Chilling Changes in the Japan–South Korea Relationship

“In 10 years, even the rivers and mountains change.” This saying is deeply imprinted on the Korean psyche. If we accept this idea, then perhaps we have no call to rue the changes that have taken place in the post–World War II relationship between Japan and Korea. After all, the world of human affairs is even more variable than the world of nature. Half a century has passed since the normalization of relations between Tokyo and Seoul, and now the basic paradigm of bilateral ties that took shape during the postwar years is being rocked to its very foundations. In this article I would like to present two tableaus emblematic of the trouble in the relationship.

Tableau 1: Change at POSCO, the Icon of Cooperation

On June 8, the Commission on Verification and Support for the Victims of Forced Mobilization under Japanese Colonialism in Korea, an organ under the direct control of the prime minister of South Korea, announced the formation of a new body, the Foundation to Support Victims of Forced Labor by Japan. The main activities of the new foundation are the filing of lawsuits against Japanese “war criminal” corporations and the provision of compensation to victims of mobilization as laborers. According to the announcement, half of the seed money for the establishment of the foundation, 3 billion won, is to be provided by POSCO, Korea’s giant steelmaker. POSCO’s board had already decided in March 2012 to contribute 10 billion won to this organization.

Whether POSCO’s decision was one the company’s board reached independently or was something it felt obliged to do in the face of the popular mood in South Korea, it came as quite a surprise to people familiar with the tale of this company’s birth and growth. POSCO was the poster boy of postwar Japanese-Korean cooperation.

POSCO was officially established in 1968 as Pohang Iron and Steel Company, but the seeds for the steelmaker were planted in the spring of 1964. Park Tae-joon, who was to become the company’s founder, was in Tokyo at the request of President Park Chung-hee to assist in the negotiations on normalization of bilateral ties. A retired army major general, he did not have a regular job. During his stay in Japan, aside from participating in the bilateral government talks, he had a lucky set of encounters. He happened to meet Yasuoka Masahiro, a Neo-Confucian scholar, who took a liking to him and admired his composure. Yasuoka introduced Park to Inayama Yoshihiro, president of Yawata Iron & Steel Co. And this introduction led to the involvement of Inayama’s company (which in 1970 merged with Fuji Iron & Steel to become Nippon Steel) as the key contributor to the development of Pohang Iron & Steel—a well-known story.

Korean Modernization, Japanese Money

Pohang Iron & Steel enjoyed the full support of Japan’s business establishment, and it was also the biggest beneficiary of the compensation that Japan provided under the 1965 Treaty on Basic Relations between Japan and the Republic of Korea. Out of the total amount of $500 million ($300 million in grants and $200 million in loans), $120 million, or 24%, went to the new Korean steelmaker. This was the largest amount provided to any single corporation, excluding the $130 million deposited in the Korea Exchange Bank for trade settlements. The company was established with money from Japan as the flagship of Korea’s industrial modernization, and for the Japanese business community it has been a memorial to bilateral cooperation.

Given POSCO’s origins, people who value Japan-Korea ties may well find it hard to understand how a company like this could throw its support behind a foundation dedicated to prosecuting Japanese companies. They may even see this development as a cruel trick of history, and some may wish that Park Tae-joon were still alive. Incidentally, the POSCO board’s decision to provide financial backing to the foundation was made three months after Park’s death on December 12, 2011.

The Demise of the “1965 System”

If we step back, however, and look at the course of developments unemotionally, accepting the inevitability of change over time, we can see POSCO’s decision as one piece of a jigsaw puzzle—a bigger picture, which I would title “the demise of the 1965 system.”

The “1965 system” describes the set of arrangements and understandings grounded in the 1965 treaty normalizing bilateral ties and the accompanying agreement on the settlement of claims. My belief that this system is being dissolved was confirmed by an August 2012 statement of Shim Yun-jo in his debate at the Foreign Affairs and Unification Committee of the Korean National Assembly.  A national legislator and a former diplomat whose career included service as head of the North American Affairs Bureau in the Ministry of Foreign Affairs and Trade, he said that “Unlike back in 1965, Korea’s national strength has increased greatly, and we cannot manage [the Korea-Japan relationship] just with the 1965 Treaty on Basic Relations.”

Calls for reinterpreting the 1965 system are now widely heard in South Korea, where people are suggesting it was an “unnatural and unjust” byproduct of the Cold War. One prominent voice is that of the legal scholar Kim Chang-rok, who calls the 1965 system “a crude stitching up of the core issue, namely, imperial Japan’s rule over the Korean Peninsula,” which is therefore “fated to rip every time a problem emerges.”

Tableau 2: Challenges to the 1965 Basic Treaty

Kim Chang-rok cites a pair of rulings by South Korea’s courts as having dealt critical blows to the 1965 system even before its service life expired. One of the rulings was issued by the Constitutional Court in August 2011, the other by the Supreme Court in May 2012.

On August 30, 2011, the Constitutional Court handed down its decision on a case brought by former comfort women against the minister of foreign affairs. The court ruled that the defendant’s “failure to act”—the fact that the defendant, i.e. the Korean government, had not acted to resolve the dispute between South Korea and Japan in line with the dispute-settlement procedures between the two countries—was unconstitutional. In lay terms, the court scolded the government and indicated that it must strive to deal with the issue of compensation for the former comfort women.

On May 24, 2012, the Supreme Court issued a pair of rulings with even graver implications. These rulings concluded cases brought in 1995 and 1997 by Koreans who had been conscripted during World War II to work at Mitsubishi Heavy Industries and at Nippon Steel, respectively. The plaintiffs, having lost their cases in Japanese courts, had turned to Korean courts in Busan and Seoul, seeking payment of past wages and compensation from their former employers. But there too they had lost both in the initial trials and on appeal. 

The plaintiffs next took their cases to the Supreme Court, which nixed the earlier rulings and sent the cases back to the two high courts. The thrust of the two rulings was the same: Imperial Japan’s rule over the Korean Peninsula was unlawful, and legal relationships based on it are invalid if they are incompatible with the spirit of South Korea’s Constitution. On July 10, 2013, the Seoul High Court awarded payments of 100 million won to each of the plaintiffs in the Nippon Steel case, and on July 30 the Busan High Court awarded payments of 80 million won to each in the Mitsubishi Heavy case (both awards have been resubmitted on appeal to the Supreme Court).

Carrying Past Issues into the Future

The 2012 Supreme Court rulings were widely welcomed within South Korea, where people praised the court for having restored the country’s legal sovereignty and having addressed the people’s resentment against Japan’s past behavior. But in terms of the Japan–South Korea relationship, the court may be said to have opened a Pandora’s box. The historical conflicts between the two countries all concern matters that are in the past. But suits seeking compensation from contemporary Japanese corporations are present and future matters.

Already moves are afoot to identify and sue all the Japanese companies that employed conscripted Korean workers in any capacity during World War II. In addition, we see steps toward seeking large-scale settlements through the US judicial system on the basis of the Korean rulings in favor of the plaintiffs. Robert Swift, a director of the Philadelphia-based law firm Kohn Swift & Graf famous for his involvement in war crimes litigation, announced in Seoul on June 6 this year that he was ready to cooperate in Korean efforts to gain restitution.

“Good Morals” as a Judicial Norm

Human history is full of wars and conflicts between nations, from which winners and losers have emerged. When the victorious and vanquished countries reach a treaty to set their adversarial relationship behind them, they must observe it. This principle, known by the Latin phrase pacta sunt servanda (agreements must be kept) is the foundation of international law and the international order.

There are, to be sure, exceptions to this basic principle. One is the provision called rebus sic stantibus (things thus standing), according to which a treaty becomes inapplicable if there is a change of circumstances unforeseen to the parties to the treaty such that observing it would go against the original spirit of the agreement. This, however, does not cover the South Korean Supreme Court rulings. The other is jus cogens (compelling law), which refers to “peremptory norms” that cannot be revoked under international law even by agreement among countries. This is the provision that the South Korean Supreme Court applied; I am not capable of assessing whether it was correct to do so.

One point that emerged clearly, though, was the Supreme Court’s explicit declaration that for Korean courts to honor the Japanese courts’ rulings against the conscripted workers was not consistent with the “good morals or other social order” of South Korea. In other words, the court judged that the compulsion exerted by Japanese companies in the past violated a “peremptory norm” as commonly accepted in South Korea.

A Roh Moo-hyun Appointee Takes the Lead

Aside from the legal reasoning behind the Supreme Court’s rulings, one point that troubles me is the fact that they were issued not by the Grand Bench, with the chief justice presiding, but by a petty bench. The Grand Bench consists of at least two-thirds of the justices (of whom there are 14, including the chief justice), while petty benches can consist of as few as three justices. The Grand Bench handles rulings that have major social repercussions or that overturn one of the court’s previous judgments. Rulings thus issued represent the consensus of the South Korean judiciary and have substantial political significance.

The cases of the conscripted workers were handled by the First Petty Bench, not by the Grand Bench. Given the nature of the relationship between Japan and South Korea, the two countries that built East Asia’s postwar economy, was this an appropriate way of dealing with a pair of cases in which Japanese companies were the defendants? The fact that the rulings came from a petty bench may be interpreted to mean that they do not represent the consensus of the South Korean judiciary.

I might also point out that the justice who was presiding over the First Petty Bench at the time of these rulings was Kim Nung-hwan, who was appointed to the Supreme Court by President Roh Moo-hyun (2003–8). Kim passed the Korean bar examination in the same year as Roh. After completing his term on the Supreme Court, he became involved in convenience store management; he then joined a major law firm.

True to the Korean saying I cited at the beginning of this article, the past 10 years have brought great change in the relationship between Japan and South Korea. Observing this transformation, I cannot help feeling a chill in my bones.

(Banner photo: The late Park Tae-Joon [left center], founder of Pohang Iron & Steel, receives the Grand Cordon of the Order of the Rising Sun in 1999 for his contributions to Japan–South Korea relations. © Jiji Press.)