JAPAN Trends and Developments Contributed by: Colin Trehearne, Lexi Takakamatsu, Daniel Allen and Yoshinori Tatsuno, Mori Hamada & Matsumoto
Continued Growth in the Use and Awareness of Investor State Arbitration In last year’s Trends and Developments article it was noted that Japan had seen an increased level of inter - est in investor state dispute settlement (ISDS), and a corresponding increase in the attention paid to the Japanese market by third-party litigation funders following Switzerland’s March 2023 instructions to Credit Suisse to write down its AT1 bonds to zero. Many international investors, including those in Japan, were substantially impacted by that decision. Interest in ISDS has only continued to grow, in part due to the notice of trigger letter sent to Switzerland on behalf of investors by the authors’ law firm. This resulting dispute is being pursued under the Japan-Switzerland Economic Partnership Agreement and is the subject of International Centre for Settlement of Investment Disputes (ICSID) arbitration proceedings. At the same time, Japan has also seen some of its largest corporate players bring (and succeed in) high-profile claims against other states. In May 2025, it was reported that Spain was attempting to annul a December 2024 arbitral award made in favour of Japanese corporate giant Itochu, in respect of Ito - chu’s solar investments in Spain. In the same month, it was reported that Spain had similarly been ordered to pay another major Japanese company, Mitsui, almost EUR40 million in relation to Mitsui’s claims regarding its solar power investments. Other states also found themselves respondents to claims brought by Japa - nese investors, including an award won by Italian- Japanese contractor Dondi Kubota against Albania. This award (made under the International Chamber of Commerce’s arbitration rules) came to light in 2025 and was made in respect of a terminated contract to improve a sewer system in Albania’s capital city. Overall, Japan has seen at least eight (publicly known) claims brought by its investors since the first claim in 2015, of which five were decided in favour of the investors, one was settled, one was discontinued, and one remains ongoing. Given long-term market trends, Japanese corporates’ increased overseas focus, and growing awareness of the potential utility of ISDS, the authors anticipate that growth in this space will accel - erate further.
Bolstering Domestic Capbilities and Japan’s Attractiveness as a Seat Remains a Priority The promotion and development of international arbi - tration in Japan has been, and continues to be, a long- term project. Numerous articles over the years have each declared that their year of publication marked the year international arbitration was finally and firmly part of the dispute resolution space in Japan. Others bemoan that, compared to London or New York, the international arbitration space has remained relatively small in Japan, and sometimes conclude that interna - tional arbitration has somehow failed to establish itself there. The reality, however, is more nuanced: Japan has, through careful and continued efforts, taken steps to bolster the international arbitration space in Japan, through collaborative efforts by actors at all levels, from small enterprises to global trading houses, and from emerging practitioners to leading lights. In 2024, efforts by numerous market players intensified and the green shoots of organic growth emerged in Japan’s international arbitration market. In 2018, the Cabinet Secretariat’s Inter-Ministerial Council for the Promotion of International Arbitration issued a report focussing on measures to revitalise international arbitration in Japan. In response, the Ministry of Justice commissioned a five-year survey and analysis beginning in June 2019, focusing on, inter alia, effective promotional measures. This was followed in 2020 by amendments to the laws regu - lating the handling of legal matters by non-Japanese lawyers and in 2023 by amendments to the Arbitra - tion Act, aligning it more closely with the UNCITRAL Model Law. In connection with the results of the five-year survey, a Practical Study Group on the Steady Promotion of International Arbitration in Japan – composed of civil procedure experts, international arbitration practition - ers, corporate users of arbitration, and international arbitration institutions – was established under the auspices of the Inter-Ministerial Council. Over eight sessions, the Practical study group discussed the survey results and future steps, compiling a report released in January 2024. As highlighted in last year’s Trends and Developments article, the Report empha - sised the need for close co-operation among public
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