Daegu court can proceed to sell off Japanese assets
Seoul and Tokyo are looking at an extended period of rocky relations after a Daegu court Tuesday finished serving notice on Nippon Steel that its assets in Korea would be seized to compensate wartime forced labor victims.
Yoshihide Suga, Japan's chief cabinet secretary, said in a press conference Tuesday that the selling off of the steelmaker’s assets “would lead to a serious situation that must be avoided” and that Tokyo plans to “respond resolutely with all options in sight.”
In early June, the Pohang, North Gyeongsang, branch of the Daegu District Court began serving notice to Nippon Steel that the court had ruled to seize the company's assets.
The court served notice through public notification because the Japanese Foreign Ministry did not deliver court documents to Nippon Steel. The documents were posted on the court's website two months ago and were considered served as of Tuesday. The court is now able to sell off the assets of the Japanese company.
The assets seized by the Daegu court last year are 194,794 shares in PNR, a rotary hearth furnace technology joint venture by Nippon Steel and Korean steelmaker Posco. The shares are worth around 973 million won ($814,000).
In a statement Tuesday, Nippon Steel said it plans to immediately appeal the Daegu court ruling.
The Korean Supreme Court made a landmark ruling on Oct. 30, 2018, ordering Nippon Steel & Sumitomo Metal, renamed Nippon Steel last year, to pay 100 million won each to Korean victims of Japanese forced labor during World War II. It made a similar ruling on Nov. 29, 2018, against Mitsubishi Heavy Industries. Korea’s top court acknowledged the illegality of Japan’s 1910-45 colonial rule and recognized that the individual’s right to compensation has not expired.
The Japanese companies refused to comply, and plaintiffs began the legal process to seize their assets in Korea.
Tokyo maintains that all compensation issues related to colonial rule were resolved through a 1965 treaty normalizing bilateral relations.
Despite clearing the legal procedures, the actual selling of the company’s assets is not expected to take place right away.
Nippon Steel has until Aug. 11 to file the appeal.
Nippon Steel in a statement reported by Nikkei Asian Review Tuesday said that the company will “continue to respond in the appropriate manner, considering diplomatic negotiations by both the Japanese and South Korean governments.”
Tokyo has been warning the liquidation of assets of Japanese companies would lead to retaliatory measures.
In July 2019, Japan implemented export restrictions impacting Korea's semiconductor and display industries and later removed Korea from its so-called white list of most trusted trading partners. While Japan didn’t officially acknowledge it, the move was seen as retaliation for the Korean forced labor rulings.
Should the liquidation process take place, Tokyo could retaliate diplomatically, economically, or through international law. Such measures could include increased tariffs, stricter visa restrictions, financial sanctions, suspension of remittances, seizure of Korean assets in Japan and the recalling of the Japanese ambassador to Seoul, according to Japanese media reports.
Addressing concerns of Japan’s potential retaliatory measures, Kim In-chul, spokesman of the Korean Foreign Ministry, said in a press briefing Tuesday, “We are leaving all leaving all possibilities open and reviewing ways to respond.”
He noted that the liquidation process “is a judicial procedure and not a matter for the government to comment on.”
But he added, “Our government, taking into consideration respect for the decision of the judicial branch, realization of the rights of the victims and Korea-Japan relations, holds an open position toward discussions to resolve the issue in a reasonable manner and is listening to opinions from across the board to continue such efforts.”
In response to the export restrictions, Seoul decided to terminate its bilateral General Security of Military Information Agreement (Gsomia) intelligence-sharing pact with Tokyo last August but conditionally suspended this decision on Nov. 22 in favor of dialogue with Japan.
Signed in November 2016, Gsomia was renewed automatically every year unless either of the two countries decided to scrap the pact.
Spokesman Kim on Tuesday left open the possibility that Gsomia can be terminated again and urged Japan to lift its export restrictions on Korea.
“Gsomia can be terminated by our government at any date, and the concept of automatic renewal annually is currently not applicable,” he told reporters.
BY SARAH KIM [email@example.com]
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