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A worker walks at Nippon Steel Corp"s collection facility in Tokyo, Oct 27, 2010. [Photo/Agencies]

Japan seeks talks with South Korea over court decision on WWII forced labor

A South Korean court said on Wednesday it would freeze the local assets of a Japanese steel company involved in a compensation dispute with wartime Korean laborers, leading to a diplomatic spat between the two neighbors

Japan quickly called the asset seizure "extremely regrettable" and said Tokyo will push for talks with Seoul on the issue.

In a landmark ruling in October, South Korea"s top court ordered Nippon Steel & Sumitomo Metal Corp to pay 100 million won ($88,000) each to four plaintiffs forced to work for the company when Japan colonized the Korean Peninsula during 1910-45.

But the company had refused to follow that ruling, siding with Japan"s long-held position that all colonial-era compensation issues were settled by a 1965 treaty that restored diplomatic relations between the two governments. Japanese officials said they could take the issue to the International Court of Justice.

On Wednesday, the Daegu District Court"s branch office in the southeastern city of Pohang said it had approved a request by lawyers for the plaintiffs to seize Korean assets held by the Japanese company as it was refusing to compensate the former laborers.

The Japanese company holds 2.34 million shares, or around $9.7 million, in its joint venture in Pohang with South Korean steelmaker POSCO.

In Tokyo, Japan"s Chief Cabinet Secretary Yoshihide Suga said that Japan has "grave concern over the development".

Seoul"s Foreign Ministry said it has no immediate comment on Suga"s statement.

The Seoul-based Yonhap news agency, citing an unidentified official at the Pohang office, reported the district court"s decision to freeze 81,075 of the 2.34 million shares. Yonhap said the asset freeze will become effective after a related court document is delivered to the joint venture.

The district court said it couldn"t immediately confirm the Yonhap report.

Nippon Steel & Sumitomo Metal Corp said it had not received a document from the court.

"We will consult with the Japanese government and take appropriate measures," a company spokeswoman said.

The asset freeze could further chill diplomatic ties between Seoul and Tokyo, which are both key Washington allies in the region. The October ruling was the first of its kind, and in November, the Supreme Court ordered a second Japanese company, Mitsubishi Heavy Industries, to compensate 10 former Korean workers, drawing strong criticism from Japan.

When the two neighbors signed the 1965 treaty, Seoul received more than $800 million in economic aid and loans from Tokyo and used the money to rebuild its infrastructure and economy devastated by the 1950-53 Korean War.

In its October and November verdicts, the Supreme Court said the 1965 treaty cannot prevent individuals from seeking compensation for forced labor because the Japanese companies" use of the laborers were illegal acts against humanity that were linked to Tokyo"s colonial rule and its war of aggression.

The latest move could further complicate ties between the two nations already embroiled in a dispute over whether a South Korean warship had locked its targeting radar on a Japanese patrol plane last month.

AP, Reuters and AFP contributed to this story.

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