4. However, the Government of the Republic of Korea did not respond to the request for diplomatic consultations and took no action, as the Korean applicants took steps to insee the assets of the Japanese companies interviewed in order to satisfy the judgments of the Supreme Court of Korea. In the absence of a government of the Republic of Korea, the Government of Japan sent a notification and request (“communication”) to the Republic of Korea on 20 May 2019. Through this communication, the Japanese government invoked the compromise clause of the agreement and referred the dispute to arbitration in accordance with Article III.2 of the agreement; And Japan has continued arbitration until today. However, the Government of the Republic of Korea did not follow the procedures set out in Article III of the agreement and not only complied with its obligation to appoint an arbitrator, but also to elect a third country whose government must appoint an arbitrator for the contracting party within the time frame provided by the agreement. 1. Japan and the Republic of Korea have forged close, friendly and cooperative relations on the basis of the Treaty on Fundamental Relations between Japan and the Republic of Korea and other relevant agreements concluded by the two countries during the normalization of their relations in 1965. The agreement on the resolution of real estate and debt issues and on economic cooperation between Japan and the Republic of Korea (the “agreement”), which is at the heart of these agreements, provides that Japan grants the Republic of Korea $300 million in grants and loans of up to $200 million (Article I) and that property issues are the rights and interests of both parties and their nationals (including including legal entities) Contracting parties and their nationals are “fully and definitively regulated” and no dispute is raised on this matter (Article II). The agreement has therefore so far formed the basis of bilateral relations. Japan and South Korea remain engaged in an international dispute over the interpretation of the 1965 agreement between Japan and the Republic of Korea over the resolution of property and debt issues and economic cooperation. This is clearly a general settlement agreement on Japan`s requests for annexation of Korea from 1910 to 1945.

As part of the agreement, Korea received $300 million from Japan as a full and final settlement for interstate claims, claims between one state and individuals of the other, and claims among individual states, including Article IV a) of the 1951 San Francisco Peace Treaty. Private companies were also considered individuals within the meaning of the agreement. How can we solve it? In accordance with the 1965 agreement, a settlement must first be sought through diplomatic negotiations and, if not, the dispute must be resolved by international arbitration. As the Korean government opposed a diplomatic agreement, the Japanese government proposed international arbitration in accordance with the 1965 agreement. If the Korean government believes that the 2018 Supreme Court ruling is consistent with international law, international arbitration would be the best option to settle the dispute with Japan once and for all. On the other hand, by opposing international arbitration, the Korean government could have an impact on Korea`s international credibility on the grounds that it could lose the case.