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Asia

Ship seizure deepens China's rift with Japan

Decision by court in Shanghai to impound a Japanese ship in a 78-year-old legal case has serious implications for dozens of other compensation cases aimed at Japanese companies and the government.

The Japanese government has reacted with restraint after the Shanghai Maritime Court on Saturday (20.04.14) ordered the seizure of the Baosteel Emotion, an iron ore carrier owned by Japan's Mitsui OSK Lines. But behind the diplomatically worded protest passed on to Beijing is anger that a legal case that dates back to the 1930s has been dredged up in an effort to discredit and damage Japan's reputation.

There is also deep concern that the court's actions could open the floodgates to a rash of similar compensation lawsuits against Japanese firms in a number of countries, despite the signing of treaties and agreements that Tokyo considers drew a line under any claims linked to imperial Japan's activities across Asia in the early decades of the 20th century.

The Shanghai court said in its ruling that it was seizing the 320-meter ship because Mitsui had failed to respond to a previous order to pay compensation to a Chinese family for a broken contract in the name of Daido Shipping Co., Mitsui's predecessor.

In the 2007 ruling, the company was ordered to pay 190 million yuan (26 million USD) after Daido rented two ships - the Shun Foong and the Hsintaiping - from the Zhongwei Shipping Co. on one-year contracts in 1936.

Chinese vessels sunk

Both vessels were subsequently used by the Imperial Japanese Navy and neither was returned to the Chinese company; one sank in 1938 and the other was destroyed in 1944.

US President Barack Obama waves as he steps out from Air Force One after landing at Haneda International Airport in Tokyo, Japan, 23 April 2014 (photo: EPA/FRANCK ROBICHON)

Timed to embarrass Japan as President Obama arrives in Tokyo?

The Chinese firm had two compensation suits dismissed by Japanese courts, in 1967 and 1970, while China introduced a statue of limitations on civil suits in 1988. In December 2007, the Shanghai court instructed Mitsui to pay the plaintiff Y2.92 billion (26 million USD), to which Mitsui disagreed and appealed to a higher court, which in January 2011 rejected the appeal and upheld the original decision.

In a statement, Mitsui said the seizure of the Baosteel Emotion came as a shock as the company "was seeking the possibility of an out-of-court settlement when the vessel was suddenly impounded."

The Japanese government lodged a formal complaint with Beijing on Tuesday, April 22.

"We have told the Chinese side through diplomatic channels that we regret the seizure of the vessel," said Yoshihide Suga, the chief cabinet secretary. "We demand that China take appropriate measures."

Damage to bilateral ties

He added that the court's ruling could damage bilateral ties and "intimidate Japanese companies doing business in China."

The government has also reiterated that all issues surrounding reparations or compensation were settled with the signing of a joint communiqué in 1972 that normalized ties between Tokyo and Beijing.

The sense in Japan is that the case is politically motivated and, coming more than four years after the last court statement on the issue, is deliberately timed to embarrass Japan as President Barack Obama arrives in Tokyo for a three-day state visit.

"There have been several movements in China to advance issues that date back to before World War II, and that echoes what is going on in South Korea," Tetsuo Kotani, a senior fellow at the Japan Institute of International Affairs, told DW.

"Japan's position is that these issues have been settled through bilateral treaties, with China in 1972, and South Korea in 1965, when both countries gave up all future claims against Japan," he said.

Beijing has replied that the Baosteel Emotion case has nothing to do with the issue of war reparations that were settled by the 1972 agreement.

Communist party control

Chinese courts are under the influence of the Chinese Communist Party, Kotani added, and this suit is "a message" from Beijing that it will continue to pressure Japan on historic issues in an effort to wring out concessions in ongoing territorial disputes between the two rivals. The most immediate - and most serious potential flashpoint - surrounds the Japanese-held Senkaku Islands, which China claims sovereignty over and refers to as the Diaoyu archipelago.

"It's politically motivated, without a doubt," said Yoichi Shimada, a professor of international relations at Fukui Prefectural University.

"The court's decision came four years ago and there has been nothing since; now President Obama is about to arrive and the issue has been brought up again," he said. "It's an effort to drive a wedge between Japan and the United States as economic and security allies in the region."

But analysts say Tokyo has no choice but to refuse to accept the Chinese court's decision.

"Japan will stick to the 1972 agreement and never back down," said Kotani, adding that the row could backfire on China.

Senkaku Islands in the East China Sea (Photo: Kyodo)

China claims sovereignty over Japanese-held Senkaku Islands

"Japanese businesses are very concerned about the case, and already economic relations between the two countries are pretty cold," he said. "This is going to convince more Japanese firms to restrain their activities in China and to look elsewhere."

Deserving of compensation

The case is also likely to embolden other companies and individuals who believe they have a good case against Japanese companies or the government here.

In July 2013, a South Korean court ordered Mitsubishi Heavy Industries to pay compensation of 71,800 USD each to five South Korean nationals who were forced to work in the company's factories when the peninsula was under Japanese colonial control. Two weeks earlier, another court had ordered Nippon Steel and Sumitomo Metal Corp. to pay redress of 89,800 USD to four Korean plaintiffs.

More than 1.2 million Koreans were forced to labor for their Japanese colonial rulers, while millions of residents of China, the Philippines, Thailand, Taiwan, Indonesia, Malaysia and other nations across the Asia-Pacific region, or their descendants, are likely to conclude they are also deserving of compensation.