South Korea’s top court ruled on Tuesday a company from Japan must compensate four South Koreans for their forced labour during World War II when the Japanese imperial army occupied the Korean Peninsula.
The Supreme Court ordered Nippon Steel & Sumitomo Metal Corp to pay 100 million won ($87,700) to each of the four plaintiffs.
Lee Choon-shik, the 98-year-old sole surviving plaintiff, welcomed the ruling saying in a televised news conference it was “heartbreaking to see it today, left alone alive”.
The court’s final decision is likely to have a significant impact on Japanese-South Korean ties, politically and economically, as Japanese firms involved in similar lawsuits could face similar outcomes.
“We might have to brace for not only a diplomatic crisis but a pull-out of some Japanese firms and a fall in new investment,” said Shin Beom-chul, a senior fellow at the Asan Institute for Policy Studies in Seoul.
Japan and South Korea share a bitter history that includes Japan’s 35-year occupation – from 1910 to 1945 – of the peninsula and the use of “comfort women” – Korean, Chinese, and Filipina – forced to work in its wartime brothels.
Nippon Steel said on Tuesday the ruling was “deeply regrettable” and that it would carefully review the court decision, taking into account the Japanese government’s response.
Japan’s foreign ministry said it would summon the South Korean ambassador.
The four former labourers initiated a lawsuit in 2005 against Nippon Steel & Sumitomo Metal Corp seeking compensation and unpaid wages.
Previous cases they had brought in Japan were dismissed on the grounds their right to reparation was terminated by a 1965 treaty normalising diplomatic ties between the countries.
But in 2012, South Korea’s Supreme Court ruled the company should compensate the plaintiffs.
The company appealed a 2013 order that it pay 100 million won ($87,900) to each of the four.
Japan’s foreign ministry said the issue of compensation was “settled completely and finally” by the 1965 deal.
Because of the ruling, the former labourers can now request a seizure of Nippon Steel’s property in South Korea, which could lead to an international arbitration, said Jin Chang-soo, president of the Sejong Institute think-tank.
South Korea’s foreign ministry said in 2016 any seizure of company assets could drive relations into an “irreversible catastrophe”.
“It’s possible that the case will escalate, stoke anti-Japanese sentiment here and spill over into other areas including security at a time when we need to closely work with Japan to resolve the North Korean nuclear issue,” Jin said.