South Korea Takes a Step in Efforts to Repair Relations With Japan

Since 2018, South Korea’s relations with Japan have deteriorated over the issue of compensation for Japan’s use of Korean forced labor during World War II. The decline in relations has spilled into the economic relationship, threatened to damage intelligence sharing between the two countries, and hindered trilateral cooperation with the United States. South Korean President Yoon Suk Yeol, however, has made improving relations with Japan a priority and his government recently initiated a new public-private consultative body to develop proposals for resolving the issue of forced labor.

The current impasse is rooted in differing interpretations of the agreement that restored relations between South Korea and Japan in 1965. While Japan has taken the position that all claims related to forced labor were resolved with the 1965 Agreement on the Settlement of Problems concerning Property and Claims and on Economic Co-operation between Japan and the Republic of Korea (Claims Agreement), South Korea’s Supreme Court has interpreted the 1965 agreement to only have resolved state-to-state claims but not individual claims.

The South Korean Supreme Court’s interpretation culminated in two decisions in 2018 that workers used as forced labor by Japan during World War II were entitled to compensation from Nippon Steel and Mitsubishi Heavy Industries.

The issue has taken on additional urgency as the South Korean Supreme Court is expected to rule in the next few months on whether assets seized from Nippon Steel and Mitsubishi Heavy Industries can be sold to provide compensation to the workers. If the seized assets were to be sold, it would likely further damage Japan-South Korea relations and potentially result in Japanese retaliation.

Perhaps hoping to avoid the difficulties of South Korea and Japan’s 2015 efforts to resolve the issue of the “comfort women,” the Yoon administration has established a public-private consultative body to develop suggestions for resolving the forced labor issue with Japan.

In the case of the 2015 “comfort women” agreement, the agreement was rejected by the victims for not reflecting their views on how to resolve the issue. The new consultative body will bring together government officials, experts, journalists, businesspeople, and legal representatives of the victims and their families in an effort to find a solution with common ground between different parts of South Korean society.

One challenge for the consultative body will be finding a solution that can be acceptable to both the Japanese government and victims of forced labor – each of which currently have seemingly incompatible objectives.

Legal representatives for the victims and their families have called on the Korean government to engage Japan in diplomacy to help facilitate direct negotiations with the companies that used forced labor, which is their preferred resolution to the issue. If direct negotiations are accepted, the victims’ representatives have suggested that they would be willing to ask that the judicial proceedings be halted. While halting the judicial proceedings would seemingly meet one of Japan’s demands for resolution, Tokyo has to date pushed its companies not to engage in negotiations since it considers all of the victims’ claims void due to the Claims Agreement.

In addition to direct negotiations between the victims and the companies, the consultative body will likely also consider the creation of a compensation fund and the use of third-party arbitration as potential solutions. Proposals for a compensation fund would center on contributions from Korean firms that benefited from prior compensation provided by the government of Japan and Japanese companies that benefited from the use of forced labor. In terms of third party arbitration, Article III of the Claims Agreement calls for disputes to be settled by an arbitration board, but there has also been discussion of sending the dispute to the International Court of Justice. South Korea, however, would first need to declare that it accepts the International Court of Justice’s jurisdiction.

For the consultative body to be successful it will need to come up with a resolution to the dispute that is broadly politically acceptable in South Korea. That solution will also need to be acceptable to Japan. However, even if the consultative body’s resolution is not currently acceptable to Japan, it could still play a helpful role in clearly defining for Japan what a resolution to the issue of forced labor might look like. That in itself could help start a process of finding a resolution and improving relations between the two countries.