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International relations

South Korea court greenlights seizure of Nippon Steel shares

Escalation in wartime labor issue further dents bilateral relations

A Nippon Steel & Sumitomo Metal works in Japan's Chiba Prefecture. The steelmaker faces the seizure of some of its shares in a South Korean joint venture.
A Nippon Steel & Sumitomo Metal works in Japan's Chiba Prefecture. The steelmaker faces the seizure of some of its shares in a South Korean joint venture.   ¬© Photo by Kotaro Igarashi

SEOUL/TOKYO -- A South Korean court has granted a request to confiscate assets held by Japan's Nippon Steel & Sumitomo Metal on behalf of South Koreans forced to work there during World War II, it was learned Tuesday.

The Daegu District Court's Pohang branch approved a request to seize about 81,000 of the Japanese company's shares in a local joint venture with South Korea's leading steelmaker, Posco. Nippon Steel was ordered by the Supreme Court in October to compensate the South Korean former workers and can challenge the new ruling, which the plaintiffs' side said was dated last Thursday.

Still unclear is whether the shares will be sold to pay for compensation and when. But the escalation is sure to draw a backlash from Japan, possibly souring relations further as the countries do verbal battle over a December incident where a South Korean warship allegedly locked a fire control radar onto a patrol plane of Japan's Maritime Self-Defense Force.

The district court is in the process of sending documents on the ruling to the joint venture, and Nippon Steel will no longer be able to sell the shares once this notification is received, the ex-workers' side said.

So far, the plaintiffs have refrained from submitting a request to the court to sell the seized shares. But in a Tuesday statement, they said they will have no choice if Nippon Steel does not participate in talks on paying compensation.

The plaintiffs sought talks with the company after the Supreme Court ordered it to pay the former workers 400 million won ($356,000). But those talks failed to materialize, prompting the asset seizure request.

Nippon Steel said Tuesday that it has yet to receive notice of last week's ruling and aims to respond appropriately after discussions with the Japanese government.

Japan views the wartime labor issue as settled by a 1965 treaty signed when it normalized diplomatic ties with South Korea. After the asset seizure request was filed, Prime Minister Shinzo Abe said on public television that he had given instructions to consider specific measures. The government is already working to nail down options.

One possibility is requesting bilateral talks with the South under the 1965 accord's dispute resolution mechanism. Diplomatic channels are the first resort. If Seoul refuses to engage or talks stall, Japan would seek a decision by an arbitration board including a third-country member.

If that still fails to bring a resolution, Tokyo could go to the International Court of Justice.

Other measures said to be under discussion include pulling out of intergovernmental talks, as well as such economic responses as raising tariffs.

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