China Court Frees Japanese Ship After Unprecedented Seizure

Source: JIJI PRESS/AFP/Getty Images

Mitsui O.S.K. Lines' cargo ship "Baosteel Emotion" sits anchored at a port in Zhejiang province, China. Close

Mitsui O.S.K. Lines' cargo ship "Baosteel Emotion" sits anchored at a port in Zhejiang province, China.

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Source: JIJI PRESS/AFP/Getty Images

Mitsui O.S.K. Lines' cargo ship "Baosteel Emotion" sits anchored at a port in Zhejiang province, China.

A Chinese court released a Japanese ship owned by Mitsui O.S.K. Lines Ltd. (9104) after the cargo carrier paid compensation for the loss of two vessels leased from a Chinese company before the two countries went to war in 1937.

The Tokyo-based company paid 2.9 billion yen ($28 million) as judgment and 2.4 million yuan ($384,585) in court fees, according to a statement posted on the microblog of the Supreme People’s Court. Mitsui O.S.K.’s 226,434-ton Baosteel Emotion, impounded April 19 at Majishan port in Zhejiang province, is preparing to leave, the shipping company said in a statement.

The incident reflects strained ties between China and Japan amid a territorial dispute over an island chain and visits by Japanese politicians to a Tokyo shrine honoring that country’s war dead. It the first time a Chinese court had ordered the seizure of Japanese assets connected to World War II.

Territorial Disputes, Malignant and Benign

“It’s possible that similar action could be taken against other Japanese firms, but it’s going to be devilishly hard to find plausible WWII-era cases,” said Jacques deLisle, the Stephen A. Cozen Professor of Law at the University of Pennsylvania. “There would be, in my view, quickly diminishing and negative returns to China if we were to see a wave of asset seizures.”

Lawsuit

Last month a Chinese judge accepted a lawsuit against Japan’s Mitsubishi Materials Corp. accused of using forced labor during the war.

Speaking at a briefing today, Japan’s Chief Cabinet Secretary Yoshihide Suga said China should separate the issue of the Mitsui O.S.K. ship from Chinese compensation. Chinese Foreign Ministry spokesman Qin Gang said at a briefing today the matter was resolved “in accordance with the law.”

The dispute had its genesis in 1936, when Mitsui O.S.K. predecessor Daido Kaiun chartered two vessels from Chung Wei Steamship Co., only to have them appropriated by the Japanese government, Mitsui O.S.K. said in a statement earlier this week. Both ships were later lost at sea.

The vessel’s impounding was part of a legal dispute that began in 1964, the Shanghai Maritime Court and Mitsui O.S.K. said earlier this week.

The heir of Chung Wei Steamship’s president sued unsuccessfully in Japan in 1964 and 1970, and then took the case to China in the late 1980s. After the maritime court ruled in the plantiff’s favor, Mitsui O.S.K. was seeking an out-of-court settlement when the vessel was “suddenly impounded,” the company said.

China Reparation

Japan argues that China gave up its right to reparations as part of a 1972 joint communique signed when the two countries established diplomatic relations. The communique says China “declares that in the interest of the friendship between the Chinese and the Japanese peoples, it renounces its demand for war reparation from Japan.”

China and Japan currently have a $366 billion trade relationship. Foreign Ministry spokesman Qin Gang earlier this week called the case a common commercial dispute and said it was unrelated to war reparation.

The Baosteel Emotion, built in 2011, is a 320-meter long ore carrier.

Mitsui O.S.K.’s shares fell 0.6 percent to 354 yen at the close of trading in Tokyo today, while the broader Topix index declined 0.8 percent.

The legal dispute over the ship comes as Japan and China spar over islands both countries claim in the East China Sea, and over Japan’s wartime aggression. Prime Minister Shinzo Abe sent an offering to the Yasukuni Shrine in Tokyo, following the visits this month of two cabinet ministers to the site that honors Japan’s war dead, including World War II criminals.

The Shanghai Maritime Court ruled in December 2007 that the Mitsui Group should pay 2.9 billion yen in compensation, according to the court statement. The case was first filed with the court in 1988.

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Nicholas Wadhams

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