On March 6, 2023, the South Korean government announced that a third-party foundation would pay compensation awarded by the Supreme Court to South Koreans who were forced by the Japanese to work for Japanese companies in Japan during World War II.
Background to the Measure
After the implementation of the National Mobilization Law enacted by Japan to generate “human, material and financial resources” for conducting the war, many Koreans were mobilized to work in factories in Japan while Korea was under Japanese rule. Some of them sued the Japanese companies that succeeded the original companies that employed them, seeking unpaid wages and compensation. In October and November 2018, the South Korean Supreme Court ordered the Japanese companies to pay the plaintiffs. (2013 Da No. 61381 (Sup. Ct., Oct. 30, 2018); 2015 Da No.45420 (Sup. Ct., Nov. 29, 2018); 2013 Da No. 67587 (Sup. Ct., Nov. 29, 2018).) As the Japanese companies have not made the payments, the courts issued judgments allowing the plaintiffs to seize and sell the assets of the Japanese companies in South Korea. Because the Japanese government has taken the position that issues related to claims stemming from the colonial period have been settled, it did not accept the judgments and the seizure. In return, Japan imposed several trade restrictions on South Korea.
Among other legal issues, the main controversy is whether the plaintiffs lost their claims on the basis of the Agreement on the Settlement of Problems concerning Property and Claims and on Economic Cooperation between the Republic of Korea and Japan (KR-JP, June 22, 1965, 583 U.N.T.S. 8473). The relevant parts of article 2, paragraphs 1 and 3 of the agreement are as follows:
3. … [N]o contention shall be made with respect to the measures on property, rights and interests of either Contracting Party and its nationals which are within the jurisdiction of the other Contracting Party on the date of the signing of the present Agreement, or with respect to any claims of either Contracting Party and its nationals against the other Contracting Party and its nationals arising from the causes which occurred on or before the said date.
The Japanese government’s position is that, according to paragraph 1, Japan and South Korea waived diplomatic protection of each other, and according to paragraph 3, any claims of individuals of one country against individuals of the other country were extinguished. The Korean Supreme Court’s understanding of paragraph 1 is the same as Japan’s, but the court stated that there aren’t sufficient and clear grounds in the agreement to conclude that the governments of Korea and Japan agreed on the waiver of individual claims.
The Compensation Measure
Before the South Korean government adopted the compensation measure, it collected opinions in South Korea and consulted with the Japanese government. The Ministry of Foreign Affairs held a public forum on January 13, 2023, to announce the measure and discuss the solution to the wartime forced labor issue. The victims’ side has opposed the measure.
The Foundation for Victims of Forced Mobilization by Imperial Japan was designated as the third-party to pay the plaintiffs’ compensation awarded by the 2018 Supreme Court judgments. The foundation was established in 2014 in accordance with the Special Act on Verification and Support for the Victims of Forced Mobilization under Japanese Colonialism in Korea. (Act No. 10143, Mar. 22, 2010, as amended, art. 37.) The act states that the foundation is to implement “[c]ultural and academic projects and investigation and research projects relating to damage from forced mobilization by imperial Japan,” among other projects. The Korean Government “may contribute funds or grant subsidies” to the foundation. (Art. 37.) If the plaintiffs in other lawsuits related to wartime labor compensation win and the judgments become final and binding, the foundation will also pay the awarded amounts to them.
The foundation will raise funds through voluntary contributions from Korean companies. “Korean firms, which benefited from the 1965 treaty with Japan, which normalized diplomatic ties in exchange for economic aid totaling some $500 million” are expected to make donations. POSCO, the Korean steel manufacturer, decided to donate $3 million to the foundation. Donations will be accepted not only from Korean companies but from anyone, including Japanese companies. The American Chamber of Commerce in Korea has indicated it plans to donate to the foundation.
The reason Korean firms that benefited from the 1965 agreement are expected to make donations to the foundation has not been made clear. One view is that because the 1965 agreement was based on the premise that the Korean government would pay provide economic aid to Korean companies using money from Japan, that aid money should be used for compensation through the foundation.
Prepared by Younkyung Eum, Law Library intern, under the supervision of Sayuri Umeda, Senior Foreign Law Specialist
Law Library of Congress, May 9, 2023
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