Recent South Korean court rulings ordering Japanese firms to compensate Koreans who were forced to perform labor for them during the war have cast a shadow on already strained bilateral ties.

In July, the Seoul High Court ordered Nippon Steel & Sumitomo Metal Corp. (NSSMC) to pay 100 million won (¥9.5 million) to each of four plaintiffs, becoming the first South Korean court to order a Japanese firm to pay compensation for wartime labor. In a separate lawsuit, the Busan High Court ordered Mitsubishi Heavy Industries Ltd. to pay 80 million won to each of five plaintiffs as compensation for the conscripted labor they performed during Japan’s 1910-45 colonial rule of the Korean Peninsula.

The two firms appealed the rulings and the South Korean Supreme Court is expected to rule on the cases this year.

In November, the Gwangju District Court ruled in favor of the plaintiffs and ordered MHI to pay them 150 million won each.

Following are questions and answers on the lawsuits and the issue of wartime compensation:

Who are the plaintiffs?

The plaintiffs include former forced laborers or their deceased relatives. The laborers were brought to Japan after the Korean Peninsula was annexed. They are or became South Korean nationals after Korea was split up after World War II.

The plaintiffs, or their kin, claim they were forced to labor at Japanese companies, including a Mitsubishi machine factory, in severe conditions and with little pay.

In addition to the two cases pending before the Supreme Court, there are four others that were filed by or on behalf of former conscripted laborers targeting Japanese firms, including the case before the Gwangju District Court. Others are being prepared by groups supporting the former laborers.

Some of the plaintiffs had filed similar lawsuits in Japan that were dismissed by the Supreme Court in 2003 and in 2008.

The South Korean government recognizes over 220,000 Koreans as having been conscripted laborers during Japan’s colonial rule.

What is Japan’s stance on redress for wartime forced labor?

Tokyo maintains that all individual claims were settled by the 1965 treaty that normalized relations between Japan and South Korea.

Under the treaty, Japan provided $500 million — $300 million in grants and $200 million in loans — as economic aid to South Korea. With the treaty, individuals lost the right to demand compensation for events that happened on or before Aug. 15, 1945.

The $500 million, however, was mostly used for economic development in South Korea, including construction of infrastructure. Individuals thus received little in reparations, pundits say.

What about Seoul?

The South Korean government maintains the same view as Tokyo — that individual compensation claims for conscripted labor were settled by the 1965 treaty.

Although the government said in 2005 that the treaty does not cover Korean victims of wartime sexual slavery or the Hiroshima and Nagasaki atomic bombings, its position has been that the treaty covered forced labor during the war.

Seoul and groups working on behalf of the forced laborers plan to establish a foundation to provide financial support to the victims and their kin, according to Kyodo News. The South Korean government has allocated 2 billion won in the fiscal 2014 budget for the foundation’s operating fees, it said.

South Korean steel giant Posco, which received funds from the $500 million handed over by Japan, decided to contribute 10 billion won to the foundation, Kyodo said.

So why did the South Korean courts order Japanese firms to compensate the plaintiffs?

South Korean lower courts originally dismissed the plaintiffs’ claims, which were filed in 2000 and 2005.

But the tide turned in May 2012, when the Supreme Court reversed its previous decisions, ruling that the right of former conscripted laborers and their kin to seek unpaid wages and compensation was not invalidated by the 1965 treaty.

The Supreme Court sent the cases back to the high courts, ordering them to resume deliberations.

Given the Supreme Court’s order, the high courts in Seoul and Busan deliberated and ruled in favor of the plaintiffs in July. In its ruling, the Seoul High Court said NSSMC committed crimes against humanity by joining hands with the Japanese government to mobilize forced labor for pursuing a war of aggression and the illegal colonial rule of the Korean Peninsula.

Some experts attribute the apparent anti-Japanese rulings to a generational change in the judges. Many were born in the 1960s and participated in the democracy movement.

If the Supreme Court upholds the lower court rulings on compensation, will the companies comply with the rulings?

Both companies have only said they maintain the same stance as Tokyo that wartime compensation related to Korean workers was settled by the treaty.

In August, the media reported that NSSMC plans to pay up if the Supreme Court upholds the Seoul High Court’s ruling. Following the reports, the steel maker released a statement saying the ruling is wrong and that it will demonstrate this in the Supreme Court.

What happens if the firms fail to comply?

The court may seize the companies’ assets in South Korea, said Naoya Okuwaki, a professor at Meiji University’s law school.

Neither Mitsubishi nor NSSMC have production bases in South Korea, but NSSMC reportedly has accounts receivable and holds shares in a South Korean firm.

It would therefore be much cheaper for NSSMC to pay the compensation than lose its assets in South Korea, experts say.

The government and business lobbies are reportedly asking the two companies to reject any orders to pay compensation because doing so will contradict Tokyo’s diplomatic stance.

The Sankei Shimbun reported in November that a Foreign Ministry official told his counterpart in Seoul that Japan may consider legal action, such as filing a complaint with the International Court of Justice, if the Supreme Court rules against the companies.

How might the cases influence bilateral ties?

They may damage relations further and cause economic fallout as well, experts said.

Fearing the issues could influence economic ties, three major Japanese business lobbies, including the influential Keidanren and the Japan-Korea Economic Association, issued a joint statement in November saying that the compensation claims against Japanese corporations could damage good economic relations between the two nations, and urged the governments and business communities of the two to work together to resolve the issue.

The economic damage could be huge, considering that Japan was South Korea’s second-biggest trade partner in 2012, and that Japanese investment in South Korea nearly doubled in 2012, according to Foreign Ministry statistics.

The Weekly FYI appears Tuesdays. Readers are encouraged to send ideas, questions and opinions to hodobu@japantimes.co.jp

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