South Korea Court Says Japan Firm Must Pay for Forced WWII Labor

(Bloomberg) -- South Korea’s Supreme Court ruled a Japanese firm was liable for compensation in a forced labor case dating back to Japan’s colonization of the Korean peninsula, in a fresh blow to already shaky ties between the Asian neighbors.

The court said Nippon Steel & Sumitomo Metal Corp. must pay 100 million won ($88,000) compensation to each of four plaintiffs who had sued over being forced to work for a forerunner of the company during the 1910-1945 colonial period.

Nippon Steel said in a statement that the ruling was “deeply regrettable” and maintained that all such claims were settled under a 1965 treaty between the two countries. The company said it would determine a course of action after carefully reviewing the ruling and gauging reaction from the Japanese government.

Shortly after Nippon Steel issued the statement, visibly angry Japanese Foreign Minister Taro Kono told reporters in Tokyo the ruling was “absolutely unacceptable."

Relations between Japan and South Korea have turned increasingly sour in recent months, potentially making it harder for the two U.S. allies to cooperate on shared goals of denuclearizing North Korea and defending free trade amid a wave of protectionism.

Japan protested a visit by South Korean lawmakers earlier this month to islets disputed between the two countries, NHK reported. Japan also canceled its participation in an international naval fleet review after South Korea demanded Japan’s Maritime Self-Defense Force remove its “rising sun” flag.

Past Pledges

Japanese Prime Minister Shinzo Abe told parliament Monday that it was regrettable that South Korea was taking actions that run counter to past pledges to build a forward-looking relationship. In response to questions from a lawmaker, he said he expected South Korea to act “appropriately.”

Anger over women trafficked to Japanese Imperial Army brothels before and during World War II is also simmering on both sides. The city of Osaka cut off its sister-city ties with San Francisco over a memorial to the women that it said was historically inaccurate, while the fate of a Japanese-funded effort to compensate the victims that has been criticized in South Korea remains in the balance.

“It’s a great loss for Japan, given that Seoul and Tokyo are natural allies,” said Brad Glosserman, deputy director of the Center for Rule Making Strategy at Tama University in Tokyo. “Both of them are smaller powers among those competing for policy influence. They would maximize their capacity to shape events in the region if they were to work together.”

President Moon Jae-in did not visit this month for the 20th anniversary of a joint declaration on improving ties.

--With assistance from Lily Nonomiya.

To contact the reporters on this story: Isabel Reynolds in Tokyo at ireynolds1@bloomberg.net;Shinhye Kang in Seoul at skang24@bloomberg.net

To contact the editors responsible for this story: Brendan Scott at bscott66@bloomberg.net, Peter Pae, Colin Keatinge

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