The ruling by South Korea’s Supreme Court ordering Nippon Steel & Sumitomo Metal Corp. to pay damages to South Koreans mobilized for wartime labor during Japan’s 1910-1945 colonial rule of the Korean Peninsula threatens to shake the legal foundation of bilateral relations since they were normalized in 1965. In defying a bilateral accord that stipulates the issue of compensation for damage incurred during the colonial era was “completely and finally” resolved with Tokyo providing $500 million in economic aid to Seoul 53 years ago, the court decision contradicts the South Korean government’s official position on the matter and could throw the country’s diplomatic credibility in question. South Korea needs to take steps to prevent the ruling from undermining the basis of our bilateral ties.

In the first ruling that finalizes the judiciary decision on a string of damages suits filed over the wartime forced labor, South Korea’s top court said the right of the plaintiffs to seek damages as individuals has not expired despite the 1965 agreement with Japan, ordering the leading Japanese steel maker to pay a total of 400 million won (some ¥40 million) to the four plaintiffs. It’s now deemed likely that similar rulings will be handed down in nearly a dozen pending suits filed against Japanese firms that used Korean labor mobilized during the war, in which lower courts have awarded the plaintiffs damages.

That the 1965 accord, which accompanied the Japan-South Korea Basic Treaty that normalized the bilateral ties, finally settled the compensation issue was confirmed once again by South Korea in 2005. At that time, the administration of President Roh Moo-hyun, in disclosing diplomatic documents related to the normalization talks between the two countries, acknowledged that the South Korean government was responsible for paying compensation to South Koreans mobilized to wartime labor for Japanese firms out of the economic aid provided by Japan in 1965.

Nevertheless, the country’s Supreme Court, in a 2012 decision sending a case back to a high court, determined that the plaintiffs’ right as individuals to seek compensation for damage incurred over “inhumane and illegal acts” linked to Japan’s colonial rule of Korea did not expire with the 1965 agreement. The following year, the Seoul High Court ordered Nippon Steel & Sumitomo Metal to pay damages to the plaintiffs and the Japanese firm appealed the case to the top court. In that sense, Monday’s Supreme Court ruling came as no surprise because it repeated its 2012 decision.

Even as Tokyo and Seoul repeatedly vow to seek future-oriented ties, the relations between the two Northeast Asian neighbors continue to be haunted by disputes deriving from their history, including the wartime “comfort women” issue and the territorial row over Takeshima, the rocky islets in the Sea of Japan controlled and called Dokdo by South Korea. The latest ruling by South Korea’s top court on the forced labor lawsuit threatens to have an even more serious impact on Japan-South Korean relations in that it challenges the diplomatic agreements that the two governments have established over more than half a century of ties.

The court decision could also undermine our economic relations. The plaintiffs in the suit reportedly say they would take steps to seize the assets of the Japanese firm in South Korea if it refuses to pay the compensation. Such a prospect could force Japanese companies to think twice about their investments and business operations in South Korea. Japan’s foreign direct investment in South Korea, which had been on a long-term decline, picked up roughly 50 percent in 2017 from the previous year. But the court decision could end up discouraging Japanese firms from investment plans in the country, which would negatively impact South Korea’s economy as well. Disruptions to bilateral ties could also dent the tourism between the two countries: Last year, 7.14 million South Koreans visited Japan, accounting for the largest group of inbound tourists after China.

Prime Minister Shinzo Abe has called the South Korean top court decision “impossible in light of international law.” Calling the decision “extremely regrettable and unacceptable,” Foreign Minister Taro Kono said the government is ready to take resolute steps from all available options — including taking the matter to international court — “unless appropriate measures are taken immediately” by South Korea. A possible legal battle at the venue of the International Court of Justice would endanger the ties that the two countries have built up over several decades. The South Korean government, which has said it “respects” the decision of the judiciary while hoping for a future-oriented development of its relations with Japan, should first set its position straight and contain any disruptions to the bilateral ties.