## Facts

- The Japanese Education Corporation (JEC) and Ringling Bros. (Ringling), a U.S. circus company, entered an agreement under which Ringling would organize circus performances in Japan.
- The contract contained an arbitration clause providing that all disputes would be resolved by arbitration under the International Chamber of Commerce (ICC) Rules.
- The clause contemplated arbitration in either New York or Tokyo, and also provided that the place of arbitration would be the country of the party against whom arbitration was initiated.
- A dispute later arose. JEC filed a damages action in the Tokyo District Court, alleging that Ringling’s representative had deceived JEC regarding certain financial matters in the contract.
- In November 1990, Ringling obtained an injunction from a U.S. District Court enjoining JEC from continuing the Tokyo court action and ordering the parties to proceed with ICC arbitration in Japan as specified by the arbitration clause.
- JEC did not participate in the U.S. proceedings and continued litigating in the Tokyo District Court.
- The Tokyo District Court ordered the parties to commence arbitration in accordance with the arbitration clause.
- JEC appealed to the Tokyo High Court, arguing that the arbitration agreement was null and void because it did not indicate the competent arbitral institution in Japan.
- Ringling argued that the arbitration agreement barred court proceedings in Japan (and also in the United States) under the Japanese Code of Civil Procedure and the U.S. Federal Arbitration Act.

## Issues

1. Whether the parties’ clause providing for ICC arbitration (with New York or Tokyo contemplated as venues and a respondent-country mechanism for the place of arbitration) was valid and enforceable despite JEC’s argument that it failed to specify a competent arbitral institution in Japan.
2. Whether the existence of that arbitration agreement required the Japanese courts to stop adjudicating the dispute and instead refer the parties to arbitration.

## Decision

- The Tokyo High Court rejected JEC’s challenge to the arbitration clause and left in place the Tokyo District Court’s order directing the parties to commence arbitration.
- The court treated the ICC designation as a sufficient identification of the arbitral framework and administering body for the parties’ disputes, even where the arbitration would be conducted in Japan.
- Because the dispute fell within the scope of a valid arbitration agreement, the Japanese court proceedings were not to continue on the merits, and the parties were to pursue ICC arbitration as agreed.

## Legal Principles

- A clause referring disputes to arbitration under ICC Rules can remain enforceable even if it does not name a separate Japan-based arbitral institution for a Japan-seated arbitration.
- Where an arbitration clause provides an objective method to determine the place of arbitration in the particular dispute (such as linking the place to the respondent’s country), the clause is not invalid solely because it lists more than one possible venue.
- When a valid arbitration agreement covers the dispute before the court, the court should not decide the merits and should direct the parties to proceed to arbitration in accordance with their agreement.

## Conclusion

The Tokyo High Court upheld the parties’ ICC arbitration agreement and affirmed a referral to arbitration, rejecting JEC’s argument that the clause was void for failing to identify a competent arbitral institution in Japan, and determining that the Japanese litigation could not proceed on the merits in light of the applicable arbitration agreement.


Judgment of 30 May 1994, XX Y.B. Comm. Arb. 745 (1995)