South Korea's top court on Friday partly reversed a lower court ruling that said two U.S. producers of a toxic chemical should compensate most of the South Korean Vietnam War veterans who sued the firms for their exposure to the defoliant.

Sending the case back for review, the Supreme Court said the Seoul High Court should reconsider its 2006 verdict of a combined 63 billion won ($61 million) in damages awarded to 6,795 South Koreans.

In a ruling, the court did not recognize epidemiological correlations between the defoliant and most of the diseases such as lymph cancer from which the plaintiffs have suffered.

A total of 16,579 South Korean veterans filed two separate lawsuits in 1999 against Dow Chemical Co. and Monsanto, seeking more than 5 trillion won in damages, but a district court ruled against the plaintiffs.

In 2006, the Seoul High Court, in a landmark ruling, overturned the decision and ordered the two firms to pay compensation ranging from 6 million won to 46 million won to the veterans for physical handicaps they sustained from contamination from the defoliant.

It marked the first time for a South Korean court to rule against the U.S. defoliant manufacturers responsible for using Agent Orange in Vietnam between the 1960s and 1970s in order to deny the People's Army of Vietnam refuge in the jungle terrain.

"The U.S. defendants produced defoliants that contained dioxin in excess of the permitted standard due to product design flaws," the Supreme Court said in its ruling.

The court, however, said it cannot be concluded that the exposure to the defoliant directly caused such diseases. "The causes of these diseases are very complicated," the court said, citing the lack of proof.

For 39 plaintiffs who have suffered from chemical acne, the court upheld the lower court's decision for compensation, recognizing the link between their exposure to the defoliant and the disease for the first time in the world.

"Chemical acne is caused when exposed to dioxin contained in Agent Orange," the court said, adding that the acne is a rare disease that is not prompted by other causes.

Following the ruling, the veterans expressed disappointment for the loss in a 14-year legal battle.

"As a victim, I do not know what to say," said Kim Seong-woo, the chief of a local veterans organization, adding that they will consider a future course of action after thoroughly reviewing the ruling.

More than 4.7 million Vietnamese are said to continue to suffer from a range of illnesses, including birth defects, cardiovascular disease, cancer and nervous disorders because of the chemical defoliant dropped during the war in which South Korea fought alongside the U.S against communist North Vietnam.

South Korea dispatched about 320,000 soldiers to Vietnam to become the largest foreign contingent of U.S. allies fighting in the war, with 5,000 killed in action and nearly 11,000 others wounded, according to official government data.

South Korean activists estimate the number of Korean victims of the chemicals at around 150,000. (Yonhap news)