In fact, the agreement set out the way forward to find a solution. Japan and the Republic of Korea have established a close, friendly and cooperative relationship, on the basis of the Treaty on Basic Relations between Japan and the Republic of Korea and other relevant agreements concluded by the two countries upon normalization of their relations in 1965. The Agreement on the Settlement of Property and Debt Issues and on Economic Cooperation between Japan and the Republic of Korea (the „Agreement”), which is at the heart of these Agreements, provides for Japan to make available to the Republic of Korea $300 million in grants and loans of up to $200 million (Article I); and that issues relating to the ownership, rights and interests of both parties and their nationals (including legal persons), as well as the rights between the parties and their nationals, are „settled in full and definitively” and that there is no debate on this matter (Article II). So far, the agreement has served as a basis for bilateral relations. In concluding both the 1965 Treaty on Fundamental Relations between Japan and the Republic of Korea and the 1965 Agreement between Japan and the Republic of Korea on the Settlement of Problems Relating to Property and Rights and Economic Cooperation, Korea and Japan clearly „agreed” that two countries „disagreed” on the legality of the 1910 annexation treaty. This „Agree to Disagree” is a very unique feature of modern relations between Korea and Japan and precludes the issue of the 1910 annexation treaty from being a priority in the interpretation of the 1965 agreement. In short, the 1965 agreement requires the Korean government to compensate alleged Korean victims. However, the Korean Government considers that Japan remains obliged to pay compensation. It is the continuation of the international dispute between two countries. Yet in October 2018, the Korean Supreme Court issued a surprising ruling that ruled that Japanese private companies must compensate Korean Peninsula workers summoned for these companies during the Pacific War. The judgment is based on the premise that the Japanese-Korean annexation treaty of 1910 was illegal and void under the Korean Constitution of 1948.
While the Korean Government strongly supports the Court`s decision, the Japanese Government argues that it is not compatible with the 1965 Agreement. In his presentation of the 1974 Nobel Peace Prize, Eisaku Satō explicitly mentioned the Treaty on Fundamental Relations between Japan and South Korea. .