Japanese Ship Seized at Chinese Port over Pre-War Debts

In Other News - April 22nd, 2014

A court in Shanghai seized a Japanese iron ore carrier in a Chinese port at the weekend over pre-war debt issues, underscoring deep-seated tensions between the long-time adversaries.

The Shanghai Maritime Court said it took possession of the Baosteel Emotion at a port in Shengsi, Zhejiang province, on Saturday over unsettled wartime compensation claims with its owner, Mitsui OSK Lines.

The court reportedly ordered the seizure of Mitsui’s assets for failing to pay leasing fees for two Chinese ships chartered from Chung Wei Steamship in 1936 before the Second Sino-Japanese War. The vessels, the Shun Feng and the Xin Tai Ping, were “taken over” by the Japanese navy as they prepared to invade China, but were later sunk toward the closing years of World War II.

The heir of Chung Wei’s owner sued Mitsui in 1988, seeking wartime reparations of $160 million but lost the case. In 2007, the Shanghai court ordered Mitsui to pay 2.9 billion yen ($28.3 million) in damages. The Japanese conglomerate appealed but was rejected by the Supreme People’s Court in 2010.

An enforcement notice was issued by the Shanghai court in late 2011 but negotiations between Chung Wei and Mitsui ended without a result, leading to the Japanese carrier’s seizure on Saturday.

The court ruled that “the arrested vessel will be dealt with by the law if Mitsui OSK Lines still refuses to perform its obligations.”

Mitsui, which is heir to the shipping lines that operated the Chinese ships, said they were informed by local officials of the Baosteel Emotion’s seizure.

“We were in negotiations with them about a settlement so we are very surprised about their sudden decision. We cannot accept it,” a spokesperson for Mitsui said. “We are checking the details and now studying what next steps we should take.”

The confiscation deals a blow to already fraught relations as the two nations continue to lock horns over a bitter territorial row and historical disputes.

Japan raised concerns that Beijing could use the seized ship as a pawn to gain leverage over Tokyo and warned it could have a “chilling effect” on economic ties.

“It is extremely regrettable,” said Chief Cabinet Secretary Yoshihide Suga said. “The move can undermine the spirit of the 1972 Japan-China joint communique from its very foundation and discourage Japanese corporations from doing business in China.”

Japan has always stressed that it is exempted from paying war-related compensation after China renounced its demand for war reparations in the 1972 agreement.

By Maesie Bertumen

Image: Jonathan/Flickr