Korean Courts Order Japanese Firms to Compensate Wartime Laborers: Background to the Rulings

A Weighty Ruling Against Mitsubishi

In recent years South Korean courts have handed down a number of rulings relating to the period of Japanese rule over the Korean Peninsula (1910–45) and other matters involving Japan that have attracted critical attention from the Japanese side. These include a decision by the South Korean Supreme Court allowing claims for compensation by people drafted to work in Japanese plants during World War II, along with the issuing of an injunction by the Daejeon District Court blocking the return of a Buddhist statue to the Japanese temple from which it was stolen pending confirmation of the manner in which the statue, believed to have been cast in Korea in the fourteenth century, passed into Japanese hands.

Here I would like to focus on the ruling issued by South Korea’s Supreme Court on May 24, 2012, with respect to people drafted to work at the former Mitsubishi Heavy Industries during World War II, discussing the distinctive features and legal background of this ruling, which may have a major impact on similar suits in the future.(*1)

The plaintiffs in this case were Koreans who were sent to Japan and forced to work at a factory of the former MHI in Hiroshima under the 1939 National Service Draft Ordinance of 1939 (based on the National Mobilization Law enacted in 1938). They became victims of the atomic bombing of Hiroshima just before the end of World War II in August 1945 and returned to Korea shortly after the end of the war. The plaintiffs had previously brought a suit in Japan seeking damages from the present MHI (established in 1964 through the merger of three companies created in the postwar breakup of the zaibatsu [financial and industrial conglomerates]) but it was rejected, and the suit they subsequently submitted in South Korea was thrown out by the court of appeal, the Busan High Court, which accepted the ruling of the Japanese court. The Supreme Court ruling reversed this ruling.

This and other cases about the wartime drafting of workers involve a complex set of interrelated issues, including jurisdiction, acceptance by South Korean courts of rulings by Japanese courts, interpretation of the 1965 Japan-South Korea agreement on the settlement of claims, and application of the statute of limitations. The key feature of the South Korean Supreme Court ruling was that the top court based its decision on the illegality of Japan’s colonial rule and on restriction of invocation of the statute of limitations.

The Supreme Court Rejects the Busan High Court’s Reasoning

The Supreme Court ruled that the Busan High Court had erred in recognizing the earlier Japanese court ruling. Under Article 217 of South Korea’s Civil Procedure Act, the final rulings of other countries’ courts are considered valid subject to certain conditions. The Japanese court rejected the plaintiffs suit on the grounds that the statute of limitations had expired, and the Busan High Court accepted this ruling, judging it not to violate the “good morals or other forms of social order” of South Korea, as stipulated in said Article 217. But the Supreme Court, declaring that the foreign court’s reasoning and the ramifications of recognizing the foreign court’s judgment must be considered as a whole, judged that the Japanese ruling did not meet the conditions of this article, because it included portions that took the application of the National Mobilization Law and National Service Draft Ordinance to the Korean Peninsula and to the plaintiffs to have been valid based on a normative recognition of Japan’s colonial rule as legal.

There is a major gap between Japan and South Korea in their perceptions of the legality of Japan’s colonial rule. The Koreans consider it to have been illegal and call it an “occupation.” The difference between the two countries’ views is especially sharp with regard to the validity under international law of the Korean-Japanese Convention of 1905(*2) (under which Korea yielded control of its foreign affairs to Japan). The major reasons cited by the Koreans for considering this convention invalid are that it was concluded under duress and that it was not approved by the Korean emperor. The opinions of Japanese and Korean scholars are fundamentally divided with respect both to factual perceptions and to interpretations of the international law of the time. The two sides have also differed from the start in their interpretations of the phrase “already null and void” in Article 2 of the 1965 Treaty on Basic Relations Between Japan and the Republic of Korea, which reads: “It is confirmed that all treaties or agreements concluded between the Empire of Japan and the Empire of Korea on or before August 22, 1910, are already null and void.” The Japanese side takes the view that the treaties and agreements in question became null and void with the establishment of the ROK in 1948,(*3) while the Korean side claims they were null and void from the time they were concluded.

The Supreme Court ruling referred to the fact that the South Korean Constitution has consistently positioned the contemporary ROK, founded in 1948, as the heir of the March First (Samil) Independence Movement of 1919 and the provisional government born of this movement. The preamble of the 1948 Founding Constitution referred to “carrying on the great spirit of independence that, through the March First Independence Movement, founded the Republic of Korea and proclaimed it to the world,” and the preamble of the current Constitution speaks of “upholding the cause of the Provisional Republic of Korea Government born of the March First Independence Movement of 1919.” In addition, the court noted that Article 100 of the 1948 Founding Constitution states, “Existing laws are valid as long as they do not violate this Constitution,” and Article 101 states, “Special legislation may be enacted to punish malicious antipatriotic acts prior to August 15, 1945”; the court stated that “any legal relationship resulting from the illegal occupation that contradicts the spirit of the Constitution is deemed ineffective.”

By way of historical background, Japan annexed Korea in 1910, and in 1919 the March First Independence Movement was followed by the establishment of a provisional government and the promulgation of a constitution on September 11. Before this, in 1917, the principal members of the provisional government had issued a Statement of Solidarity, in which they declared that when the Korean emperor abdicated in 1910, his sovereign authority passed not to Japan but to the Korean people. This position is considerably different from Japan’s, but if one adopts it, along with the aforesaid view of Japan’s colonial rule as an illegal occupation, it follows that no application of the Japanese laws of the colonial period can be recognized.

The Relevance of the 1965 Claims Settlement Agreement

In 1965, when Japan and South Korea concluded their bilateral Treaty on Basic Relations, they also concluded an Agreement Between Japan and the Republic of Korea Concerning the Settlement of Problems in Regard to Property and Claims and Economic Cooperation. The contents of this claims settlement agreement can become an issue directly relating to cases of wartime forced labor.

The issue is the scope of the claims relinquished under Article 2 of this agreement.(*4) The official record of the bilateral talks concerning this agreement explicitly notes that the two sides confirmed that they included all items falling within the scope of the claims against Japan submitted by the Korean side during the talks.(*5) These claims, consisting of eight items, included amounts due to Korean forced laborers and compensation of damages to persons drafted for the war. So it was the shared view of the Japanese and South Korean governments that the claims in these connections had been settled.

The Supreme Court, however, ruled, “claim rights for tort against humanity involving Japanese government power or colonial rule tort damages were not addressed” in the claims agreement. The court also declared that the state cannot liquidate an individual’s claim rights without the individual’s consent; it can only abandon diplomatic protection rights. The Japanese government has also recognized that the claims agreement does not address the issue of compensation based on the illegal nature of colonial rule but merely provides for the abandonment of diplomatic protection rights between the states;(*6) in this respect its position does not differ from that expressed by the court. The issue is whether the wartime forced labor was illegal or not; on this point the legal judgments of the two sides differ. The Hiroshima High Court, which handled the appeal on this case in Japan, judged that the forced labor itself could not be considered illegal but that the employer violated its duty to provide for the safety of employees after the dropping of the atomic bomb.

Application of the Statute of Limitations

In Japan, and also in the South Korean appeal court, the suits were ultimately rejected on the grounds that the statute of limitations had expired. The starting point for calculation of the time limit for claims was taken to be 1965, the year when the bilateral Treaty on Basic Relations was concluded and it became possible to file suits of this sort. But the Supreme Court ruled that even if the statute of limitations under Japanese law is taken into consideration, the use by a debtor of a defense based on expiry of the statute of limitations is constrained by the basic principle of good faith and prohibition of abuse of rights under the civil code.

The Supreme Court also noted these four points: (1) The view that the rights of individuals to make claims had been settled by the 1965 claims agreement had been prevalent within South Korea. (2) Following up on the claims agreement, Japan had enacted a Property Rights Settlement Act that disallowed claims by the plaintiffs in Japan. (3) The understanding that the claims agreement did not eliminate the right to claim damages directly resulting from Japan’s inhumane and illegal acts or its colonial rule had gradually emerged during the course of the plaintiffs suit; this view was supported by the documents relating to the claims agreement that were finally published in Korea in January 2005 and by the official view announced by a public-private joint committee that year. (4) There were legal provisions in Japan that cast doubt on the identity of the defendant (the present MHI) and the former MHI. Based on these points, the court judged that there had been “obstruction grounds” making it effectively impossible for the plaintiffs to claim their rights until May 1, 2000, and that it was therefore contradictory to the principle of good faith and an abuse of rights for the defendant to assert that the statute of limitations had expired.

The Significance of the Supreme Court Ruling

The Supreme Court’s ruling differs from the Japanese judgment in its view that the forced labor itself was illegal because of the illegality of Japan’s colonial rule and in its view that the defendant’s allegation that the statute of limitations had expired was contradictory to the principle of good faith and an abuse of rights. On the former point, the Supreme Court’s judgment was the same as the earlier South Korean position, and it seems likely that the high court took the same position as well. The Hiroshima High Court also judged that the plaintiffs had the right to claim damages for their employer’s failure to take proper safety measures, and it recognized their right to claim unpaid wages (though it ruled the statute of limitations to have expired). And the Japanese and Korean views concerning the legality of the wartime forced labor were already different. The portions of the Supreme Court ruling that departed significantly from earlier positions are to be found in the reasons it cited for not recognizing the validity of Japanese court decisions and in its interpretation of the statute of limitations. The Supreme Court took a lenient view of the causes for delay in application of the statute of limitations and made bold use of the legal principles of violation of good faith and abuse of rights, and it referred to retroactive application of penalties for “antipatriotic acts”; the court’s ruling also gave a strong sense of “settling past accounts.” But the determination of the existence of “obstruction grounds” to the exercise of plaintiffs’ rights (making it improper to apply the statute of limitations to the period in question) is greatly affected by the values of the individual justices on the court. This is a point that has also been noted in South Korea.(*7)

In South Korea, the Constitutional Court attracted attention with its August 30, 2011, rulings concerning the comfort women and the Korean A-bomb victims; the court decided that in both these cases the basic rights of the persons in question had been violated by the inaction of the South Korean government. Both cases are seen in Korea as not being covered by the 1965 claims agreement; the Constitutional Court judged that the government’s failure to pursue these matters adequately with Japan despite this fact was a violation of the country’s constitution. This case, which dealt with the constitutionality of the state’s failure to act as a domestic issue, is not directly related to the 2012 Supreme Court decision. However, in view of the fact that the Constitutional Court Act states, “A decision to grant a constitutional complaint shall be binding on all state agencies and local governments,” where “binding” means that the state agencies and local governments are forbidden to take acts contradictory to the Constitutional Court’s decision and are subject to a real legal obligation to actively eliminate the unconstitutionality, along with the fact that this court has earned a high level of trust from the people of South Korea as the guardian of human rights, it is possible that this decision triggered the Supreme Court’s ruling. In any case, we can say that the ruling by the Constitutional Court obliged the South Korean government to conduct diplomatic negotiation with Japan, and the Supreme Court opened the way for South Korean citizens to sue Japanese corporations under domestic law.

However, the attorney for the plaintiffs in the former Mitsubishi case hopes for an across-the-board settlement through the government rather than judicial settlements for corporations as well. As the attorney also points out, the Japanese Supreme Court has noted that “the term ‘waiver’ of claims in this context does not mean to effectively extinguish claims but it only means to have the competency of these claims in litigations lost.”(*8) The ruling of the South Korean Supreme Court creates a path for the pursuit of this thinking. So in the view of the plaintiffs’ attorney, the matter should be seen not as a Japan–South Korea issue but as one between the judiciaries of the two countries and their respective governments. And the South Korean Supreme Court ruling, like the ruling of the Constitutional Court, may be seen as having been intended to apply pressure on the South Korean government.

Finally, I would note that the 2012 Supreme Court ruling was not made by all 14 of the justices and that among the four justices who issued it, two have already retired from the court. Also, the case is once again under appeal; in other words, the 2012 ruling is not final. We will need to see what sort of ruling the court makes next time.

(Originally written in Japanese on December 11, 2013. Title photo: Korean women in front of the Kwangju District Court on November 1, 2013, celebrate their victory in a suit for compensation and damages relating to forced labor at a Mitsubishi Heavy Industries plant in Nagoya during World War II. Photo by Jiji.)