This article was originally published by the JoongAng Ilbo and translated by OKN Correspondent.
It was revealed that there were signs of North Korea reoperating manufacturing facilities owned by South Korean companies left at the Kaesong Industrial Complex without notice. The intelligence authorities are analyzing a fire that occurred at the industrial complex on April 21 also occurred due to the North’s resumption of operations at the facilities.
Multiple sources familiar with the situation told the JoongAng Ilbo newspaper on May 8 that the “military detected the movement of personnel and vehicles in the Kaesong Industrial Complex with observation cameras.”
The facilities that North Korea seems to have operated without permission were owned by about 10 companies related to clothing, miscellaneous goods, and electronics. “Last month, the fire at the Kaesong Industrial Complex was also observed between the two companies’ buildings where signs of operation were detected,” a source said. “There is a possibility that the fire broke out while North Korea was operating production facilities in the Kaesong Industrial Complex.”
Suspicions have surfaced again that North Korea is making economic gain by arbitrarily utilizing the assets of South Korean companies. It cannot be ruled out that this may have been in line with North Korea’s gradual opening of trade with China since early this year. North Korea had completely shut down its borders to block the spread of the new COVID-19 infection.
An intelligence source who wanted to remain anonymous said, “A few years ago, South Korean investigative agencies and intelligence agencies conducted an investigation of a distribution process and sample products flowing from North Korea to China due to the circumstances under which North Korea operates the Kaesong Industrial Complex.” The source added that “at the end of last year, we spotted unloading objects believed to be manpower and materials inside the Kaesong Industrial Complex.”
The government institutions in charge of this matter are also reportedly watching the process of supplying power to the industrial complex. In response to North Korea’s fourth nuclear test and long-range missile launch, the South Korean government decided to completely shut down the industrial complex on February 10, 2016. The next day, the electricity supply was cut off. Therefore, if North Korea wants to restart production facilities at the Kaesong Industrial Complex, it must supply electricity on its own.
In this regard, another source said, “A relatively stable power supply is connected from the Kaesong Industrial Complex North Korean CIQ [Customs, Immigration and Quarantine] office to nearby military facilities and railway facilities.” The source added that “they can use electricity from the North Korean utility pole in the industrial complex.”
Earlier in October 2017, foreign media outlets reported that North Korea had secretly operated a clothing factory owned by a South Korean company in the Kaesong Industrial Complex. They said that it operated 19 factories without notifying the South and produced clothing for domestic use and other products ordered from China. The National Intelligence Service also reported to the National Assembly’s intelligence committee that it believes that part of the Kaesong Industrial Complex is being reoperated.
Shortly after the report came out, Uriminzokkiri, a North Korean propaganda media outlet aimed at foreign audiences, responded, “No one should care about what we do in the Kaesong Industrial Complex,” adding, “factories in the industrial complex will run more vigorously.” The media outlet did not directly acknowledge the use of the facilities, but it came up with an absurd argument saying that they had the right to operate the industrial complex.
However, even at that time, the facts were not clearly confirmed due to physical limitations. Entrepreneurs doing business at the Kaesong Industrial Complex tried to visit North Korea to inspect facilities there after receiving approval from the South Korean government in May 2019. However, they were not able to do so because North Korea did not respond to their request.
If North Korea benefited from operating facilities in the Kaesong Industrial Complex without permission, they would have violated the property rights of South Korean companies, but it is unclear whether legal measures (to help South Korean companies damaged) will be possible.
It is legally possible for South Korean companies to file a lawsuit against the North Korean regime for damages in a South Korean court. However, a lawsuit can only be filed within three years of the time the damage is recognized. Depending on the exact date of recognition, the extinctive prescription (expiration of claim rights) can be an issue.
It is also possible for the companies to file a lawsuit against the South Korean government for their damages by saying that the government left room for unauthorized operation of their properties in North Korea by making the decision to close the industrial complex without giving time for the companies to deal with their property left there. This can also be filed within five years of recognition.
Lim Eul-chul, a professor at Kyungnam University’s Institute for Far Eastern Studies said, “It might be possible to raise questions about the unauthorized use of assets from South Korean companies by North Korea, but it seems difficult to actually receive compensation for it.” He added that “North Korea is blaming the South for the suspension of the industrial complex, and Pyongyang is unlikely to admit its wrongdoing because it has proposed reoperating it multiple times.”
