S. Korea freezes Japan company assets over forced labour spat - EcoFinBiz Blog

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S. Korea freezes Japan company assets over forced labour spat

SEOUL, Korea, Republic Of — A South Korean court said Wednesday it has decided to freeze the local assets of a Japanese company involved in compensation disputes for wartime Korean labourers, in an escalation of diplomatic brawls between the Asian neighbours.

Japan quickly called the asset seizure “extremely regrettable” and said Tokyo will push for talks with Seoul on the issue.

In a landmark ruling in October, South Korea’s top court ordered Nippon Steel & Sumitomo Metal Corp. to pay 100 million won ($88,000) each to four plaintiffs forced to work for the company when Japan colonized the Korean Peninsula from 1910-45.

But the company had refused to follow that ruling, siding with Japan’s long-held positon that all colonial-era compensation issues were settled by a 1965 treaty that restored diplomatic relations between the two governments. Japanese officials said they could take the issue to the International Court of Justice.

On Wednesday, the Daegu District Court’s branch office in the southeastern city of Pohang said it had approved a request by lawyers for the plaintiffs to seize Korean assets held by the Japanese company as it was refusing to compensate the former labourers.

The Japanese company holds 2.34 million shares, or around $9.7 million, in its joint venture in Pohang with South Korean steelmaker POSCO.

In Tokyo, Chief Cabinet Secretary Yoshihide Suga said that Japan has “grave concern over the development.” Suga was expected to hold a meeting of top officials later Wednesday to discuss how to respond.

Seoul’s Foreign Ministry said it has no immediate comment on Suga’s statement.

South Korea’s Yonhap news agency, citing an unidentified official at the Pohang office, reported the district court decided to freeze 81,075 of the 2.34 million shares, not the whole shares. Yonhap said the asset freeze will become effective after a related court document is delivered to the joint venture.

The district court said it couldn’t immediately confirm the Yonhap report.

The asset freeze could further chill diplomatic ties between South Korea and Japan, which are both key U.S. allies in the region. The October ruling was the first of its kind, and in November South Korea’s Supreme Court ordered a second Japanese company, Mitsubishi Heavy Industries, to compensate 10 former Korean workers, drawing strong criticism from Japan.

When South Korea and Japan signed the 1965 treaty, South Korea received more than $800 million in economic aid and loans from Japan and used the money to rebuild its infrastructure and economy devastated by the 1950-53 Korean War. In its October and November verdicts, the South Korean Supreme Court said the 1965 treaty cannot prevent individuals from seeking compensation for forced labour because Japanese companies’ use of such labourers were illegal acts against humanity that were linked to Tokyo’s colonial rule and its war of aggression.

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Associated Press writer Mari Yamaguchi in Tokyo contributed to this report.

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