1

Establishment of the Labor Tribunal System: Lay Judge Participation in Japanese Labor Proceedings.

Takashi Araki∗

1 Introduction：Participation in Labor Law

This paper explores the ways in which management and labor "participate" in Japanese labor law. Specifically, the paper firstly identifies the two patterns of participation: participation in norm establishment and norm enforcement. Second, focusing on the norm enforcement participation, it reviews the historical development of dispute resolution systems in the post-war period. Third, it delineates the new Labor Tribunal Act which entrenches participation in innovative and promising ways. Finally, the significance of lay participation in dispute resolution system in labor law and more broadly its impact on the judiciary will be examined.

1.1 Participation in Norm Establishment

Norm establishment occurs across different levels. Most centrally, the highest level of participation is in the government’s tripartite Labor Policy Council which discusses and determines labor law and policy. The Council has a number of subcommittees. Both the Council and subcommittees adopt a tripartite membership involving representatives of labor, management and the public interest. It is an established custom in Japan that deliberative councils (and their subcommittees) initially consider major legislative and policy initiatives. At a more decentralized level, namely the firm level, both parties participate in collective bargaining and joint labor management consultation processes. In the scholarship on Japanese-style corporate governance, the involvement of employees in corporate administrations is held out as one of the hallmarks of Japan’s stakeholder-model governance that treats employee interests as highly — if not more so — than shareholder returns.1 Unlike European countries, however, sector-level or industry-level industrial negotiations are uncommon in Japan because more than 90% of labor unions in Japan are enterprise-specific.2

1.2 Participation in Norm Enforcement One of the feature of Japan’s labor dispute resolution procedures or

the norm enforcement mechanism in labor law (see Figure 1) is that Japan does not maintain a separate court system for resolving labor disputes such as those found in many European countries. In the European system, labor disputes may be heard by lay judges representing the interests of

∗ Professor of Law, Dr., The University of Tokyo, Faculty of Law. 1 Takashi Araki, “From employee-centered to shareholder-centered governance?: Corporate governance reforms and the future of Japan’s practice-based stakeholder model”, Jürgens/ Sadowski/ Schuppert/ Weiss (Hrsg.), Perspectiven der Corporate Governance, 97 (2007, Nomos). 2 See Takashi Araki, Labor and Employment Law in Japan, 164 (2002, Japan Institute of Labor).

2

Labor Disputes

Labor Administration

[Individual Disputes]

Labor Relations Commissions

[Collective Disputes] Courts

General Labor

Consultation

Corner

Guidance and

advice by labor

bureau

Labor Inspection

Adjustment of

collective labor

disputes

Adjudication of

Unfair Labor

Practices

Provisional

Disposition

Regular Civil

Procedures

Labor Tribunal

[Individual Disputes]

Dispute Adjustment

Committee

management and labor. For instance, both the labor courts in Germany (Arbeitsgerichts) and the employment tribunals in the UK are tripartite organs whereas the labor courts in France (conseil de prud’hommes) have bipartite panels.

However, since 1945 Japan has had a system of labor and management-participating dispute resolution bodies, the labor relations commissions. The labor relations commissions are the tripartite administrative bodies consisting of members representing public interests, labor and management. These commissions have two major functions: (i) collective dispute resolution through mediation, conciliation and arbitration; (ii) and quasi-judicial determination of cases involving allegations of unfair labor practices. The former function is not limited to norm enforcement; it also includes resolution of disputes that play a role in establishing work-related norms, such as collective bargaining culminating in strikes or lockouts. The latter function is directed at enforcing norms in the Trade Union Acts, namely the proscription of such unfair labor practices by employers as the disadvantageous treatment of union members, the unreasonable refusal to submit to collective bargaining, and attempts to control or interfere in the unions’ formation and administration.

Figure 1: Overview of Labor Dispute Resolution Systems

3

Labor relations commissions deal with collective labor disputes only.

As for individual labor-related disputes, there were no dispute resolution mechanisms where labor and management participate.

In 2004, however, Japan enacted the Labor Tribunal Act which introduced a new dispute resolution body for individual labor-related disputes, namely, the Labor Tribunal (Rodo Shinpan). The Labor Tribunal is a de facto tripartite panel established in each district court adjudicating on cases of individual labor relations. The Labor Tribunal system commenced on April 1, 2006.

This article focuses on the issue of norm enforcement participation, especially on the newly created Labor Tribunal system and examines the impact and significance of lay participation on the resolution of labor disputes specifically as well as on the judiciary more broadly. 2 Background to the Introduction of the Labor Tribunal System in

2004 2.1 Disputes Resolution for Collective and Individual Disputes

Labor disputes fall into two categories: collective and individual. Japan originally developed a dispute resolution mechanism for collective labor disputes, namely, the tripartite labor relations commissions.

Japanese labor law effectively started following WWII. With new constitutional guarantees enshrining the workers’ right to organize, bargain collectively and engage in collective actions (Art. 28, Constitution), labor unions actively engaged in collective bargaining and strikes in the late 1940s and 50s. Therefore, the resolution of collective labor disputes, which could have significant implications for Japanese industry and people’s lives, was a great concern for society. To resolve such collective labor disputes, Japan established tripartite labor relations commissions as special administrative bodies. Although unimaginable today given prevailing peaceful industrial relations, labor and management clashed until 1960s in the private sector and until the mid 1970s in the public sector (see Figure 2). In resolving such collective disputes, the tripartite labor relations commissions comprising labor, management and neutral members played an important role through mediation, conciliation and arbitration.

Another important role for the labor relations commissions is to adjudicate on unfair labor practice cases. In such cases, only the neutral members have the power to reach a decision on the merits. However, the majority of the cases (about 70%)3 are settled down before neutral members hand down remedial or dismissal orders. In the process leading up to settlement, labor and management members actively intervene and persuade parties to accept amicable settlement. Thus, also in the unfair labor practice

3 Among 461 cases disposed in 2007 by all prefectural labor relations commissions, 314 cases (68.1%) ended by settlements or withdrawal of the petitions. See <http://www.mhlw.go.jp/churoi/shinsa/futou/futou03.html>

4

cases, labor and management members play significant roles. Post-war labor law also dealt with individual labor disputes. It did so

by introducing new labor protective statutes laying down minimum labor standards and an administrative inspection system for their enforcement. However, the law did not go so far as to create a body with quasi-judicial powers to resolve individual labor disputes. Instead, such cases formed part of the caseload of the ordinary courts.

2.2 Decrease in Collective Disputes and Increase in Individual Disputes From the mid-1950s to the mid-1960s, Japan experienced a gradual

but significant transformation in industrial relations. Adversarial labor relations gave way to a more cooperative approach. Exhausted by their bitter clashes from the end of WWII through the 1950s, management and labor started to seek non-confrontational alternatives. They voluntarily established joint labor-management consultations and developed rich communication. Employers provided a wide range of information to the unions, and unions cooperated with management in increasing productivity. Employers kept their promise of not dismissing employees who were made redundant by restructuring and rationalization, but instead transferring them to other sections and retraining them so that they may settle into their new positions. As a result, Japanese labor and management gradually changed the nature of labor relations from a zero-sum game into a win-win game where both benefitted from increased profitability generated by more cooperative relations.

The spread of cooperative labor relations coincided with a decrease in collective labor disputes. The figures clearly demonstrate this trend, especially in terms of number of disputes and workdays lost following 1974 — the year when Japan’s economy faced a severe slump caused by the first oil crisis (see Figure 2).

Figure 2: Dispute Acts and Work-Days Lost

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 97

dispute acts(cases)work-days lost(1,000days)

5

By contrast, individual labor disputes have increased following the burst of the bubble economy in the early 1990s (see Figure 3). The main reason for the increase is the subsequent economic slump resulting in more corporate restructurings entailing personnel downsizing and tightening of working conditions. In the past when the lifetime employment practice prevailed in the Japanese corporate society, workers’ grievances were normally resolved within the firm. For workers hired under the long-term relations, informal settlements within firms were more reasonable than bringing a lawsuit against the employer. However, corporate downsizing resulted in laid-off workers who did not hesitate to file a complaint in the courts, labor inspection offices or other dispute resolution agencies.

Another reason for the growth in individual disputes is the diversification of the work force. Women, the elderly and foreigners are often employed on fixed-term or part-time contracts, and are dissatisfied with their unstable and inferior working conditions compared to those of regular employees. Since the “community firm” norms which have resolved regular employees’ grievances do not properly apply to those non-regular workers, they are less reluctant to air their complaints in public.

As a result, individual labor cases increased dramatically. In 1991, labor related civil cases, such as claims for unpaid wages and those contesting termination of employment, filed in the district courts (including provisional disposition cases) numbered about 1000. This tripled in 2002 (see

Figure 3: Number of Newly Filed Labor Cases, First Instance

Provisional

Disposition Cases

Regular Civil Cases

92 94 96 98 00 02 04

6

Figure 3). The number of complaints and consultation received by labor administration offices of each prefecture has also increased. For instance, complaints received by the labor administration offices of Tokyo Metropolitan government was 31,712 in 1991, increasing to 52,445 in 2001.

2.3 New Mechanism to Resolve Individual Labor Disputes The above mentioned increase in individual labor cases and grievances arising from individual labor relations put Japan on notice that it needed new mechanism to efficiently resolve individual labor disputes.

2.3.1 2001 Act to Promote Individual Labor Dispute Resolution In response to such surge of individual labor disputes, the

government enacted the Act to Promote Resolution of Individual Labor Relations Disputes in 2001. The prefectural Labor Offices, which are the local offices of the Ministry of Health, Labor and Welfare, started to provide counseling and mediation services. Since the Labor Offices launched such services, the number of complaints received by the Labor Offices has also been increased annually (see Figure 4). If necessary, the Head of the Labor Office may transfer the grievances to the mediation procedures of the Dispute Adjustment Committee [Funso Chosei Iinkai] in the Labor Office. The Dispute Adjustment Committee can provide a mediation proposal but it is up to the parties whether or not to accept it.

Figure 4: Number of Consultation at the Labor Offices

Figure 5: Breakdown of Civil Consultation Cases (FY 2005)

7

2.3.2Judicial Reform and the Proposal by the Labor Study Group Until recently, Japan did not have labor courts. All labor related litigation had to be filed with the ordinary courts where all judges are professional jurists. Neither was there a special procedure for labor litigation. Partly because of this, the number of labor cases in Japan, although increasing, has remained extremely small compared to other countries. The number of labor-related cases newly filed in Japanese district courts (first instance) in 2002 was only about 3,000. This is an exceptionally small number compared with 90,000 in the Netherlands, 160,000 in France, 200,000 in the United Kingdom and 600,000 in Germany. Labor cases in Japan were only one two-hundredth of those in Germany (Table 1).

Table 1: Number of Newly Filed Labor Cases (First Instance) Japan Germany UK France Netherlands

3,168 (2004)

630,666 (2003)

197,365 (2003-2004)

163,218 (2000)

approx. 90,0004 (2004)

Given these circumstances, there were calls for new courts to be established within the judiciary dealing with individual labor disputes. This request was incorporated into the Japan’s large scale judicial reform initiative launched in 1999.5

Struggling with an unprecedented sluggish economy and facing

4 It is not easy to quote the number of labor cases in the Netherlands because there is no labor court and administrative bodies also play similar function. This approximate number is given by Prof. Heerma van Voss and his student’s estimation. The author would like to express his appreciation to their kind calculation and estimation. 5 See Kazuo Sugeno, “Judicial Reform and the Reform of the Labor Dispute Resolution System” 3-1 Japan Labor Review 4 (2006).

8

intensified global competition in the 1990s, Japan adopted a deregulatory policy and embarked on a large-scale legislative reform project. It was thought necessary to relax and repeal “ex ante regulation” by the government and strengthen “ex post regulation” by the judiciary. For this purpose, a more effective judiciary and a larger number of jurists were required.

Thus, the Judicial Reform Council was formed in the Cabinet in July 1999. After two years of deliberation, the Council’s final report, among other things, proposed to introduce a labor conciliation system with expert involvement as well as to deliberate further on whether to introduce a court system similarly with expert involvement or whether to introduce special procedures for labor litigation. Then, as one of ten study groups to give shape to judicial reform plans, the Labor Study Group (Chairperson: Prof. Kazuo Sugeno, Univ. of Tokyo) was established in the Judicial Reform Promotion Headquarters in December 2001.

The study group endured heated discussion and deadlock among its labor and management representatives while considering its agenda, but finally an agreement was reached to introduce a new system named “the labor tribunal system” with the participation of experts in the field of labor. 3 Labor Tribunal System

3.1 Outline and Features of the Labor Tribunal System The Labor Tribunal System is a non-contentious procedure

established in a district court to mediate and, if mediation proves unsuccessful, to adjudicate on individual labor disputes (see Figure 6).6 The judge who was charged with establishing the Labor Tribunal System characterized the new tribunal as providing “triple-S” justice: speedy, specialized, and suitable.7

3.1.1Speed The first feature is the expeditiousness of the procedures. Since the

new tribunal is in principle aimed at overcoming delays in labor litigation, the Labor Tribunal Committee (LTC) which hears the dispute must decide the case within three sessions (LTA Art. 15, Para 2), which means that a filed complaint will be disposed of within three or four months. Hearings are informal and not open to the public, although the LTC may allow observers if appropriate.

To dispose of the case within three sessions, the LTC will clarify the issues of the case and examine evidences in the first session. In the second and third session, the Committee seeks a solution through mediation (Chotei) while continuing to investigate the facts by interviewing witnesses and examining documents. If the parties to the case accept the mediation

6 As for the details of the Labor Tribunal System, see Kazuo Sugeno, “The Birth of Labor Tribunal System in Japan,: A synthesis of Labor-Law Reform and Judicial Reform”, in Liber Amicorum Reinhold Fahlbeck, 573 (Juristförlaget I Lund, 2005). 7 Kazuo Sugeno et al, “Rodo Shinpan Seido 1 nen—Jisseki to Kongo no Kadai [One year of the Labor Tribunal System—Its Performance and Future Challenges], 1331 Jurisuto, 7 (Quoted by Prof. Sugeno) (2007).

9

proposal by the LTC, the agreement shall be written into the record of the court which has the same effect as a court settlement or a finalized court decision.

Source: Japan Institute for Labor Policy and Training, Labor Situation in Japan and Analysis: General Overview 2006/2007, 78

3.1.2Speciality The second important feature of the procedures is the participation of

lay judges with specialist expertise, experience or knowledge of labor relations. The Labor Tribunal Committee (LTC), thus, comprises one professional judge and two lay members, both of whom are experts in labor relations. Although these two experts are recommended by Rengo (Japanese

Figure 6: Overview of the Labor Tribunal System

10

Trade Union Confederation) and Nippon Keidanren (Japan Business Federation), in practice, they must be fair and impartial in the handling of the case. These experts participate in decision making on equal footing with the professional judge member.

3.1.3 Suitability The third characteristic of the labor tribunal procedures is the flexibility

and wide discretion given to the LTC to make such orders as are appropriate to resolve the dispute. If one of the parties rejects the mediation proposal, the LTC will hand down a labor tribunal decision8 (this decision is also called “Rodo Shinpan”). In the decision, the LTC may confirm the rights between the parties, order payment or delivery of property, or specify the measures that would be “appropriate to resolve the dispute taking the judgment of the rights of the parties as well as the situations found in the labor tribunal procedures into account” (Art. 20, LTA). It is notable that the LTC is not limited to determining the merits of the complaints, but may also consider the broader circumstances of the case such as the parties’ desires.

The LTC is not bound to determine the strict rights and obligation of each of the parties, but may order a decision more appropriate to resolve the dispute.9 For instance, it is possible for the LTC to order an employer who unjustly dismissed a worker to pay certain amount of money rather than to nullify the dismissal. Such a monetary remedy is not available in the ordinary courts because, under current Japanese law, remedies for unjust dismissals are limited to nullifying dismissals, ordering reinstatement and payment for wages during the dismissed period. In other words, ordinary courts cannot order payment of money in exchange for the dissolution of the employment contract, but LTC can render such a decision.

3.1.4 Relationship with Regular Civil Procedures Fourthly, the Labor Tribunal Procedures are connected to regular civil

procedures. If either party does not notify the court of the rejection of the labor tribunal decision in writing within two weeks, it becomes binding on both parties in the same way as if it were a court settlement, and is thus enforceable under the Civil Execution Act. If either of the parties rejects the decision and makes a formal notification to that effect, the LTC decision has no effect.

However, if the decision is rejected, the case will automatically be transferred to the regular civil section in the same district court. The case is deemed to have been filed in the court retrospectively from the date when the complaint was filed to the Labor Tribunal. This connection with the regular procedures gives both parties an incentive to settle the case in the Labor

8 The LTC is to render the decision in writing but, if it deems it appropriate, it may notify the decision orally without making any written decision. The content of the oral decision must be written in the record of the court (LTA, Art. 20 Para. 3, 6, 7). 9 Saiko Saibansho Jimusokyoku [Supreme Court Secretariat], Rodo Shinpan Tetsudsuki ni Kansuru Shitsumu Shiryo [Manuals for the Labor Tribunal Procedures], 138 (2006); Kazuo Sugeno et al, Rodo Shinpan Seido [Labor Tribunal System] (2nd. ed.), 40 (2007) ; Ryuichi Yamakawa, “Rodo Shinpan Seido no Rironteki Kadai [Theoretical Issues in Labor Tribunal System], 217 Kikan Rodoho, 9 (2007).

11

Tribunal to avoid the time-delays and costs associated with regular civil procedures.

3.2 Active Utilization of the Labor Tribunal System

The Labor Tribunal System came into operation from April 2006. As expected, many cases were filed with it (see Figure 7). The Labor Tribunal enjoys a strong reputation for its services among litigants, lawyers and members of labor tribunal committees. The average period for the hearing is less than 2.5 months (74.2 days).10 Therefore, the tribunal has achieved its aim of effecting speedy justice. Labor, management and their lawyers have also approved these expedited procedures.

Figure 7: Number of Newly Filed Labor Cases, First Instance

2404 2480 24101983 2174

738 652 619

466 387

8771494

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2003 2004 2005 2006 2007

Labor TribunalCases

ProvisionalDisposition Cases

Civil Cases

Of the 877 cases filed to Labor Tribunals in the first year (from April 2006 to March 2007), 644 (70.1%) resulted in the acceptance of the mediation proposal and 162 (17.6%) reached the stage of a formal labor tribunal determination. Among the 162 cases resulting in labor tribunal decisions, 95 cases (58.6%) were subject to an objection by one or more of the parties and were transferred to the regular civil procedures, but the other 67 cases (41.4%) concluded with the tribunal decisions since no objection was raised. Considering other settled cases, such as those withdrawn prior to or during the hearing, nearly 80 % of the filed cases were resolved through the Labor Tribunal procedures.11 All in all, the Labor Tribunal system has had a highly successful debut. 4 Significance of the Lay Judge Participation in the Labor Tribunal

10 Akihiko Ohtake, “Kaishi-go 1 nen wo heta Rodo Shinpan Seido no Genjo to Kadai [The Current Situation and Future Issues after One Year Operation of the Labor Tribunal System]”, 217 Kikan Rodo-Ho 53 (2007). 11 Ohtake, supre note 10, 50.

12

System 4.1 High Reputation of Lay Judges

Apart from family and civil in-court mediation services, lay judges are unprecedented in Japan. Therefore, professional judges were initially skeptical about their deployment, in particular in the field of labor relations where ideological conflicts are, they thought, conspicuous and irreconcilable. One judge, head of the Tokyo District Court, Labor Division, candidly stated: “Professional judges could not imagine the kind of people the Labor Tribunal Lay members would be before the implementation of the Labor Tribunal System. However, we have come to recognize that they are long on common sense and very industrious.” 12

Since the lay members in Labor Tribunal are recommended by Rengo (Japanese Trade Union Confederation) and Nippon Keidanren (Japan Business Federation), they are or used to be officials of enterprise-based labor unions (on the labor side) and directors or officials in charge of labor relations or human resource management (on the management side). The concern whether they would be capable of serving as impartial, fair adjudicators proved unfounded. Practicing lawyers stated that, in the Labor Tribunal session, they could not recognize which member represented labor and which represented management since the seat arrangement were not fixed and they kept their neutrality and impartiality when questioning the parties.13

Professional judges who worked with these lay members have highly evaluated their quality and ability to identify the facts and issues of the case, as well as find an appropriate resolution to the dispute.14

4.2 High Performance in Resolving Disputes

As mentioned above, four out of five complaints filed have been resolved within the Labor Tribunal system. Such a high rate of resolution has largely been accomplished due to the effective utilization of lay members’ expertise.

4.2.1 Expertise effective in Finding Key Facts and Issues of the Disputes

Since the LTC must dispose a filed case within the three sessions, finding the key points to solve the dispute is vitally important. The lay members have fully exerted their expertise in finding the crucial facts and issues which may have escaped the notice of the professional judge or even the representing lawyers. In one case, for instance, the employer contended that the firm had a briefing session for employees to explain that the introduction of the annual salary system would entail the change of open-ended labor contracts into fixed-term contracts. The lay member requested the submission of the handouts used at that briefing because it was

12 Sugeno et al, supra note 7, 30 (statement by Judge Koichi Nanba). 13 Sugeno et al, supra note 7, 8 (statement by Attorney Kenji Tokuzumi) and 27 (statement by Attorney Makoto Nakamachi). 14 Ohtake, supra note 10, 37; Sugeno et al, supra note 7.

13

unthinkable that such a meeting would be conducted without any handouts. Such practical common sense has functioned very effectively in uncovering crucial facts.15

The same applies to clarification of the issues in the disputes and to forming an appropriate solution of the case.

4.2.2 Persuasiveness of the Mediation Proposals An important factor that explains the high resolution rate of the labor

tribunal cases is the persuasiveness of the mediation proposal. Almost all mediation proposals are unanimously agreed upon by the three members of the LTC. Such a proposal adopted by both labor and management sides is highly persuasive to the parties.

The content of such mediation proposals can be more flexible than a decision of an ordinary court and more responsive to the actual circumstances of the dispute. In shaping such contextual proposals, lay members’ knowledge and experiences are both helpful and useful.

Furthermore, lay members are adroit at persuading the parties to accept the mediation proposals.

4.3 From “Precise Justice” to “Resolution-oriented Justice”

The high resolution rate in the Labor Tribunal is not solely attributable to the lay member participation. The mechanism of the Labor Tribunal combined with the lay members’ expertise has enabled such high performance of the Labor Tribunal System. The third feature of the Labor Tribunal System, namely the flexible and wide discretion given to the LTC in rendering a labor tribunal decision, paves the way for the active utilization of the lay members’ expertise and experience. Combined with the first feature, the speediness of the procedure, both the parties and LTC prioritize the resolution of the disputes (“resolution-oriented justice”) over making precisely elaborate legal decision though technically precise, strictly formalized procedures (“precise justice”). The speediness of the procedure induces the parties to express their real intention (hon-ne) to resolve the dispute, rather than resorting to a legal position (tatemae). This is especially true in dismissal cases. In ordinary civil procedures, a plaintiff or a dismissed worker must assert the invalidity of the dismissal and reinstatement, even if he or she does not want to be re-hired by the company. The respondent or the employer, in the same manner, must contend the validity of the dismissal, even though it may fully intend to pay compensation for the dissolution of the employment contract. In the Labor Tribunal, the LTC has a power to order a monetary settlement when both parties want to resolve the dispute in this way. Another example of the resolution-oriented justice of the Labor Tribunal is the calculation of an unpaid overtime premium. Under ordinary civil procedures, precise calculation of unpaid wages is indispensable and it 15 Sugeno et al, supra note 7, 27 (statement by Attorney Kenji Tokuzumi).

14

requires time-consuming procedures. By contrast, in the Labor Tribunal, if the Committee found a certain amount of unpaid overtime premium in a specific month, it can exercise its discretion by applying a similar calculation to the other period. 16 The aim of the procedure is not to precisely clarify the right and obligations of each of the litigated parties but to seek an appropriate resolution of the dispute considering each parties’ rights and obligations. Such a resolution-oriented justice introduced under the Labor Tribunal System combined with the work-site based common sense provided by the lay members seems to enable the effective functioning of the new dispute resolution system.

4.4 Relationship between a Mediation Proposal and a Labor Tribunal Decision

In the second or third session, LTC will propose a mediation. This mediation proposal is not binding, and if one of the parties rejects the proposal, the LTC will hand down a labor tribunal decision. This decision is also not binding. If one of the parties submits an objection, the decision loses its effect and ordinary civil procedure will commence. Why does the Labor Tribunal adopt these two, not-legally binding steps? Judge Nanba first deemed a mediation proposal to be an interim and conciliatory decision whereas the labor tribunal decision is adjudicative in nature. Thus, his committee handed down a labor tribunal decision different from the mediation proposal. It is natural that the party who thought the decision was unfavorably changed from the mediation proposal opposes the labor tribunal decision. Faced with these objections, Judge Nanba realized that three sessions in the Labor Tribunal would all be in vain. He then changed his mind and endeavored to make the mediation proposal and labor tribunal decision the same or similar, which decreased the parties’ objections. When parties know that a rejection of the mediation proposal will only result in the labor tribunal decision of the same purport and without too much prospect of a better outcome, they tend to settle the dispute at the mediation stage without requesting the tribunal decision. In fact, attorneys persuade the parties to accept the mediation proposal by explaining the implications of an objection. This practice explains the high acceptance rate of the mediation proposal (about 70%). On the other hand, however, if one of the parties is not satisfied with the mediation proposal and the same content tribunal decision, he or she will reject both. In fact, among the 162 cases seeking for labor tribunal decisions, 95 cases (58.6%) were objected and transferred to the regular civil procedures. Having said that, about 40% of the labor tribunal decisions are accepted. Most of them are estimated to be the same in effect as the rejected mediation proposals. Why do similar proposals result in different

16 Yamakawa, supra note 9, 10 footnote 21, Sugeno et al, supra note 7, 11 (statement by Attorney Kenji Tokuzumi).

15

responses? Judge Nanba explains this by the difference in the psychological impact of the mediation proposal and labor tribunal decision on the parties. To make the mediation proposal effective, the parties must express their positive intention to accept the mediation proposal. It is not easy for the disputing parties to proactively express such an intention. By contrast, to make the labor tribunal decision effective, no action is needed. Even though the decision is identical to the rejected mediation proposal, the parties who deem the decision to be within acceptable limits tend to make no objection and accept the decision. This is a very interesting observation on the behaviors of disputing human beings.

4.5 Educational Effect of the Labor Tribunal System The participation of lay members in the court judicial procedures has educational benefits for both lay members and professional judges.17 First, most lay members are active union leaders and active personnel in charge of labor relations or human resource management. Therefore, their experience as a lay member enforcing labor law has a feedback effect on their activities in labor and employment relations. In other words, lay member participation in the court will further embed the rule of law in Japanese workplaces. Second, professional judges also learn about worksite common sense through their involvement in labor tribunal activities. This will make their decisions handed down in the regular civil division more attuned to the realities of the modern workplace. Furthermore, the expedited procedures and resolution-oriented justice experienced in the labor tribunal may have an impact on other court procedures. 5 Conclusion This paper has analyzed labor and management participation in norm establishment process focusing on the newly created Labor Tribunal System with lay judges. The author would like to conclude this article by pointing out two impacts of the Labor Tribunal System. First, the Labor Tribunal System has triggered the reconsideration of justice in employment relations. The Labor Tribunal System was needed to resolve increasing individual disputes swiftly and properly. Speediness is vital because slow justice is no justice. This is especially true of employment disputes. The two year experience of the Labor Tribunal has reconfirmed that speediness minimizes the loss for both labor and management sides and greatly facilitates dispute resolutions. Thus, the three-session labor tribunal is welcomed by both sides to the dispute. Such expedited resolution has been made possible by utilizing lay members’ expertise and worksite common sense, and also by giving the tribunal wide discretion in ordering decisions appropriate to resolve the dispute. Where appropriate, the tribunal may depart

17 See Sugeno et al, supra note 9, 50.

16

from a strict assessment of the rights and obligations of each of parties. This implies the change of the notion of justice at courts. This paper emphasized this by the shift from “precise justice” to “resolution-oriented justice.”18 The other point worth mentioning is the significance and impact that Labor Tribunal has had on traditional labor law and the substantive labor law. Traditional labor law envisages two guardians for workers: labor inspectors and labor unions. The state establishes minimum labor standards and violations are inspected by the government or labor inspectors. More favorable working conditions than minimum standards have been expected to be established through collective bargaining between employers and labor unions. However, the governmental inspection system is inefficient and union density continues to decrease. Thus, the traditional labor law model has become dysfunctional. Individual workers need a mechanism to enforce their right other than by relying on labor inspectors or labor unions. In this sense, the Labor Tribunal System and other individual labor dispute resolution systems have become the new guardians of working conditions and rights. However, the establishment and strengthening of various dispute resolution systems have also exposed the lack of substantive law regulating individual labor relations. Of course, case law also provides rules governing individual labor relations, but unwritten case law rules have problems in transparency. Thus, in order to clarify the substantive rules governing employment relations, the Labor Contract Act was enacted in 2007 and put into force from March 2008. However, the current content of the Labor Contract Act is very poor because of political disagreement between labor and management. Therefore the development of both procedural and substantive labor law is an important challenge that the current Japanese law faces.

18 In this respect, the reconsideration of justice in labor relations will lead us to re-examine the time-consuming but scrutinizing procedures at the labor relations commissions. In spite of the establishment of the special administrative organ with tripartite members, the labor relations commission might not have realized dispute-oriented justice.