On 9 January 2019, Hong Kong’s Department of Justice and the Ministry of Justice of Japan signed a Memorandum of Cooperation (MoC) to “strengthen collaboration on international arbitration and mediation“. The MoC, a copy of which is available here, provides a general administrative framework for cooperation between Japan and Hong Kong in relation to international arbitration and mediation.

The MoC, which does not create any binding rights or obligations, sets out three primary areas for cooperation between Japan and Hong Kong:

  1. exchange of information on their respective legal frameworks, case law, as well as views and experience relating to international arbitration and mediation.
  2. training on international arbitration and mediation for individuals and institutions of Japan and the Hong Kong Special Administrative Region of the PRC.
  3. jointly organised forums and seminars promoting international arbitration and mediation.

The MoC also specifies governmental ‘focal points’ for its implementation and review:

  • for the Ministry of Justice of Japan – the International Affairs Division, Minister’s Secretariat; and
  • for the Department of Justice of Hong Kong – the Inclusive Dispute Avoidance and Resolution Office.

With the growing popularity of international arbitration among Asian users and intense competition between arbitral seats in Asia, there has been an increased governmental focus on the development of arbitral institutions and infrastructure in both Japan and Hong Kong. The Inclusive Dispute Avoidance and Resolution Office (IDAR) was established earlier this year by the Hong Kong Government to “harness the additional opportunities offered by the Belt and Road Initiative and the Guangdong-Hong Kong-Macao Greater Bay Area Plan“. Part of the IDAR’s remit is to pursue and conclude co-operation agreements with other jurisdictions, of which the MoC is the first example. The Belt and Road Initiative is a China-led international development strategy that aims to increase trade and stimulate economic growth across Asia and beyond. Please see our thinking on the Belt and Road Initiative here.

Although currently a less prominent seat in Asia than Hong Kong and Singapore, in Japan there is a renewed focus on collaboration between both the public and private sectors in an effort to expand Japan’s capacity in international arbitration. This has included the government recognising, for the first time, the importance of international arbitration and making a commitment in its official policies to expanding its capacity in this area.

Shortly thereafter, the Japan International Dispute Resolution Center (JIDRC) – the product of cooperation between the public and private sectors – was established in February 2018. In May 2018, the JIDRC launched the first facility in Japan dedicated to the provision of specialised international arbitration hearing services, located in Osaka. There has been an increased governmental focus on establishing Japan as an internationally recognised seat for cross-border dispute resolution, particularly ahead of the 2020 Olympics, and the expectation is that a second JIDRC facility will be opened in Tokyo by then.

Whilst no specific programs have yet been announced, the MoC is an encouraging development and appears to indicate an increased appetite for government investment in the broader project of international arbitration in Asia. Certainly, for Japanese institutions and judges who may have had less exposure to international arbitration cases relative to their Hong Kong counterparts, the MoC represents an exciting opportunity.

David Gilmore
David Gilmore
Managing Partner, Tokyo
+81 3 5412 5415
Ben Jolley
Ben Jolley
Senior Associate, Tokyo
+81 3 5412 5399

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Herbert Smith Freehills LLP is licensed to operate as a foreign law practice in Singapore. Where advice on Singapore law is required, we will refer the matter to and work with licensed Singapore law practices where necessary.