(Bloomberg) -- Japan protested to South Korea’s ambassador after Japanese company funds lodged with a Seoul court were paid out as compensation over colonial-era forced labor, a step Tokyo said was a breach of a 1965 treaty. 

Vice-Minister for Foreign Affairs Masataka Okano summoned Yun Dukmin Wednesday and told him the payment “placed Japanese companies at an unfair disadvantage,” describing it as “extremely regrettable,” the ministry said in a statement. 

The plaintiff, a relative of a deceased former laborer, received 60 million won ($45,000) in funds that Hitachi Zosen Corp. had deposited at the court during the legal battle, after the Supreme Court in December upheld an order for damages, Kyodo News said the previous day. Yonhap News said the payment was the first of its kind. 

Japanese Foreign Minister Yoko Kamikawa expressed her “strong regret” over the court’s move that “inflicts unjustifiable damages and costs” on the company when she met South Korean counterpart Cho Tae-yul on the sidelines of a Group of 20 meeting in Brazil, Japan’s Foreign Ministry said in a statement. 

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The dispute risks reigniting ill-feeling between the two US allies, who have recently sought to set aside a long-running disagreement over whether Japan paid sufficient compensation for its 1910-1945 colonization of the Korean Peninsula. US President Joe Biden has encouraged the rapprochement, in a bid to balance growing threats from China and North Korea. 

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Japan says agreements signed in 1965 and accompanied by $800 million (about $7.5 billion today) in grants and cheap loans settled all South Korean claims over the colonial period “completely and finally.” South Korean courts have found that individual laborers were not properly compensated for their suffering. 

The payout comes as Prime Minister Fumio Kishida prepares to travel to Seoul to meet President Yoon Suk Yeol next month, according to the Asahi newspaper and other media, amid improved sentiment between the two countries. About 44% of South Koreans had positive feelings toward Japan, according to a survey commissioned by the Japan Press Research Institute in November, the highest since the annual survey began in 2015. 

(Updates with statement from Japan’s Foreign Ministry in paragraph four.)

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