The appeal was made by a group of women forced to work in Japan's wartime military brothels to strike down a deal signed by the two Asian countries to settle claims over the abuse.
South Korea's Constitutional Court dismissed on Friday an appeal by survivors of wartime sexual slavery over a controversial deal between Seoul and Tokyo as the two nations sought to mend ties in the face of mounting threats from Pyongyang.
"It is difficult to conclude that it is possible for the deal to violate the victims' basic rights," the constitutional court said.
The court said the 2015 deal was a "political agreement" and therefore surrounding discussions also belong to the political arena.
Japan and South Korea – both key US allies and democracies – have long been locked in a bitter row over historical issues that have spiralled into a fully-fledged trade dispute.
A 2015 deal with Tokyo under Seoul's then leader Park Geun-hye established an $8.8 million fund for "comfort women" – those forced to provide sex for Japanese troops during World War II – but a 2016 petition by survivors and their families claimed the agreement was unjust.
The appeal, from 29 survivors and 12 family members, claimed the Park administration didn't consult with them before signing the 2015 agreement – at the time the two governments agreed it was "final and irreversible" – and that it violates their own individual right to demand compensation.
Earlier this year, Seoul and Tokyo's relationship was damaged by South Korean courts ruling that Japanese firms that used forced labour decades ago must compensate victims.
It later sparked a simmering trade row between the two, with South Korea threatening to scrap a critical military intelligence pact with Tokyo until the idea was abandoned last month.
'Christmas gift' from Pyongyang
South Korean President Moon Jae-in, who has repeatedly condemned the 2015 agreement as a "wrongful" solution, has sought to dial down the temperature in the face of threats from the nuclear-armed North and pressure from Seoul's key security ally Washington.
On Tuesday, during his bilateral meeting with Japan's Shinzo Abe in China, in a dramatic shift in rhetoric, he described the nations as "the closest neighbours geographically, historically and culturally".
The meeting took place with the clock ticking on a threatened "Christmas gift" from Pyongyang that could reignite global tensions over its nuclear programme.
The North has carried out a series of static tests at its Sohae rocket facility this month after a number of weapon launches in recent weeks, some of them described as ballistic missiles by Japan and others – which Pyongyang is banned from testing under UN sanctions.