Salient Features of International Commercial Arbitration in East Asia: A Comparative Study of China and Japan

By Kun, Fan | American University Business Law Review, January 3, 2016 | Go to article overview

Salient Features of International Commercial Arbitration in East Asia: A Comparative Study of China and Japan


Kun, Fan, American University Business Law Review


Introduction

Driven by the trend of harmonization, arbitration in East Asia reflects an increasing uniformity of local legislation. Most East Asian countries have now ratified the New York Convention and a growing number of jurisdictions in the region have amended outdated laws, adopting the principles of the UNCITRAL Model Law on International Commercial Arbitration ("Model Law"). Has this trend led to the harmonization of arbitration law and practice across the region? What are the salient features of international commercial arbitration in East Asia?

Despite the harmonization of law, legal systems do not exist independently of social and cultural contexts. Arbitration is generally seen as a meeting point for different legal cultures. Some suggest that there is an emergence of an "international arbitration culture," which fuses together elements of different legal traditions.1 Others see arbitration as a locus of conflicts among legal cultures and traditions.2

This paper discusses the salient features of arbitration in East Asia through case studies from Japan and China. It illustrates the recent trends of arbitration development in East Asia. It then describes how the present state of the law and practice came to be in China and Japan by examining their historical developments and contemporary practices. This paper will draw comparisons between the countries' legislation, courts, and arbitration customs. This paper summarizes the country-specific features of arbitration in Japan and China and highlights some commonalities in the conduct of arbitration within these two countries and in East Asia generally. It analyzes the cultural reasons for both the divergences and convergences in arbitration in East Asia. This paper concludes with a prediction on the future trends of development.

II. Recent Trends of Arbitration Development in East Asia

There is a strong movement towards the worldwide harmonization of international commercial arbitration law and practice. This is largely driven by globalization. East Asia is not immune to such forces. The development of trade and investment in the region has resulted in increased international commercial transactions.3 Rapid development has increased caseloads for already overburdened courts, further leading to slow adjudication of commercial disputes.4 As a result, Alternative Dispute Resolution ("ADR") mechanisms, including arbitration, have become crucial for businesses operating in East Asia.5 Driven by the need to resolve the ever-increasing number of international commercial disputes, East Asia has been endeavoring to improve its legal infrastructure and develop a sound environment for efficient international dispute resolution.

The broad international consensus surrounding the Model Law also drives the relevant authorities in East Asia to modernize and harmonize arbitration laws. All East Asian jurisdictions, except Taiwan, have ratified the New York Convention6 and a growing number of East Asian jurisdictions have amended outdated laws, instead adopting the Model Law principles.7 For example, Japan, Hong Kong, and Singapore have all adopted the Model Law with only some minor amendments.8 South Korea and India have adopted legislation that is closely patterned after the Model Law. The relevant legislation in China and Taiwan includes important principles of the Model Law.

East Asia's improvements on its legal infrastructure have facilitated the region's arbitral development and as a result, regional arbitration institutions have blossomed. The most active arbitration institutions in East Asia include the Hong Kong International Arbitration Center ("HKTAC"), the Singapore International Arbitration Centre ("SIAC"), the China International Economic and Trade Arbitration Commission ("CIETAC"), the Japan Commercial Arbitration Association ("JCAA"), the Korean Commercial Arbitration Board ("KCAB"), and the Kuala Lumpur Regional Centre for Arbitration ("KLRCA"). …

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