. Insurtech 10.1 Insurtech Developments
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