1. In compliance with the orders issued by the Civil Property Custodian, Supreme Commander for the Allied Powers, the Japanese Government has already transferred 38 vessels (Annex A) to Korean Authorities of which 9 are sunken vessels. It is understood that the transfer of these vessels to Korea, as indicated in SCAPIN 1597-A dated 29 June 1946 (Ref. 1-e) and SCAPIN 7028-A dated 29 December 1949 (Ref. 1-g), was ordered on the ground that they were formerly registered in Korea and located in Korean waters on and after 9 August 1945.

2. Around May 1950, the Korean side filed a petition with the General Headquarters, SCAP, for the return of 221 vessels by submitting a “list of vessels to which water was supplied at Pusan” which, the Korean alleged, was a proof that, ‘such vessels had actually been in Korean waters during the period covering 9 August 1945 to 25 September 1945 inclusive. The Japanese Government, thereupon, was ordered by the Civil Property Custodian, SCAP, to investigate on the matter (Ref. 3-File 560 (16 May 50) CPC/FP, 16 May 1950) and the following facts were revealed:

(1) Vessels which cannot be identified in ship Directories and other date....................................136
(2) Vessels which have actually sunk prior to the date of the alleged supply of water by the Koreans..........9
(3) Vessels which are proved by log books to have been in Japanese waters on the very date alleged by the Koreans to have received a supply of water at Pusan...........36
(4) The names of vessels which are duplicated in the list.........6

From the foregoing facts, a report was submitted to the Civil Property Custodian, SCAP, pointing out the utter unreliability of the all■■tion of the Korean side. The report was only acknowledged by the Civil Property Custodian, SCAP, therefore, was ■■■■■■■ed in the Japanese Government to ■■■ ■■■■■.

3. Up to the present time, the Civil Property Custodian, SCAP, took a series of steps presently based upon the policy indicated in paragraph 1.

(1) The five Korean registered vessels belonging to the former Korean Mail Steamship Co., Ltd. (the present Tokyo Mail Steamship Co., Ltd.), namely, KILSEN (3,081. G/T), ANJO (882 G/T), TENKO (2,221 G/T), SAKARAJIKA (1,281 G/T) and KANKYO (2,933 G/T) were located in Japanese waters on and after 9 August 1945 and had been under the government use. These vessels were later loaned to American Military authorities in Korea in compliance with SCAPAP instructions but have not been returned up to the present. Several requests for the return of these vessels were made by the Japanese Government to Korean authorities through the General Headquarters, SCAP, but no compliance was forthcoming from the Korean side. Since this stubborn attitude of the Korean side was considered as a positive deterrent to the reorganization of the Korean Mail Steamship Co. as an incorporated company with a head office outside and branch offices in Japan, based on the Cabinet Order No. 291, 1 August 1949, issued under SCAPIN 1965 dated 18 January 1949 (Ref. 4-a), the General Headquarters, SCAP, instructed by way of SCAPIN 7010-A, dated 16 December 1949 (Ref. 2-a), the exchange of the title to the aforementioned five vessels with those which are equal to the aggregate tonnage made up of government-owned vessels (including 2 National Railways-owned vessels) such as IKI (3,519 G/T), MUROTSU (850 G/T), KOAN (7,079 G/T) and UJINA (2,401 G/T). As a result the former Korean Mail Boat Co. ■■■■red ownership of the ■■■■ Government-owned vessels plus the National Railways-owned vessels ■■■■■ing 33, ■■■■■ ■■■, and the National Railways were ■enzated in kind from the general account of the State to the extent corresponding to the price of lest vessels and the State thereby acquired the title to the said five vessels. Since the Japanese takes the view that the five vessels have thus been “loaned” to Korea, it will in due course request for their return as is warranted in the light of the purpose of SCAPIN 7010-A dated 16 December 1949 (Ref. 2-a) and 095 (10 Jan 50) CPC/FP dated 15 February 1950 (Ref. 2-b).

This disposition positively indicates the fact that SCAP authorities adhere to the principle that even vessels formerly registered in Korea should belong to Japan insofar as they were located in Japanese waters on and after 9 August 1945.

(2) Furthermore, some of the vessels formerly registered in Korea and which were in Japanese waters on and after 9 August 1945 have been sold either with the approval, or at the initiative, of the Civil Property Custodian, SCAP. The two vessels, KAINEI and KEIAZAN, fall under the former category while the RYUYOSAN MARU under the latter(File 095 (19 Feb 49) CPC/FP, 21 July 1949; File 095 (24 May 49) CPC/FP, 28 July 1949- Ref. 5), with the proceeds of the sale having been deposited as blocked accounts for the respective shipowners. This disposition is reasonably construed as reflecting the policy or principle on the part of the Civil Property Custodian, SCAP, that all vessels which were in Japanese waters on and after 9 August 1945, should belong to the Japanese side even if they were formerly registered in Korea.
(3) The shipping companies having ■■■■■■■■ in Japan with ■■■d offices in Korea (the Korean Mail S.S. Co., the ■■■■ Japan S.S. Co., the Keijin Commercial S.S. Co. and the Korean Oil Tanker Co.) which were owners of major vessels of Korean registry located in Japanese waters on and after 9 August 1945 have been recently authorized, in accordance with the Cabinet Order No. 291 dated 1 August 1949 and with the approval of GH■, SCAP, to liquidate their debts and credits and to establish anew independent Japanese incorporated firms, registering as Japanese vessels those which had been formerly registered in Korea (Ref. 40b, c, d, e). This is also a clear endorsement that SCAP authorities recognized the principle that the vessels which were located in Japan on and after 9 August 1945 should belong to Japan even though they had been formerly registered in Korea.

4. The result of investigation regarding those vessels formerly registered in Korea which were in Japanese waters on and after 9 August 1945 is as per annexed list (Annex B).

5. With regard to such vessels as those cited in (2) and (3) of 3 which have become Japanese registered vessels in accordance with the instructions or approvals of SCAP, many commercial transactions have been already conducted, and many debts and credits have been created with the lapse of time in connection with the said transactions. For example, the owners of vessels in (2) of 3 have changed several times as mentioned in the annexed paper (Annex C). If these vessels are to be delivered to Korea, the vessels must be handed back to their original owners through the complicated legal procedures. If the vessels must be taken away from the present, (판독 불가) new legal ■■ ■■■■■■ by ■■rcibly purchasing from them, such would be create difficult problem from the point of provisions in the Japanese Constitution and also from the phase of budgetary deliberations in the Diet.

6. As stated in the Foreigner, the dispute on the title to vessels between Korea and Japan has already been settled with the delivery, by SCAP’s orders, to Korea of the 38 vessels formerly registered there and which were in Korean waters on and after 9 August 1945. The vessels now belonging to the Japanese side are, we understand, in the lawful possession of the respective owners by the designation or under the approval of SCAP authorities and have now entered upon legitimate rights and responsibilities in accordance with respective laws concerned. The Japanese Government therefore, deems that the SCAP authorities join with it in sharing the view that the measures which had been taken are sufficient to consider that the case has always been settled. Such being the present situation, it is hoped that no further steps would be taken until the Japanese Peace Treaty comes into force.
The case involved. it is believed, would be disposed of after the peace treaty in accordance with its stipulations. If it becomes necessary, however, for SCAP to adop(adopt) new policy, it is hoped that the case would be settled in accordance with the purport of the Draft Peace Treaty which has already been announced and which will be signed in a few days.