Protesters gather in front of a statue symbolizing former South Korean wartime laborers to criticize then–President Yoon Suk-yeol's diplomacy, March 16, 2023, in Seoul. (©Kyodo)
South Korea's Supreme Court has once again ruled that Japanese corporations bear civil liability for the wartime mobilization of Koreans during Japan's colonial era — a decision that risks unsettling the fragile diplomatic thaw between Seoul and Tokyo
On December 11, the court upheld an appellate court ruling in a damages lawsuit brought by the four children of a deceased wartime laborer against Nippon Steel, ordering the company to pay a combined ₩100 million KRW (approximately $70,000).
The plaintiffs' father, Jeong, had during his lifetime testified he suffered harm after being forcibly mobilized to work at a steel mill in Iwate Prefecture between 1940 and 1942.
Relying on those words, his surviving family members filed a suit in April 2019, seeking roughly double the amount ultimately granted.
Court Reopens Old Wounds
What makes the latest ruling consequential is not the verdict per se but the precedent it chooses to revisit.
For the first time since 2018, South Korea's top court again embraced the contested interpretation that the 1965 Treaty on Basic Relations between Japan and South Korea did not extinguish individuals' rights to seek damages over wartime mobilization.
Under the court's interpretation, the treaty settled state-to-state claims while leaving individual plaintiffs free to pursue compensation from Japanese companies.
Critics argue that this approach pushes the judiciary into terrain traditionally reserved for the executive branch.
Lee Wooyoun, a researcher at the Nakseongdae Institute of Economic Research, says the court has once again "stepped into treaty interpretation," effectively reopening questions that previous governments had sought, however imperfectly, to close.
By grounding its reasoning in what he calls an academically fragile theory, Lee argues, the judiciary has repeatedly entangled bilateral relations "in a knot of its own making."
How the Controversy Began
That knot has been tightening for decades. The current legal controversy traces back to February 2005, when four South Korean plaintiffs filed a lawsuit alleging that they had been forcibly conscripted into labor in Japan during the colonial era.
At the time, however, South Korean courts largely sided with the defendants. In 2008, a trial court dismissed the claims, and an appellate court upheld that decision the following year.
But that consensus broke in 2012, when the South Korean Supreme Court overturned both rulings and remanded the case. The shift culminated in October 2018 with a landmark ruling that declared Japan's colonial rule illegal and preserved individuals' right to pursue damages against Japanese companies.
Central to the court's reasoning was the so-called "illegal annexation theory," a postwar narrative advanced by left-leaning Japanese scholars before gaining traction in Korean legal and academic circles.
At its core, the theory holds that Japan's 1910 annexation of the Korean Peninsula was illegal and therefore null and void, stripping subsequent colonial-era actions, including wartime mobilization, of any legal legitimacy.
Japanese firms declined to comply with the ruling, citing the 1965 treaty, which Tokyo has long maintained settled all colonial-era disputes "completely and finally."
The Diplomatic Costs
In early 2019, South Korean courts began freezing and seizing domestic assets of Japanese companies to enforce compensation orders.
By July, then–Prime Minister Shinzo Abe responded with export controls on South Korea, citing security concerns. Bilateral relations deteriorated rapidly, triggering a nationwide boycott of Japanese goods in South Korea and an escalating cycle of tit-for-tat retaliation.
The standoff persisted until 2023, when the Yoon Suk-yeol administration moved to reset ties. Seoul advanced a "third-party compensation scheme," operated through a government-run foundation and financed by voluntary contributions from South Korean companies, rather than Japanese firms.
Tokyo accepted the proposal, enabling relations to stabilize.
As of September 2025, 26 former wartime laborers or their bereaved families had reportedly received compensation of up to $216,000 per person. For a time, the arrangement offered a pragmatic, if politically fragile, path forward.
Dispute Far From Settled
The December 11 ruling suggests that the legal battle is far from over. After the 2018 Supreme Court decision, a wave of similar lawsuits followed. More than 87 plaintiffs are currently pursuing similar claims against 11 Japanese companies, with dozens of cases still pending.
Ju Ik-jong, a lecturer at the Rhee Syngman Academy, warns that the scale of potential liability could prove unmanageable. Some estimates, he says, place the number of possible compensation recipients at more than 200,000.
"With the latest [December 11] decision possibly opening the door to more lawsuits, there will have to be a discussion about what replaces the fund if Korean companies can no longer shoulder the burden," he says.
Ju also adds that the possibility of plaintiffs once again seeking direct compensation — and formal apologies — from Japanese firms and even the government could not be ruled out.
By the summer of 2025, the compensation fund was reportedly depleted, raising doubts about its long-term viability.
Testing the Limits of Rapprochement
President Lee Jae-myung has thus far signaled his intention to maintain the compensation framework established by his predecessor.
Yet observers caution that any broader deterioration in bilateral ties — whether over security, trade, or regional diplomacy — could quickly elevate historical grievances back to the center of the relationship.
"Some lawsuits still explicitly demand direct payment from Japanese corporations, including through asset liquidation," says Marie Kim, a jurist and professor of history at St Cloud State University in Minnesota.
"By declining to narrow or recalibrate its 2018 precedent, the Supreme Court has effectively kept those avenues open."
She cautions that the dispute is far from over and the recent court decision could pose new challenges to reconciliation efforts.
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Author: Kenji Yoshida
