GUIDE to TOMAC ARBITRATION


HISTORICAL LOOK AT MARITIME ARBITRATION IN JAPAN


MARITIME ARBITRATION OVER THE PERIOD OF A CENTURY

The history of commercial arbitration in Japan goes back as far as 1889-90 when a dispute over the purchase of the Steamship Johan from Germany was arbitrated. Between 1 January 1891 and 31 December 1938, there were a total of 209 arbitration awards deposited with Japanese courts. Of the 209 awards, 88 were deposited with the Kobe District Court, 34 with the Tokyo District Court Civil Division, 34 with the Nagasaki District Court, 16 with the Osaka District Court, 9 with the Kanazawa District Court, 4 each with the Nara and Kofu District Courts, and the remaining 20 with various other courts throughout Japan. Geographically, Kobe was the site of the greatest number of arbitration cases. Broken down by category, 83 cases or 40% of the 209 total disputes were maritime related. 42 cases were related to real estate transactions and 27 cases were linked to rice dealings, another 4 cases were related to the electrical industry.

It can be seen from the above that maritime arbitration played a leading role in the development of commercial arbitration in Japan.

The reasons for this are as follows:
  1. Development of the Japanese shipping industry was based on British customs and traditions, and many people in the industry have been in the habit of referring contractual disputes to London arbitration.
  2. Domestically, in addition to the fact that maritime custom and practice are governed by English law, because numerous aspects of the practice of maritime commerce were not well suited to the Japanese Maritime Code based on civil law, there was a tendency towards arbitration rather than litigation.
  3. In response to the need, from early on there has been an active standing organ for conducting maritime arbitration.

 


ARBITRATION GROWS WITH THE JSE

Regarding standing arbitration organs, the Kobe Shipping Union began providing arbitration services in 1912. Those services were succeeded in 1926 by the Kobe Shipping Exchange, Ltd. (founded in 1921, incorporated into the Japan Shipping Exchange, Inc. in 1933, referred to hereafter as the JSE) which expanded and developed the provision of arbitration services.

Because of the constitution of the Kobe Shipping Union, the disputes referred to it for resolution centered around time charterparties and contracts for the carriage of goods by sea. The Kobe Shipping Union handed down 43 arbitration awards. As the JSE carried on the arbitration tradition of the Kobe Shipping Union, an increasingly broad range of disputes, which included ship purchase, shipbuilding & repair, came to be referred to arbitration there. The JSE continued to expand the role of arbitration along with the increase in trade after WWII, and the scope of arbitration at the JSE grew to include disputes involving marine salvage, bills of lading, combined transport, towage, collisions, shoreside claims, manning, shipmanagement, ship financing and fisheries' claims.

The reason that the scope of arbitration expanded so greatly was that the corporate structure of the JSE allowed it reserve a substantial number of eligible arbitrator candidates from a wide range of fields, including shipping, shipbuilding, marine insurance underwriting, trading, steel mill, ship brokering, longshore facilities and financing.

TOMAC AS AN INDEPENDENT ORGAN

The JSE increases the independence and fairness of maritime arbitration by leaving the management of the arbitration function to TOMAC (Tokyo Maritime Arbitration Commission) which consists of a selection of talented and experienced specialists from the member companies of the JSE.

Through the good offices of the general meeting of TOMAC, its members exchange knowledge and measure their expertise.

OPEN ARBITRATION SYSTEM

Under the occupation by the Allied Forces after the end of WWII, arbitration by domestic business associations was forbidden in accordance with the "Business Incorporation Law." In December 1948, reflecting the high regard in which it was held, the JSE became the only organization authorized to conduct maritime arbitration in accordance with the Maritime Arbitration Law.

Thus the JSE maritime arbitration system has contributed greatly toward the establishment and development of commercial arbitration in Japan. Maritime arbitration systems, however, are best evaluated on a global scale. In this context, the JSE maritime arbitration is still overwhelmed by the sheer volume of New York and London arbitrations. Globally speaking, Japanese arbitration is still best described as being in the developing stages.

As of March of 1997, a total of 430 cases have been referred to the JSE from its inception of service. Of those 430 cases, arbitration awards were granted in 189 cases, and 233 cases were withdrawn from arbitration when a settlement was reached between the parties during the proceedings. In many of the withdrawn cases the arbitrator recommended conciliation upon the request of one or more of the parties.

This high rate of conciliation speaks highly of the degree of trust that is accorded to the arbitrators.

In order to heighten understanding of the fairness and appropriateness of arbitration awards, and also in order to promote the development of improved commercial custom and practice, arbitration awards are made public. Anyone may purchase the arbitration award reporter. The names of the parties and witnesses appearing in published arbitration awards are changed.

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