Nippon Steel & Sumitomo Metal Corp said on Tuesday a ruling by Korea's top court that the Japanese company should compensate four South Koreans for their forced labour during World War Two is "deeply regrettable".
President Moon, who once represented South Korean forced laborers as a lawyer in the 2000s, said after taking office previous year said that the 1965 treaty can not prevent individuals from exercising their rights to receive damage compensation.
Following news of the court's decision, Kono called the South Korean Ambassador to Japan, Lee Su-hoon, to the Foreign Ministry and told him that it "fundamentally undermines the legal basis that has served as the foundation of the friendly relationship between the two countries since the normalization of bilateral relations in 1965".
The Supreme Court upheld a lower court ruling that the firm pay each of four plaintiffs - only one of whom is still alive - 100 million won ($88,000) for being forced to work at its steel mills between 1941 and 1943.
Japanese Prime Minister Shinzo Abe said Tokyo will respond "resolutely" to the ruling, which he described as "impossible in light of worldwide law".
Tuesday's ruling eliminated the "room for diplomacy" and Japan could take the case to global arbitration, though South Korea is not a member of the worldwide Court of Justice, said Jin Chang-soo, a senior fellow at the Sejong Institute think tank south of Seoul.
Japan and South Korea share a bitter history that includes Japan's 35-year occupation of the peninsula and the use of comfort women, Japan's euphemism for women - many of them Korean - forced to work in its wartime brothels.
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He said the ruling violated a 1965 treaty between Seoul and Tokyo that was accompanied by Japanese payments to restore diplomatic ties. At that time, the court sent back such compensation cases, including Nippon Steel's case, to Seoul High Court.
"Japan will take resolute action, considering all options available including an worldwide trial", Foreign Minister Taro Kono said, suggesting that Japan may file a complaint with the global Court of Justice.
Tokyo saw Seoul as departing from a long-standing position held by both governments that the issue of forced labor compensation had been settled.
"The government hopes to improve South Korea-Japan bilateral relations in a future-oriented manner", it added.
South Korean President Moon Jae-in has hailed new relations with the North in recent months, but others remain critical of the military agreements between Seoul and Pyongyang.
It also ruled that the 1965 bilateral treaty signed between South Korea and Japan to settle colonial-era issues does not terminate individuals' rights to claim damages.
The government "respected" the court ruling, the prime minister's office said, and was "saddened by the pain the forced labor victims had to endure".
The source said Pompeo's counterpart in the upcoming talks is likely to be Kim Yong-chol, a top aide to the North Korean leader. "Seizing the companies' assets in South Korea could also be a long and hard process if they continue to refuse paying the victims".