Seoul and Tokyo have been engaged in a war of words for more than 20 years over Japan’s colonial rule on the Korean Peninsula from 1910 to 1945, but the latest turn in the saga suggests the dispute could now extend beyond the diplomatic, media and social spheres, and into the economic sector.

The trend is repetitive. Japan issues apologies and compensation. Korea responds that their apology is insincere or compensation inadequate, and lambasts Japanese public figures for actions that indicate insincerity, such as visits to the controversial Yasukuni Shrine to Japan’s war dead (where war criminals are also enshrined).

The latest flare-up is a spiraling feud over a series of South Korean court rulings over the past two months asserting that Japan should pay compensation to Koreans dragooned into forced labor in Japan during World War II.

Tokyo has responded by saying that all compensation issues were settled in a diplomatic normalization treaty and a financial package paid in 1965.

Adding fuel to the flames, Seoul has unilaterally abrogated a deal struck between the two capitals in 2015 over “comfort women,” saying the deal cannot hold as it did not include the wishes of the victims. Tokyo furiously insists that the deal must be adhered to.

Assets to be seized?

On October 30, South Korea’s top court ordered Nippon Steel and Sumitomo Metal Corp to pay compensation to four plaintiffs who say they were forced to work for the company’s predecessor at the end of the World War II. One month later, it issued a similar judgment against Mitsubishi Heavy Industries.

Two Korean attorneys involved in the successful suits on behalf of Korean forced laborers, journeyed to Japan this week, where they met local media. They also tried to visit the headquarters of Nippon Steel to open a dialogue, but said they were turned back at the reception center.

Kim Se-in, one of the attorneys, told reporters he hoped to negotiate with the concerned parties this month. If that is not successful, the only option left open to win monetary compensation on behalf of their clients is to seize assets of companies in Korea owned by Nippon Steel or its subsidiaries, he said.

The attorneys are eyeing the assets of a Nippon Steel joint venture with Korean-owned steelmaker POSCO, as well as intellectual property that the company owns in South Korea.

Against this background, the Japanese government is considering seizing assets of Korean firms in retaliation, according to the Jiji News agency. However, that would be a “last resort,” according to the agency. A more likely next step for Tokyo would be to refer the case to the International Court of justice.

Festering issues

The plaintiffs argued that the industrial giants had lured workers from Korea to Japan to work producing munitions or digging coal without being paid, making them de facto slave labor.

In the Mitsubishi case, the court awarded five plaintiffs 80 million won ($70,000) in damages to each of five men, only one of whom was an actual survivor of the forced labor. The rest were family members of deceased laborers. Similar damages were awarded to plaintiffs in the Sumitomo and Nippon Steel Corps.

The original claims for compensation were filed nearly 20 years ago, in 2000. An effort to win compensation through Japanese courts failed after the Japanese Supreme Court ruled in favor of Mitsubishi in 2008.

The rulings drew fervent protests from the Japanese government. Chief Cabinet Secretary Yoshihide Suga demanded that the Korean courts retract the decisions and said that Tokyo is debating “all options.”

“The rulings not only impose unfair damages to the Japanese companies but fundamentally overturn the legal foundations of friendly and cooperative relations Japan and South Korea have built since 1965,” Foreign Minister Taro Kono said.

He was referring to the 1965 treaty through which Japan and Korea normalized diplomatic relations. Under that agreement, Tokyo paid $800 million in direct aid and soft loans, to serve as compensation for Japan’s 35-year occupation of Korea. The treaty stipulated that issues relating to property claims were settled “completely and finally.”

However, the Korean government at the time did not pass on full – or,  in some cases, any – compensation to victims of colonial rule. Rather, it used most of the Japanese funds to kickstart industrial development.

Nevertheless, the Korean court ruled that the plaintiffs’ rights as victims of forced labor could seek compensation for their injuries, despite the wording of the treaty.

Their lawyers dismissed the notion that the 1965 treaty prevented survivors of forced later demanding compensation. “The compensation for forced labor was not included in the agreement,” one of the lawyers, Lim Ga-song, said.

However, questions do hang over the issue, and over the responsibility of Seoul toward victims.

In 2005, the Korean government released a range of documents related to the 1965 treaty. They showed that Seoul had, in fact, demanded US$364 million for forced laborers, with compensation set at a rate of $200 per survivor, $1,650 per death and $2,000 per injured person.

There was a public furor in Korea when the papers were made public, particularly when it was found that only 300,000 won (under $300 at current rates, and far far less in the 1960s) had been offered to the families of the dead – well short of the $1,650 Tokyo had paid to Seoul.

‘Comfort women’ deal

The forced labor issue is not the only one which the two capitals are fighting about. Earlier this year, Tokyo pulled out of a Korean naval review after Seoul demanded that the visiting ship not display the “wartime” rising sun flag (its naval ensign since well before the war).

A more bitter issue is the “comfort women” – a euphemism for women in Korea and throughout Japan-occupied Asia who worked – often after being tricked, coerced or even forced – in wartime brothels.

In 2015, Seoul and Tokyo agreed to a “final and irreversible” solution to the issue, under which Japanese Prime Minister Shinzo Abe published a public apology and Tokyo paid compensation. That deal was reached between Abe and the now-discredited Park Geun-hye administration, which collapsed after Park was impeached in early 2017, paving the way for the current Moon Jae-in administration to take power in Seoul.

Early this year, the Moon administration made clear it would not be bound by the terms of the 2015 agreement, saying it wanted further apologies from Tokyo. That drew a protest from Tokyo, which wanted the deal to be maintained.

Then, on November 22, Korea’s Foreign Minister Kang Kyung-wha formally hammered the final nail into the agreement’s coffin, saying that Seoul was dissolving the “Reconciliation and Healing Foundation.” The foundation was the centerpiece of the deal, as it was the receptacle of the compensation money Tokyo had paid.

And while the majority of ‘comfort women’ still living at that time accepted the deal in 2016, a vocal minority furiously protested against it. They said they had not been consulted during the inter-governmental negotiations, and refused to accept the money.

According to Seoul, 5.8 billion won ($5.1 million) remains in the foundation’s funds. Some 4.4 billion won was provided to 34 of the 47 victims who were alive when the agreement was signed and to 58 of the 199 families of deceased victims.

Tokyo urged Seoul to stick to the agreements as a matter of trust.

“If international pledges are broken then forging ties between countries becomes impossible and as a member of the international community we urge South Korea to act responsibly,” Abe told reporters on the same day that the South Korean government announced it was dissolving the foundation.