Download Tokyo District Court Judgment of 28 August 2007

[Title]
Denial of Japanese Court’s International Jurisdiction over Provisional Disposition Order
where Overseas Arbitration was Agreed
[Deciding Court]
Tokyo District Court
[Date of Decision]
28 August 2007
[Case No.]
Case No. 20047 (yo) of 2007
[Case Name]
Petition for Order for Provisional Disposition against Breach of Contract
[Source]
Hanrei Jiho No. 1991: 89
[Party Names]
Plaintiff:
Corporation X
Defendant:
Corporation Y
[Summary of Facts]
A Japanese corporation, X, which was a distributor of semiconductor-related products,
entered into a contract with a Korean corporation, Y, which was a manufacturer of silicon
wafer, to the effect that X was designated as Y’s agent for the purpose of selling Y’s
products to Corporation A and others in Japan. However, a dispute arose between the
parties with regard to the renewal of the contract, and X sought the following provisional
disposition order from the Japanese courts.
(1) That Y be prohibited from selling its products to Corporation A without an order from
X.
(2) That if X issued an order, Y must deliver the products to Corporation A.
(3) A temporary stipulation that where X issued an order, X would have standing, namely a
contractual right, to seek delivery by Y of the products to Corporation A.
In response, Y asserted that there was an arbitration clause designating Seoul as the place of
arbitration in the relevant contract, and that since the courts of Japan did not have
international jurisdiction over the merits of the suit, they also did not have international
jurisdiction over the provisional disposition order.
[Summary of Decision]
Dismissal without prejudice
(1) Since there are no generally internationally accepted principles with regard to the
kinds of cases in which international jurisdiction over provisional orders should be
affirmed, and the relevant international customary law is also not fully developed, it is
appropriate, as in general civil lawsuits, to decide the matter in accordance with the
principles of justice and reason, based upon the ideas of promoting fairness between the
parties
and
equitable
and
prompt
administration
of
justice
. In principle, if a court with jurisdiction over a provisional order prescribed in Article
12(1) of the Civil Provisional Remedies Act is within Japan, it is appropriate to subject
the obligee to the jurisdiction of Japan with regard to the preservation order where a
petition has been made for the same to a court in Japan. However, in cases where there is
such no court with jurisdiction, Japan’s international jurisdiction should be denied, absent
any special circumstances such that conducting the trial in Japan would conform to the
ideas of promoting fairness between the parties and equitable and prompt administration
of justice.
Article 12(1) of the Civil Provisional Remedies Act, with regard to civil preservation
cases, acknowledges the jurisdiction of the court that has jurisdiction over the case on the
merits, or the District Court that has jurisdiction over the location of the things to be
provisionally attached or that are the subject of the dispute. The “merits” here means the
proceeding that establishes the existence or otherwise of the right of preservation or legal
relationship, and is understood to include arbitration proceedings as well as legal
proceedings. As a result, in a situation where an arbitration agreement is in existence a
“court with jurisdiction over the merits” should be understood as a court with jurisdiction
over the place of arbitration for the relevant arbitration, and to not include a court that
would have had jurisdiction over the suit on the merits absent the arbitration agreement.
The rationale for this is that unless the matter is understood that way a court that does not
have jurisdiction over the case on the merits due to the existence of an arbitration
agreement would have jurisdiction over only the preservation case, creating a result that
runs counter to the fact that the preservation case is incidental to the case on the merits.
Also, the fact that the court that has jurisdiction over the place of arbitration also has
jurisdiction over the preservation case conforms to the logical intention of the parties who
specified the place of arbitration in the arbitration agreement, and moreover, accords with
the principle of fairness as between the parties.
(2) The Arbitration Act does not contain express provisions with regard to the proper law
of an arbitration agreement; therefore, the validity of the arbitration agreement is
determined based on the law of the place chosen by the parties at the time of the relevant
juristic act (Article 7 of the Act on the General Rules of Application of Laws). In the case
at hand, since there was an agreement in the contract making the law of Korea the
governing law, the law governing the validity of the relevant arbitration agreement was
the law of Korea.
Article 3(2) of the Arbitration Act in Korea prescribes that “an arbitration agreement is an
agreement to entrust arbitrators with the resolution of all or part of civil disputes that
have already arisen, or disputes regarding a specific legal relationship (whether or not
pursuant to a contract) in the future,” and Article 8(2) of the same Act prescribes that
“arbitration agreements must be in writing.” The arbitration agreement in this case
satisfied these requirements, and the relevant agreement on jurisdiction should therefore
be interpreted as valid in light of the law of Korea.
Also, in light of the facts that: Y was a Korean corporation with its main office in Korea;
X had a branch store in the city of Seoul, Korea that conducted its semiconductor-related
business in Korea and Japan; and X’s representative had lived in Korea until the age of
21 and had a wide network of contacts in both Korea and Japan, the relevant arbitration
agreement could not be said to be unreasonable. No prima facie evidence was adduced
such as to the effect that the relevant arbitration agreement was entered into to avoid the
protection of continuous contracts under the law of Japan, or as a result of the abuse of
Y’s superior status and it could therefore not be said that the application of the law of
Korea ran counter to public order in Japan.
As stated above, since there was an arbitration agreement in this case between the parties
specifying the city of Seoul, Korea, as the place of arbitration, there was no “court with
jurisdiction over the merits” specified in Article 12(1) of the Civil Provisional Remedies
Act in Japan. Also, this petition was not a demand for a provisional attachment order or a
provisional disposition with regard to the subject of a dispute, and there was therefore no
“court that has jurisdiction over the location of the things to be provisionally attached or
that are the subject of the dispute.” Accordingly, there was no court of jurisdiction
prescribed under Article 12(1) of the Civil Provisional Remedies Act in Japan with regard
to the petition to preserve the right to claim performance under the contract.
Additionally, in light of the fact that the governing law of the relevant contract was the
law of Korea, and that a speedy resolution could be expected by applying for arbitration
pursuant to the relevant arbitration agreement under the commercial arbitration rules of
the Korean Commercial Arbitration Board, it could not be said that there were special
circumstances such that conducting the trial in Japan would conform to the ideas of
promoting fairness between the parties and equitable and prompt administration of
justice. If followed that Japan’s international jurisdiction could not be affirmed in relation
to the petition to preserve the right to claim performance under the contract.
[Keywords] Arbitration Agreement, Jurisdiction, Provisional Remedies