The court ruling has triggered a new row between Japan and South Korea -- two US allies faced with an increasingly assertive neighbour in China and the long-running threat of nuclear-armed Pyongyang.

Japan's Prime Minister Shinzo Abe has severely criticised the ruling, saying it was "impossible" under international law and that the issue had been "completely and finally settled" by a 1965 treaty that restored diplomatic relations between the two countries.

On Monday, cabinet secretary Yoshihide Suga urged Seoul to take steps to calm the situation.

"We are asking the South Korean government to take appropriate measures including redressing the current situation that violates the international law due to the ruling by the Supreme Court," Suga said.

"We are in close contact with Japanese firms that are subjects of similar lawsuits."

Around 780,000 Koreans were conscripted into forced labour by Japan during its 35-year occupation of the peninsula, according to South Korean figures -- a figure that does not include the thousands of women forced to work in wartime brothels. (AFP)