The long-awaited ruling, delivered Tuesday after more than five years of deliberation at Seoul's top court, could have larger implications for similar lawsuits that are pending in South Korea and will likely trigger a diplomatic row between the Asian U.S. allies.
Japanese Prime Minister Shinzo Abe said Tokyo will respond "resolutely" to the ruling, which he described as "impossible in light of international law." He said the ruling violated a 1965 treaty between Seoul and Tokyo that was accompanied by Japanese payments to restore diplomatic ties. Japanese Foreign Minister Taro Kono said Japan could potentially take the case to the International Court of Justice.
"Today's ruling by the South Korean Supreme Court has one-sidedly and fundamentally damaged the legal foundation of Japan-South Korea relations," Kono said. South Korean President Moon Jae-in had no immediate reaction to the ruling. South Korean Foreign Ministry spokesman Noh Kyu-duk said Tokyo and Seoul "should gather wisdom" to prevent the ruling from negatively affecting their relations.
The court said Japan's Nippon Steel & Sumitomo Metal Corp. should provide compensation of 100 million won ($87,680) to each of the four plaintiffs, who were forced to work at Japanese steel mills from 1941 to 1943. Among them, only 94-year-old Lee Chun-sik has survived the legal battle, which extended nearly 14 years.
"I won the case but I am here alone, so I am sad, a lot of tears are coming out," an emotional Lee told reporters after the ruling. "It would have been good if we were still here altogether." The court rejected Nippon Steel & Sumitomo Metal's stance that the issue of compensation for forced labor had been settled by the 1965 treaty. The court also rejected the company's argument that it is a different entity from the steelmaker that forced the South Koreans to work during the war. The current company, one of the world's largest steel producers, was formed from the merger of several companies after the war.
Nippon Steel & Sumitomo Metal called the ruling "deeply regrettable" and said it will "carefully review" the court's decision in considering its next steps, taking into account "the Japanese government's responses on this matter and other factors."
Seoul and Tokyo's bitter disputes over history, including issues surrounding South Korean women forced into wartime sexual slavery, have complicated Washington's efforts to strengthen trilateral cooperation to deal with North Korea's nuclear threat and China's growing influence in the region.
President Moon, who once represented South Korean forced laborers as a lawyer in the 2000s, said after taking office last year said that the 1965 treaty cannot prevent individuals from exercising their rights to receive damage compensation. In the past, both governments have stated that the issue of forced labor compensation had been settled by the treaty.
Moon has also questioned the validity of a 2015 agreement with Japan negotiated by South Korea's previous conservative government to compensate South Korean women forced into sexual slavery by Japan's wartime military. Many South Koreans believe Seoul settled for far too little in that agreement and have been calling for the disbanding of a Seoul-based foundation established to support the victims with a 1 billion yen ($9 million) fund provided by Japan.
Tokyo maintains that the $500 million Japan provided to South Korea under the 1965 treaty was meant to permanently settle all wartime compensation issues. But the Supreme Court in Tuesday's ruling said the treaty does not terminate individuals' rights to seek compensation for the "inhumane illegal" experiences they were forced into.
Kim Jin-young, an activist from a group representing South Korean forced labor victims, said the ruling will likely affect the outcomes of more than a dozen similar lawsuits pending in local courts, including a case against Mitsubishi Heavy Industries now with the Supreme Court. The ruling could also trigger more lawsuits by South Korean victims or their families against Japanese companies accused of exploiting forced labor.
"There are likely more obstacles left before the victims receive compensation," Kim said. "The legal battle may reach a third-country location. Seizing the companies' assets in South Korea could also be a long and difficult process if they continue to refuse paying the victims."
The four plaintiffs filed a damage lawsuit against Nippon Steel & Sumitomo Metal with the Seoul Central District Court in 2005 after two of them lost a similar suit filed in Japan. The Supreme Court in 2012 overturned rulings by lower courts that denied compensation for the plaintiffs and sent the case back to the Seoul High Court, which in 2013 ruled that the company compensate the plaintiffs 100 million won each.
Tuesday's ruling came more than five years after the company appealed the High Court decision in August 2013.
AP writer Mari Yamaguchi in Tokyo contributed to this report.