Cash Conversion of Japanese War Criminal Companies' Assets Including 'Chorooki'... August Brings Multiple 'Amscho' in Korea-Japan Relations

From midnight on the 4th, seizure order on 'Nippon Steel' assets takes effect... Japan's consistent silence despite court ruling
Commemorations on the 14th for Japanese comfort women, and Liberation Day speech on the 15th... disputes expected to intensify
Japanese Chief Cabinet Secretary "Reviewing all response measures"... possibility of additional retaliation following export restrictions

[Image source=Yonhap News]

[Asia Economy Reporter Lim Cheol-young] The procedure for liquidating the domestic assets of Japanese companies responsible for forced labor during the Japanese colonial period has entered the final countdown, signaling a direct confrontation between South Korea and Japan. With significant issues such as the Japanese Comfort Women Memorial Day (August 14), Liberation Day commemorations (August 15), and the expiration of the Korea-Japan General Security of Military Information Agreement (GSOMIA) on August 24, the intensity of the clash is expected to be higher than ever.

According to the court on the 3rd, the seizure order on the domestic assets of the Japanese company responsible for forced labor, Shin Nihon Steel (currently Nippon Steel), will take effect from midnight on the 4th. Although Nippon Steel has consistently ignored the court's decision, from this time, the PNR shares held by Nippon Steel will be considered seized. If Shin Nihon Steel does not appeal by midnight on the 11th, one week later, the seizure order on the shares will be finalized.

This seizure order is based on a court decision from 2018. On October 30, 2018, the South Korean Supreme Court ruled in the final appeal of four forced labor victims against Nippon Steel, ordering the company to pay 100 million KRW each in compensation for damages.

However, despite the Supreme Court ruling, Nippon Steel showed no intention of compensation. Consequently, in December 2018, the forced labor victims applied for the seizure of PNR shares, a joint venture between Nippon Steel and POSCO in South Korea. The Pohang Branch of the Daegu District Court accepted the plaintiffs' application and decided to seize the PNR shares in January last year. The shares amount to 194,794, with a face value of 5,000 KRW each, totaling approximately 973 million KRW.

The Japanese government did not deliver the seizure decision document issued by the Korean court to Nippon Steel. On June 1, the Pohang Branch initiated the public notification procedure for the seizure decision document. Public notification is a system where, if the opposing party in a lawsuit does not receive court documents, the content is considered delivered by publishing it in the official gazette. This finally allows the court to dispose of the seized assets and proceed with the liquidation process.

With the seizure decision taking effect from midnight on the 4th, the possibility of a head-on confrontation between South Korea and Japan has increased. On the 1st, Japanese Chief Cabinet Secretary Yoshihide Suga hinted at additional economic retaliation.

He stated on Yomiuri TV, "The direction of (Japan's response) is clearly set," and "We are reviewing all possible countermeasures." This is interpreted as an intention to check the court's actions in response to the liquidation of the forced labor Japanese company's assets in South Korea.

Experts predict a high likelihood of Japan filing an appeal. Some speculate that the Japanese government may take measures such as tightening visa issuance requirements, recalling the Japanese ambassador to South Korea, or imposing additional tariffs on Korean products in response to the Korean court's liquidation actions over time.

Professor Hosaka Yuji of Sejong University explained, "Japan will naturally file an appeal within the one-week period," adding, "Japan already has many teams prepared for response." However, he noted, "Procedures such as stock appraisal for asset sales may take several months." A South Korean government official also explained, "Even after the public notification takes effect, the actual liquidation process is complicated and may take considerable time."

Professor Hosaka further stated, "Since the actual sale has not yet occurred, it is ambiguous for Japan to take retaliatory measures immediately," but added, "There is a high possibility of retaliation once the assets are actually sold, and Japan will prepare in advance."

Following the enforcement of the seizure order on the forced labor Japanese company's assets, a series of issues likely to worsen Korea-Japan relations will continue throughout August. The World Trade Organization (WTO) Dispute Settlement Panel, established last month to discuss Japan's export restrictions, will be active, and on August 14, the 'Japanese Military Comfort Women Victims Memorial Day' may see increased criticism of Japan. On August 15, President Moon Jae-in's Liberation Day speech and Prime Minister Shinzo Abe's war-end commemorative speech could spark disputes between the two countries.

Most importantly, the GSOMIA extension deadline expires on August 24. If Japan takes additional measures following the seizure decision's enforcement, the South Korean government may respond by terminating GSOMIA. The South Korean government has consistently maintained since the November suspension decision last year that it can terminate GSOMIA at any time.

The general view is that the possibility of a dramatic breakthrough through dialogue between South Korea and Japan is low. The Ministry of Foreign Affairs continues to hold regular director-level working meetings and claims mutual understanding has improved, but differences remain unresolved regarding historical issues such as forced labor.

[Image source=Yonhap News]

This content was produced with the assistance of AI translation services.