South Korean forced labor victims to seek Japan's Mitsubishi asset sale

South Koreans forced to work for Japanese occupiers will seek a court order to forcibly liquidate Japan's Mitsubishi Heavy Industries' (7011.T) assets to compensate them, their lawyers said on Tuesday, risking more Japanese anger over the issue.

The question of compensation for South Koreans for labor during Japan's 1910-45 occupation of the Korean peninsula has soured the U.S. allies' relations, which took a turn for the worse this month when Japan restricted exports of high-tech material to South Korea.

The export restrictions threaten global supplies of memory chips and smartphones.

Japan has denied that the dispute over compensation for laborers is behind the export curbs, even though a Japanese government minister this month cited broken trust with South Korea over the labor dispute in announcing the export restrictions.

Instead, Japan has cited “inadequate management” of sensitive items exported to South Korea, with Japanese media reporting that quantities of one of the materials had been shipped to North Korea.

South Korea denies that. The Japanese government has said it had not said any materials were going to North Korea.

A South Korean court ruling forcing Mitsubishi Heavy to liquidate its assets in South Korea to compensate workers would put an additional strain on relations, likely making a resolution of the dispute over exports even more difficult.

South Korea's Supreme Court last year ordered the Japanese company to compensate 10 forced labor victims, drawing a strong rebuke from Japan, which believes the matter was settled under a 1965 treaty.

The lawyers said they would file court papers seeking the sale of Mitsubishi's assets, as it had failed to respond by a Monday deadline to requests for discussions on the case.

“For plaintiffs who are over 90 years old, the process set by the law can no longer be delayed,” the lawyers said in a statement, adding Mitsubishi has done nothing to address the court ruling for more than six months.

“We will apply for an order to sell the assets of Mitsubishi Heavy Industries as soon as possible,” they said.

Mitsubishi Heavy Industries had no immediate comment.

The South Korean Supreme Court ruled in November Mitsubishi must pay between 80 million won and 150 million won ($68,000-$127,000) to each of 10 people who worked for the company during World War Two.

The same court had ruled earlier in October that Japan's Nippon Steel & Sumitomo Metal Corp's (5401.T) must pay four steel workers 100 million won each for their forced labor during the war.

A Nippon Steel Corp spokesman said it had no immediate comment.

Speaking about the possible court order, Japanese Trade Minister Hiroshige Seko said he hoped the matter would be solved through diplomatic channels.

“Japanese companies should not come to actual harm. Basically, this is something we'd like to have the Ministry of Foreign Affairs deal with,” he told a briefing in Tokyo.