SEOUL: The South Korean government announced a plan Monday for an existing foundation to pay compensation to plaintiffs on behalf of Japanese companies sued over wartime labor, an effort to resolve a dispute that had plunged relations between the two countries to their lowest point.

The payments will be financed by donations from South Korean companies, including steelmaker Posco, that received Japanese economic assistance under the 1965 bilateral agreement on property and claims.

Before the compensation plan was announced, Japanese Prime Minister KISHIDA Fumio told parliament in Tokyo that his cabinet upholds its predecessors’ statements and documents on the country’s history.

Seoul announced the plan after Tokyo rejected a South Korean request for donations to the foundation by Japanese companies.

Some plaintiffs may refuse to accept compensation payments by the foundation and take legal countermeasures.

The Japan Business Federation, or Keidanren, and the Federation of Korean Industries are considering establishing a joint fund for young people, sources familiar with the matter said.

In 2018, South Korea’s Supreme Court ordered Japanese defendants–Nippon Steel Corp. and Mitsubishi Heavy Industries Ltd.–to pay compensation to South Koreans requisitioned to work for them during World War II.

The Japanese government refused to accept the rulings, reiterating its position that the wartime labor issue has been resolved based on the 1965 agreement.

In 2019, Japan imposed stricter controls on exports to South Korea.

A series of rulings issued in South Korea since 2021 ordered the sale of assets held in South Korea by Mitsubishi Heavy and Nippon Steel. The compensation plan means that the Japanese assets will not have to be sold.

South Korean President Yoon Suk-yeol is now considering vising Japan as early as this month, sources familiar with the matter said.

JIJI Press