South Korean Court OKs Seizure of Nippon Steel Assets

January 9, 2019

Seoul--A South Korean court has approved the seizure of assets of Nippon Steel & Sumitomo Metal Corp. <5401>, which refuses to follow a Supreme Court order to pay compensation for wartime labor.

Plaintiffs in a damages lawsuit against the company over the wartime labor on Tuesday announced the recent approval given by the Pohang branch of Daegu District Court.

The plaintiffs warned that they will seek a court order to sell the assets in South Korea unless Nippon Steel meets their request for talks.

The Japanese government sees the wartime labor issue as resolved with an agreement on claims and property concluded in 1965, when the two countries normalized their diplomatic relations.

After the plaintiffs filed a petition for the seizure of Nippon Steel assets in South Korea, the government started considering how to respond. The focus is when Japan will take action.

So far, the South Korean government has made no clear response to the issue. Its ties with Japan are likely to worsen further after deteriorating due to a recent incident in which a South Korean destroyer directed its fire-control radar at a Japanese Maritime Self-Defense Force patrol plane.

Under the Pohang branch's decision, Nippon Steel will be banned from selling some of its shares in a joint venture with South Korean steelmaker POSCO.

If the court seizes the portion of shares in POSCO-Nippon Steel RHF Joint Venture Co., known as PNR, and orders them sold, the assets can be converted into cash for compensation. The plaintiffs have yet to file for a court order for such sale.

The plaintiffs urged Nippon Steel to accept talks immediately.

Japanese Prime Minister Shinzo Abe on Sunday said on television that he had instructed relevant government agencies to consider concrete measures following the filing of the asset seizure petition.

Foreign Minister Taro Kono said Monday that Japan needs to take immediate action if a Japanese company faces a disadvantage. Jiji Press