South Korea’s Top Court Rules Japanese Company Must Pay Wartime Compensation

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SEOUL, South Korea — South Korea’s Supreme Court ordered a Japanese steelmaker on Tuesday to compensate Korean men forced to toil in its factory for Japan’s World War II efforts, a landmark ruling that threatened to intensify friction between America’s two key allies in Asia.

The judges upheld a lower-court ruling that Nippon Steel & Sumitomo Metal must pay 100 million won, or about $88,700, to each of four South Korean men who said they were subject to forced labor for the company between 1941 and 1943. Korea was a Japanese colony from 1910 until Japan’s surrender in 1945.

The case has been closely followed in both South Korea and Japan, which have been locked in highly sensitive territorial and other disputes rooted in the colonial era. Japan insists that all matters concerning allegations of forced labor were settled under agreements that established bilateral diplomatic ties in 1965.

But on Tuesday, the South Korean court ruled that those deals should not impede individual victims’ right to seek redress.

If the Japanese company refuses to pay the compensation, the plaintiffs and their families could ask local courts to seize its assets in South Korea. The verdict could also open the floodgates for other victims and their families to file class-action lawsuits against Nippon Steel & Sumitomo Metal and other Japanese companies accused of capitalizing on forced labor.

“I am the only one still alive to see this day come,” Lee Chun-shik, 94, one of the plaintiffs, told reporters outside the courthouse on Tuesday.

Nippon Steel & Sumitomo Metal called the court’s decision “deeply regrettable” and said it contradicted the 1965 agreement not to raise claims that “arose during wartime.”

The company “will carefully review the decision of the Supreme Court of Korea in considering its next steps, taking into account the Japanese government’s responses on this matter and other factors,” it said in a statement.

Prime Minister Shinzo Abe of Japan called the ruling “an impossible judgment in light of international laws.”

The ruling “overturns the legal basis of the friendly cooperative relationship between Japan and South Korea,” said the Japanese foreign minister, Taro Kono, calling the decision “extremely regrettable and absolutely unacceptable.”

“In case appropriate measures are not immediately taken, Japan will make a resolute response with all possible options in sight, including bringing it to the international court,” Mr. Kono added.

South Korea indicated that it wanted to avoid major diplomatic fallout from the ruling.

Prime Minister Lee Nak-yon said the government “respects” the ruling, promising efforts to “heal the pain of the victims as quickly and as much as possible.” But he also said South Korea preferred a “future-oriented” relationship with Japan.

His comments were echoed by Noh Kyu-duk, a spokesman for the Foreign Ministry in Seoul.

“We are telling the Japanese side that both sides need to pull our wisdom together to prevent this verdict from adversely affecting bilateral relations,” Mr. Noh said.

Hundreds of thousands of Koreans were forced to work for Japan’s war efforts in Japan, China and elsewhere, according to South Korean historians. Only a few thousand are believed to still be alive, and the ruling on Tuesday could encourage many of their families to file lawsuits against 300 Japanese companies still in operation that are believed to have used forced labor during the colonial period, according to South Korean officials.

Some scholars have suggested that the two governments and the Japanese companies create a joint fund for the victims in order to avoid more lawsuits and diplomatic tensions.

“This is certainly not good news for relations between the two countries, but how bad they will get will depend on how the governments will handle its aftermath,” said Lee Won-deok, an expert on Japan at Kookmin University in Seoul. “Both sides don’t want this to escalate into a full-blown diplomatic or history war.”

For the victims, the ruling capped a long and torturous legal battle.

Their struggle for compensation began in 1997, when two former workers sued Nippon Steel & Sumitomo Metal in Japan. But courts there sided with the company and the Japanese government, saying the 1965 treaty had settled the issue.

In 2005, they joined two other former workers to take their case to South Korean courts. At first, judges supported the Japanese court decisions. But in 2012, the Supreme Court sent the case back to a lower court, saying the Japanese rulings contravened the South Korean Constitution and international legal norms.

In 2013, a lower court in South Korea ordered the Japanese steelmaker to pay compensation to the plaintiffs. That same year, another court ordered the Japanese company Mitsubishi Heavy Industries to pay similar compensation to five former workers. In 2014, another Japanese company, Nachi-Fujikoshi, was ordered to compensate 13 former workers who were still alive and the families of 18 others who had died.

The Japanese companies appealed, ultimately leading to the Supreme Court ruling on Tuesday upholding the workers’ claims.

South Korean prosecutors are investigating allegations that the Supreme Court sought budgetary and other political favors from former President Park Geun-hye in return for delaying a ruling on the cases to save Ms. Park a diplomatic headache. In 2016, her Foreign Ministry told the court that it feared diplomatic repercussions if it ruled in favor of the victims.

President Moon Jae-in, who replaced Ms. Park last year following her impeachment, has argued that the 1965 agreement should not prevent the victims from seeking redress. Mr. Moon has also criticized, but stopped short of nullifying, Ms. Park’s unpopular 2015 agreement with Japan to “finally and irreversibly” resolve a decades-old dispute over “comfort women,” Korean women who were forced into sexual slavery during World War II.

Washington has repeatedly urged Japan and South Korea to overcome their historical differences so they can better work together with the United States to end the North Korean nuclear threat and counter China’s growing influence in the region.

“The unfortunate thing is, who needs this kind of tension between Japan and South Korea at a moment when we’re in the middle of really difficult transitions and difficult diplomacy on the Korean Peninsula and more broadly with China,” said Daniel C. Sneider, a lecturer in East Asian studies at Stanford University. “I think it’s just not helpful, and in that sense, I question the judgment of the South Korean government.”

In a joint statement between four Japanese business groups, including the Japan Business Federation and the Japan Chamber of Commerce and Industry, the groups said the court decision could “damage the good economic relations between the two countries, as it may be an impediment on future investment and business in South Korea.”

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