Japan Warns of Countermeasures if 'Jingyong Companies' Assets Are Liquidated... "Considering All Options for Response"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] On the 4th, as the public notice to seize the assets of Nippon Steel (formerly Shin Nippon Steel & Sumitomo Metal), which refuses to compensate forced labor victims during the Japanese colonial period, took effect in South Korea, Japanese government officials collectively warned that they would consider all options to protect their domestic companies and respond accordingly if asset liquidation is enforced.

According to NHK and other sources, Yoshihide Suga, Chief Cabinet Secretary of Japan, said at a press conference after the Cabinet meeting on the same day, "While we will withhold disclosing the government's specific future response, we want to continue to respond calmly, keeping all options in view from the perspective of protecting the legitimate economic activities of Japanese companies, in close cooperation with the related companies."

Suga stated, "The Korean Supreme Court ruling and related judicial procedures concerning former Korean Peninsula workers (a term used by the Japanese government to refer to 'forced labor victims') clearly violate international law," adding, "If liquidation occurs, it will cause a serious situation and must be avoided." He also mentioned that he has repeatedly explained this to the Korean side and will strongly demand an early resolution from Korea going forward.

Japanese foreign media have mentioned that the Japanese government’s possible responses to South Korea’s asset liquidation measures include tariff increases, suspension of remittances, stricter visa issuance requirements, financial sanctions, seizure of Korean assets in Japan, and summoning the Japanese ambassador to South Korea.

Taro Aso, Deputy Prime Minister and Minister of Finance, also said at a press conference that the situation where Japanese companies’ assets are forcibly sold "is clearly a violation of international law from Japan’s standpoint," adding, "Korea’s response differs from international common sense. Judging by the trend, it seems likely that we will have no choice but to respond." This is interpreted as a warning of retaliatory measures if asset sales proceed.

Foreign Minister Toshimitsu Motegi and Minister of Economy, Trade and Industry Hiroshi Kajiyama also stated at press conferences on the same day that they would respond to the Korean side if Japanese companies’ assets are liquidated. Motegi said, "We want to respond calmly, keeping all options in view, including any possible scenarios." Kajiyama reiterated the claim that the Supreme Court ruling and related procedures violate international law and mentioned that forced liquidation of Japanese companies’ assets would cause a serious situation and must be avoided.

Earlier, on October 30, 2018, the Korean Supreme Court ruled in a retrial that four forced labor victims should be compensated 100 million won each in damages in a lawsuit against Nippon Steel. After Nippon Steel refused to accept the ruling, the plaintiffs applied to the court in December of the same year to seize shares of PNR, a joint venture between Nippon Steel and POSCO, to secure the damage claims.

Accordingly, the Pohang branch of the Daegu District Court decided in January last year to seize 81,075 shares corresponding to the damage claim amount, and the plaintiffs applied for the sale of these assets in May last year. The scale is about 400 million won based on the face value.

However, the Japanese government refused to deliver the Korean court’s asset seizure decision to Nippon Steel. In response, the Pohang branch started a public notice procedure on June 1, posting the documents on the court bulletin board or official gazette when it was difficult to deliver the documents to the opposing party, and the effect took place from that day.

Nippon Steel has indicated its intention to file an immediate appeal against the public notice. The deadline for Nippon Steel’s immediate appeal is midnight on the 11th. If the higher court confirms the stock seizure order after review, the next step will be the stock appraisal and sale order, entering the sale procedure. It appears that Nippon Steel intends to buy time by filing the immediate appeal.

NHK reported, "With the Korean government maintaining its position to respect the judiciary’s judgment, if the court orders asset sales and liquidation occurs, the Japanese government is considering countermeasures, raising concerns that Japan-South Korea relations will further deteriorate."