North Korean Economy Watch

UPDATE 6 (2013-8-1): The South Korean Supreme Court  has recognized for the first time North Koreans as blood relatives of a South Korean family. The court’s decision will allow them to claim their share of their father’s inheritance. According to the New York Times:

A doctor by training, Mr. Yoon left 10 billion won, or $8.9 million, worth of property when he died in 1987.

As his South Korean children moved to inherit the properties, his North Korea-born daughter, now 78, filed a lawsuit in 2009, claiming that they should share the fortune with Mr. Yoon’s children in the North.

She went to extraordinary lengths to win her case. She found a Korean-American who was willing to travel to the isolated North to find, with the help of the North Korean government, her siblings in the North and collect DNA evidence, including hair and fingernail samples, and she also received videotaped statements from them allowing her to represent them in a South Korean court of law.

In a 2011 lower-court ruling, which was formally upheld by the Supreme Court on Wednesday, the North Koreans were recognized as biological children of Mr. Yoon.

The court also recognized the North Koreans’ right to hire a South Korean lawyer and file a lawsuit in the South, as well as their rights to a portion of the inheritance from their father.

Despite the ruling, the North Korean children are unlikely to get their money anytime soon.

In anticipation of the cases like Mr. Yoon’s, South Korea enacted a law last year stipulating that any inheritance money won by North Koreans be kept in the care of a court-appointed custodian and sent to the North only with government permission. With tensions high with the North after its Feb. 12 nuclear test, South Korea keeps tight restrictions on cash transmissions to the North.

But legal experts say that if the North Koreans file another lawsuit claiming that this law violates their rights under the Constitution of South Korea, it can open a whole new legal battle over the ban on cash transmissions.

The South Korean Constitution includes North Korea in the South Korean territory, essentially giving all North Koreans citizenship in South Korea.

There are two other similar cases of which I am aware. See here and here.

UPDATE 5 (2012-12-1): The Hankyoreh fills us in on how the case is proceeding:

Mrs. Yoon, 77, is a native of South Pyongan province in what is today North Korea. During the Korean War, her father took her, his eldest daughter, with him to South Korea, leaving her two brothers and three sisters behind. He went on to remarry and have four more children, two boys and two girls. By the time he passed away in 1997, he had amassed a sizable fortune in real estate and other holdings. But during the registration of the inheritance in 2008, a battle ended up breaking out between Mrs. Yoon and her half-siblings.

She learned from an American missionary that four of her full siblings are still alive in North Korea. She also received a 2010 court ruling confirming that they were the offspring of her father. After filing suit for a portion of the inheritance on their behalf, she finally received a settlement in which they would receive 3.25 billion won (US$3 million) in real estate and cash from their half-siblings.

Mrs. Yoon spent 690 million won (US$637,400) of the money on her litigation, eventually coming away with 2.3 billion won (US$2.12 million) after signing a sales contract in which she sold her real estate to her North Korean siblings for 2.5 billion won (US$2.3 million). She also signed a contract stating that she would lease and hold their real estate until when they could manage it themselves, with the maintenance costs counting as rent.

Last May, the Act on Special Cases Concerning Family Relations and Inheritances Between North and South Koreans went into effect. The act stipulates that North Koreans who acquire South Korean property through inheritance request the court appointment of a property custodian. Mrs. Yoon tried to get appointed as property manager for her siblings in North Korea.

But the court gave the status instead to a non-relative, an attorney identified by the surname Kim.

Park Hee-geun, judge for the 21st family affairs division at Seoul Family Court, ruled on Nov. 30 that it was “proper for the efficient management of the considerable assets acquired by the siblings in North Korea that a neutral attorney be appointed as property manager instead of Mrs. Yoon, who has a conflict of interest.”

A court official said the decision to appoint a neutral party was made because Mrs. Yoon was suspected of spending or concealing part of the inheritance ahead of the law going into effect and before she requested to be appointed property manager.

“This is the first appointment of a property custodian since the law went into effect, and it clearly shows the legitimacy and necessity of the law,” the official added.

UPDATE 4 (2011-7-14): The Choson Ilbo is worried about the legal implications of the finding:

The court order marks the first instance where the inheritance rights of children left behind in North Korea were recognized in South Korea. An estimated 5 million North Koreans came to the South during the Korean War. An organization estimates that some 8.3 million of such people and their children and grandchildren are living here, and their families and descendants left behind in the North are also estimated in the millions. The court order is expected to lead to similar lawsuits against parents or half-siblings living in South Korea. Even the grandchildren of North Korean escapees could sue.

According to South Korean law, the direct descendants of deceased citizens are entitled to inherit their assets. The court order would have to be applied across the board to all children of North Korean escapees still living in the North, and this could trigger chaos and an explosive increase in lawsuits. This raises the question how to deal with inheritance suits filed by North Koreans claiming to be members of a particular clan that also exists in South Korea. In such cases, it would be difficult to verify the accuracy of family registers kept in North Korea and whether to recognize their validity.

The Justice Ministry is working on a law that requires government permission when North Koreans transfer inherited assets from families in the South outside the country and allows the transfer of limited amounts only in certain specified cases, such as paying for medical bills and basic livelihood. But North Koreans could file suits claiming that this regulation infringes their constitutional rights, since the South Korean Constitution applies in principle to all Koreans. The court order raises more questions than it answers.

UPDATE 3 (2011-7-13): It appears as if the North Koreans were granted an undisclosed amount of the estate in mediation. According to the Korea Herald:

Four North Koreans from the same family have come to share assets left by their late father with their half-brothers and sisters in South Korea under mediation by a Seoul court in the first case of its kind.

The North Koreans, surnamed Yoon, had filed a lawsuit against their South Korean stepmother and four half-brothers and sisters in February 2009 demanding they split 10 billion won ($9.35 million) worth of assets left by their father who died in the South.

The Seoul Central District Court on Tuesday said the South Korean family agreed to give part of the disputed real estate from their father to the North Koreans along with some of their inherited assets in cash.

The court did not announce the exact amount of assets owed to the North Koreans, citing an agreement between the two sides not to disclose details of the deal mediated by the court.

Several groups of North Koreans have filed similar lawsuits at South Korean courts as the country’s Constitution considers the entire Korean Peninsula as its national territory. But the group involved in Tuesday’s agreement became the first to win partial ownership of assets left by a relative who defected to the South.

The father, who ran a hospital in North Korea, crossed the border to the South right after the Korean War began in 1950, taking only his eldest daughter with him. He had four other children with his South Korean wife and died in 1987.

The eldest daughter later found her North Korean family with the help of an American missionary who traveled between the two Koreas. The family sent letters of attorney, videotapes with their images and hair samples to the sister in the South via the missionary. Based on the materials, the North Koreans filed two lawsuits with South Korean courts ― one asking for a split of the father’s leftover assets and the other seeking court confirmation of their biological relationship with the father.

Last year, the Seoul Family Court acknowledged the blood relationship between the four North Koreans and the deceased, citing DNA test results. But the South Korean family appealed the decision.

The North Koreans are thought to have delegated the authority to manage the real estate and money from their father to their eldest biological sister in the South.

The North Koreans’ lawyer Bae Geum-ja confirmed that there will be no cross-border transmission of the assets.

To cope with possible property disputes between South and North Koreans, Seoul’s Justice Ministry said it plans to legislate a law restricting North Koreans from taking their share of inherited assets out of the South even if they are granted ownership.

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