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Japan-South Korea rift

Japan eyes damages if South Korea sells seized company assets

Tokyo seeks response as looming Mitsubishi sell-off deepens wartime labor row

Victims of wartime labor and their supporters demonstrate for reparations in Seoul. The issue has been a sticking point in bilateral ties for years.   © Reuters

TOKYO -- Tokyo is considering seeking damages from Seoul should seized Japanese corporate assets be sold off as part of their feud over wartime labor, as tensions between the neighboring countries deepen.

South Korea's Supreme Court has ordered several Japanese companies to pay South Koreans forced to work for them during World War II. Attorneys of plaintiffs against Mitsubishi Heavy Industries announced Tuesday that they will start the procedure to sell copyrights and patents seized as compensation from the company.

"We will have no choice but to take action if real harm is done to Japanese companies," Japanese Foreign Minister Taro Kono told reporters on Tuesday. Nippon Steel and Nachi-Fujikoshi face similar situations as well.

Tokyo considers the sale of seized assets to be a red line, since it believes all claims to wartime reparations were settled under a bilateral treaty signed in 1965. Japan provided South Korea with $300 million in grants and $200 million in lending under the treaty, ostensibly as economic assistance.

Japan believes that if the seized assets are turned into cash and disbursed to the former laborers, that would be a violation of the 1965 deal.

"If the companies that are hurt are not rescued, we will seek damages from the South Korean government," said a source at the Japanese Foreign Ministry. Under international law, a country has the right to secure protection for individuals and organizations that are wrongfully injured internationally.

But any actual sale of corporate assets will likely take time. A South Korean court was expected to order the sale of shares in Nippon Steel's local venture as early as this summer. But the plaintiffs say this will not happen until at least the end of the year, since the court still needs to question the company.

Regarding Mitsubishi Heavy, "assessing intellectual property will take time, and its assets likely won't be converted into cash this year," a lawyer said.

Japan has asked South Korea to agree to a third-party dispute settlement panel regarding wartime labor. Seoul is expected to provide an answer by Thursday, but a top South Korean official said Tuesday that the country is not planning any particular response.

South Korean President Moon Jae-in expressed hopes for a dialogue with Japan to discuss Seoul's proposal for the situation, in which Japanese and South Korean companies would contribute to a settlement with the plaintiffs. But he also said that his government "has never claimed that its proposal can be the only way to solve the problem."

"It was an expression of our willingness to explore reasonable solutions together that could win the sympathy of the people of our two countries as well as the victims themselves," he said.

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