Japan is considering taking a dispute with South Korea over its compensation for wartime forced laborers to the International Court of Justice as the deadline for seeking third-country arbitration is set to pass on Thursday, public broadcaster NHK reported.

The question of compensation for South Koreans over labor during Japan's 1910-45 colonial rule of the Korean Peninsula has soured the U.S. allies' relations, which took a turn for the worse this month when Japan restricted exports of high-tech materials to South Korea.

South Korea's Supreme Court last year ordered two Japanese companies to compensate the wartime workers in a ruling that Tokyo said violated international law. Japan believes the issue of compensation was settled under a 1965 treaty.