JAPAN Trends and Developments Contributed by: Colin Trehearne, Lexi Takakamatsu, Daniel Allen and Yoshinori Tatsuno, Mori Hamada & Matsumoto
tion. Other notable efforts include an event held in February 20025 organised by the Japan Institute for International Arbitration Research and Training, along with the Asia Development Bank and supported by UNCITRAL and the Ministry of Justice, to promote mediation in Asia. Another significant initiative is the engagement of academics and the government, as demonstrated via bilateral visits such as those of Malaysian officials to the Japan International Media - tion Center and Doshisha University, both in Kyoto. At the same time, signs of consolidation in the interna - tional arbitration space have also been visible. Certain domestic and international firms have seen partners (and in some cases, counsel and senior associates) leave without being replaced in the market, although a smaller number of firms have increased their practi - tioner headcount. Meanwhile, the JIDRC, established in 2018 – which, as noted in last year’s Trends and Developments article, closed its Tokyo and Osaka facilities – concluded its arbitration promotion activi - ties as of March 2024. The JAA has since assumed responsibility for the arbitration promotion activities of the JIDRC and has expanded its organisational struc - ture to accommodate these increased duties. Continued Development of the Japan Commercial Arbitration Centre In the 2024 Policy Report, the JCAA was specifically highlighted by the authors and is, arguably, now the preeminent arbitral institution in Japan. To support its continual growth and improvement, the JCAA has proactively taken steps to improve its offering – too numerous to comprehensively list – including the launch of an Advisory Board in October 2024. The Advisory Board, whose tasks include refining arbitral procedures and promoting best practices, includes well-known international practitioners such as Profes - sor Klaus Sachs of Germany, Matthew Gearing KC of the United Kingdom, and Professor Nathalie Voser of Switzerland. In parallel with this, the JCAA’s Rule Review Committee continues its assessment of the institution’s rules with a view to issuing a public con - sultation draft in the medium term. The JAA has also pursued capacity-building and profile-raising steps, including participation in California International Arbi - tration Week in March 2025 and the conclusion of a
co-operation-strengthening MOU with the Asian Inter - national Arbitration Centre in May 2025. Continued Development of Awareness and Use of Third-Party Funding In the past year, there has been significant develop - ment in the level of interest in third-party funding in Japan. Japanese clients, which generally have a high level of financial sophistication, have become more interested in exploring funding arrangements, both in theory and in relation to specific cases. There is also increased interest from funders, with many visiting the market and considering funding in particular matters. A particularly promising development has been the emergence of at least one Japan-based third-party funder. However, it should be noted that the domestic market for third-party funding in Japan remains in its infancy. Particular areas of focus for Japanese companies include not just de-risking claims (although that remains a point of interest for Japanese companies, which often follow risk-averse decision-making pro - cesses), but also products such as enforcement sup - port, portfolio funding, and insurance offerings (eg, after-the-event policies and related products). Much of this surge in interest can likely be attributed to activity relating to potential claims by Japanese inves - tors against Switzerland arising from the write down of Credit Suisse AT1 bonds, a topic explored above in the broader context of growing interest in investor- State arbitration. Many potential claimants have been considering third-party funding as a means to pursue such claims, often on a group basis, with numerous third-party funders devoting considerable attention to evaluating their viability. In at least two instances, funders have entered into funding agreements with Japanese claimant groups, a development that has been reported extensively in the mainstream press (both in Japan and abroad), contributing to the “buzz” around this topic in Japan. Although these are not by any means the first instances of Japanese claimants using third-party funding in international arbitration (or even in investment arbitration), this is the first time that the topic has received significant attention. It is anticipated that interest levels will continue to grow
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