Kim Sung-joo, center, forced into labor during Japan’s occupation of the Korean Peninsula, speaks upon her arrival at the Supreme Court in Seoul on Thursday. (Ahn Young-Joon/AP)

 Rulings by South Korea’s Supreme Court over the issue of forced labor during Japanese colonial rule 70 years ago have plunged relations between the United States’ two closest allies in Asia into crisis.

On Thursday, South Korea’s Supreme Court ordered Japan’s Mitsubishi Heavy Industries to compensate 10 South Koreans for being forced to build ships and aircraft for Japan’s war effort in 1944. 

It was the second such ruling in a month, poisoning relations between the Asian democracies at a time of heightened tension in the region. Experts said it complicates efforts to present a united front against the threats posed by North Korea’s nuclear weapons program and China’s increasingly aggressive regional diplomacy.

Japan maintains that the issue of forced labor was fully settled in 1965 when the two countries restored diplomatic ties and Tokyo gave Seoul $500 million in grants and loans in a “final and complete” settlement for its occupation of the Korean Peninsula from 1910 to 1945.

But elderly victims of forced labor have been pursuing their own claims through the courts for years, and South Korean President Moon Jae-in supported their right to claim compensation after he took office last year. 

Last month, South Korea’s Supreme Court also ruled in favor of South Koreans seeking compensation from Japan’s Nippon Steel & Sumitomo Metal. At least 10 more cases involving more than 900 plaintiffs are still awaiting final judgment.

Japan’s foreign minister, Taro Kono, called Thursday’s decision “extremely regrettable and totally unacceptable” and said Tokyo would consider taking the case to international arbitration.

“The decision completely overthrows the legal foundation of the friendly and cooperative relationship that Japan and the Republic of Korea have developed since the normalization of diplomatic relations in 1965,” he said in a statement.

South Korea’s Foreign Ministry shot back that Japan was responding “excessively,” with spokesman Noh Kyu-duk saying the court’s decision should be respected in a democracy.

Upholding two separate lower-court decisions, the Supreme Court ordered Mitsubishi to pay between $71,000 and $133,000 to two groups of five men and five women.

The five women, including 87-year-old Yang Geum-deok, were forced to work at a Mitsubishi aircraft factory in Nagoya, Japan, under harsh conditions. Yang says she was frequently beaten by her Japanese supervisor at the factory and said this week she wanted the ruling to address “70 years of resentment.”

The 1965 treaty between the two countries said that issues related to past “property, rights and interests” were settled and that no further claims by the governments or peoples should be made. But the court rejected the argument that this had resolved the issue.

“The treaty does not cover the right of the victims of forced labor to compensation for crimes against humanity committed by a Japanese company in direct connection with the Japanese government’s illegal colonial rule and war of aggression against the Korean Peninsula,” it said in a statement.

The anger in Tokyo has been palpable.

Prime Minister Shinzo Abe called the first ruling last month “impossible in the light of international law.”

Japanese media have also been outraged, warning that any attempt to seize the assets of Japanese companies operating in South Korea over the compensation awards could dramatically undermine business ties and even force Japanese companies to pull out of the country.

In South Korea, the response has been equally vehement. Hong Ihk-pyo, a spokesman for the ruling Democratic Party, has called for an apology and compensation not only from the companies but also from the government of Japan, while a spokesman for the main opposition Liberty Korea Party said Japan should no longer “stick to tongue-lashing and impudence” and should offer a sincere apology.

Experts said the issue could also encourage North Korea to claim more money from Japan as compensation if relations between the two nations are ever restored. 

Many South Koreans are fiercely nationalistic, and the memory of cruelty and humiliation under Japanese rule lives on even if many of the victims have died. Polls have found that Abe is considerably less popular in South Korea than North Korean leader Kim Jong Un, because Abe is widely viewed as reluctant to acknowledge Japan’s wartime record.

Politicians in South Korea have also consistently exploited the issue to gain support, and relations have deteriorated sharply in recent weeks.

Earlier this month, Japan’s TV Asahi canceled an appearance by leading K-pop band BTS, after a photo went viral showing one of its members wearing a T-shirt that appeared to celebrate the atomic bombing of Hiroshima. South Korean politicians backed the band.

Then, last week, South Korea said it was shutting down a foundation created to help “comfort women” who were forced to work in brothels for Japan’s military during World War II. 

The foundation was funded by Japan as part of a 2015 agreement that was supposed to put the issue to rest, but Seoul’s decision effectively voided that deal. 

While experts said the dispute would not have any immediate impact on efforts to negotiate with North Korea over its nuclear program, Junya Nishino, an East Asia expert at Keio University in Tokyo, said the crisis undermined Japan’s efforts to have an effective policy toward North Korea.

Tokyo and Seoul also need to maintain close ties in case of any military tensions or confrontation with North Korea, noted Bonji Ohara, a national security expert at the Sasakawa Peace Foundation in Tokyo.

The dispute between two of Asia’s most prosperous democracies is not in Washington’s interests. 

“It matters a lot, having our two leading allies in Asia not getting along,” said Matthew Goodman of the Center for Strategic and International Studies. “There are a lot of challenges from North Korea to China to upholding the rules-based international order. These are two rules-based market economies that could and should be working more closely together to defend that approach.”

Min Joo Kim in Seoul and Akiko Kashiwagi in Tokyo contributed to this report.