A South Korean court that ordered the seizure of Japanese steelmaker Nippon Steel Corp. assets in the country in connection with a wartime labor compensation case has rejected an appeal by the firm, the Yonhap news agency reported Monday.

The decision is not final, however, because by law the company’s appeal will be further considered by a higher court under the three-tiered judicial system stipulated for such legal processes.

According to local media, an appeal process like the one involving Nippon Steel normally takes several months to reach its conclusion.

The possible liquidation of the company’s assets in South Korea carries the risk of further fraying ties between Japan and South Korea, already mired in feuds stemming from the former’s colonial rule of the Korean Peninsula from 1910 to 1945.

The Daegu District Court’s Pohang branch received the company’s “immediate appeal” on Aug. 7 and decided last Thursday that it would not accept it due to the absence of “grounds,” according to Yonhap.

The case will now be considered at the Daegu District Court.

The court’s order to seize some of Nippon Steel’s assets went into effect on Aug. 4, drawing closer to liquidation of the assets.

The order stems from an October 2018 Supreme Court ruling that found four Korean men were forced to work for Japan Iron and Steel Co., Nippon Steel’s forerunner, in the 1940s.

The company was ordered to pay the plaintiffs 100 million won (¥9 million) each in damages. But it refused to pay, prompting the plaintiffs to seek seizure of its assets.

Japan has taken the position that the issue of claims stemming from its colonial rule of the peninsula was settled under a bilateral accord signed alongside a 1965 treaty that established diplomatic ties.

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