Japan's Foreign Minister Taro Kono answers questions at the Foreign Ministry in Tokyo on October 31, 2018, after a South Korean court ruling ordering Japanese firm Nippon Steel to pay compensation for wartime forced labor on October 30. Photo: AFP/Kazuhiro Nogi

News this week that South Korea’s Supreme Court upheld a lower court’s decision that a Japanese firm owes compensation to four South Koreans forced to labor for the Imperial Japanese regime during World War II was a bombshell that has the potential to rock already fragile relations between Seoul and Tokyo.

The four South Koreans who served as forced laborers for Nippon Steel and Sumimoto Metal Corp (NSSM) were granted 100 million won – about US$88,000 – in compensation. Predictably, both the Japanese company as well as various senior officials in the Japanese government have reacted unfavorably and are in strong opposition to the ruling.

Japan claims that all such matters were settled by the 1965 Treaty on Basic Relations that established diplomatic ties between Seoul and Tokyo. Seoul’s argument that individuals still have the right to sue Japanese firms is on very shaky ground.

History speaks volumes

Tokyo provided Seoul with the equivalent of $500 million in soft loans and $300 million in grants as part of that treaty, the amount being calculated, in part, on those South Koreans who had been forced into labor for Imperial Japan.

The total amount of compensation demanded by South Korea at that time was just over $364 million. That amount was calculated at the rate of $200 per surviving laborer, $1,650 for the death of a laborer and $2,000 per injured laborer.

Tallies provided by Seoul during negotiations of the treaty were that there were just over 930,081 laborers who survived, 77,603 laborers who had died and 25,000 laborers who had been injured.

What the South Korean government and its Supreme Court were overlooking now is that the money intended for those victims or their surviving families was instead diverted by then-South Korean President Park Chung-hee, who used it to build “the Miracle on the Han” – the infrastructural foundation for the South Korea we know today.

Righteous indignation

Worse, current South Korean President Moon Jae-in has stated that the 1965 settlement did not preclude individuals from suing still-extant Japanese firms for “consolation money,” something not covered by the 1965 treaty. That is a spurious claim designed to obfuscate the fact that Seoul was initially given the funds for forced labor victims, but that the government chose to use the money elsewhere. Japan, of course, knows this.

If all that is not enough, the plaintiffs could petition the courts to seize the South Korean assets of NSSM if the company does not pay up. This would have a chilling effect on Japanese investment in South Korea and would further damage relations between the two countries – perhaps even irreparably.

Japan is understandably upset because it is Tokyo’s position that all this was settled via that 1965 treaty between the two nations. Though it could be argued that Japan has not fully owned up legally and morally to its infamous past, regarding this fiduciary action, Tokyo is quite correct.

Seoul was given the funds for the forced laborer issue and it is South Korea that is responsible for settling those claims for “consolation money.”

A possible way out

Is there any resolution in sight? One easy solution would be to tap into that $8.8 million that Japan gave South Korea after a December 2015 apology to settle the comfort women issue.

Due, in part, to mounting public sentiment against the hastily-reached settlement, Moon, who was elected in 2017, rejected that money on the grounds that the few remaining comfort women had no say in the agreement and that Japanese Premier Abe Shinzo did not admit legal or moral responsibility for Japan’s inglorious past.

Since then, the funds have been frozen and Seoul has used its own money to compensate the remaining comfort women. However, in view of the forced labor petitioners seeking only “consolation money” – though an apology as well would be nice – those rejected comfort women funds could be re-purposed.

After all, the money did come from Japan. And after all, it was South Korea that hijacked the original funds for forced labor compensation more than 50 years ago.

Seoul should work with Tokyo to sort out the legal and financial logistics of such a maneuver and then craft some resourceful language that would satisfy both the forced laborer survivors as well as Japan. Skillful negotiations and diplomacy should be able to come up with something.

If not, and if the current decision stands, with Japanese firms refusing to comply, South Korean courts could seize NSSM’s peninsular assets. That would ignite a diplomatic firestorm and a possible international justice system showdown, ruining what little cooperation and goodwill remain between the two countries.

Better to use that sequestered money for this, and for any future forced labor compensation suits.

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