The South Korean Supreme Court's final decision involving former requisitioned workers has brought Japan-South Korea relations to a crossroads.
The ruling rejected the two countries' common position on the 1965 bilateral Agreement on the settlement of problems concerning property and claims and on the economic cooperation, which was concluded at the same time diplomatic ties were normalized.
The Japanese government will take a position of not ruling out legal steps, depending on how the South Korean government responds. The administration of South Korean President Moon Jae In will be forced to face a tough challenge.
Japan eyes legal action
"We'll do whatever we can. We'll show our intention to protect Japanese companies," a high-ranking Japanese government official said Tuesday.
In response to Tuesday's ruling, the Japanese Foreign Ministry set up an office in its Asian and Oceanian Affairs Bureau to deal with bilateral property and claim issues, and began full-scale preparations for a legal response.
Meanwhile, South Korea's Foreign Affairs Ministry spokesman Noh Kyu Duk said Tuesday at a press conference: "We, as a government, are considering various possibilities. We must put our heads together to keep the latest judgment from negatively affecting Japan-South Korea relations."
However, Noh did not state any concrete measures.
According to Japan and South Korean diplomatic sources, the Japanese government will first confirm with the Moon administration if its position so far -- that the individual rights of former workers to claim compensation are covered by the 1965 agreement -- remains unchanged.
Stating a position of compliance with the 1965 agreement would mean that the Moon administration has confirmed that the responsibility to assist the workers lies with the South Korean government. On the other hand, if the Moon administration follows the top court ruling and introduces a new interpretation of the agreement, saying that the agreement does not cover their individual rights, it would bring about a dispute between Japan and South Korea.
The agreement's Article III stipulates that any dispute between the two countries shall be settled primarily through diplomatic channels.
The Japanese government plans to request bilateral talks.
"We may set a deadline, so as not to let Seoul stall for time," a Japanese government official said.
No great ideas
According to South Korean government sources, Seoul has approached Tokyo in the past through back channels to form a foundation funded by both governments, South Korean firms and defendant Japanese companies to handle compensation payments. This suggestion was rejected by the Japanese government.
The Japanese side does not have room for compromise, while the Moon administration is not likely to have any good ideas, either.
If bilateral talks break down, the Japanese government will suggest, based on the agreement, the formation of an arbitration commission including an arbitrator from a third nation.
There is no precedent for forming such a commission. The two countries might not be able to agree on the selection of the third-party arbitrator. If this happened, the Japanese side might file a complaint with the International Court of Justice (ICJ), but even then a trial is likely not to be convened, as South Korea has not accepted the obligation to attend ICJ trials.
One reason why the South Korean government tries to avoid settlement through an arbitration commission or the ICJ is that "losing will spur public finger-pointing, causing tremendous harm to the Moon administration," a Japan-South Korea diplomatic source said.
Even if an ICJ trial would not be held, the Japanese government is still considering filing a complaint, to show international society that South Korea breached international law.
The Moon administration has taken an ambiguous approach, trying to balance domestic public opinion and the Japan-South Korea relationship. It acted in a similar way regarding a bilateral agreement signed at the end of 2015 over the issue of former comfort women, where the administration did not abolish nor renegotiate the deal but still has not accepted it.
Regarding lawsuits involving former requisitioned workers, however, the issue should not be left unaddressed because Japanese companies may receive court orders for compensation one after another, and the plaintiffs may move to seize defendants' assets.
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