China ship seizure hikes redress fears

Japanese firms see war-linked ruling putting overseas assets at risk

Kyodo, Staff Report

China’s seizure over the weekend of a containership owned by shipping giant Mitsui O.S.K Lines for its failure to respond to a wartime compensation order related to a contractual dispute has raised concerns in Japan that further assets may be confiscated if more rulings favor Chinese plaintiffs.

The container vessel was seized Saturday at a port in Zhejiang province, Shanghai municipal authorities said Sunday.

The seizure appears to mark the first time that an asset belonging a Japanese company has been seized over litigation related to wartime compensation.

The Maritime Court said that if Mitsui does not honor its legal obligations, it will dispose of the ship in accordance with the law.

Local media and municipal authorities identified the seized vessel as the Baosteel Emotion.

On Monday, Tokyo conveyed its concerns to Beijing through diplomatic channels.

Chief Cabinet Secretary Yoshihide Suga said the court action was “extremely regrettable,” adding that the sudden seizure may damage bilateral economic ties.

“The Chinese side’s actions, including the seizure, may rock the foundation of the 1972 joint statement’s spirit that normalized Japan-China diplomatic relations. And it may have an intimidating effect on Japanese firms doing business in China,” Suga told reporters at a news conference.

“I’m deeply concerned and strongly hope China will take appropriate measures,” he added.

In the 1972 joint statement normalizing postwar Sino-Japanese ties, China declared that it “renounces its demand for war reparations from Japan.”

Suga said that Tokyo has asked Beijing to provide related information on the case.

“We will think about concrete measures (against the seizure) while working closely with Mitsui,” he said.

China countered that the seizure has nothing to do with issues related to war reparations between the two countries. Foreign Ministry spokesman Qin Gang played down the gravity of the case, saying it was just “a common commercial contract dispute.”

“The Chinese government sticks to upholding all the principles” of the 1972 joint communique, he told a news conference. “This position remains unchanged.”

He also emphasized that “China will continue to protect the lawful rights and interests of foreign-invested companies in China in accordance with the law.”

In a statement Monday, Tokyo-based Mitsui said it was seeking ways to compromise with the plaintiff and deliberating on its response.

In 2007, the court ordered Mitsui to pay 190 million yuan ($26 million) to a Chinese family to compensate for contractual obligations left unfulfilled by Mitsui’s predecessor, Daido Shipping Co.

Mitsui appealed the ruling, but the Supreme People’s Court rejected Mitsui’s petition for retrial in December 2012,affirming the decision.

In 1936, a year before the Second Sino-Japanese War began, Daido rented two ships on a one-year contract from Zhongwei Shipping Co. But the ships were commandeered by the Imperial Japanese Navy and later sank at sea.

The suit was brought against Mitsui by grandsons of the founder of Zhongwei Shipping Co.

Mitsui has argued it is not liable for paying compensation, given that the ships Daido rented were requisitioned by the Japanese military.

A string of compensation lawsuits related to wartime forced labor in Japan have recently been filed in China against Japanese corporations, reflecting the apparent intention of the country’s leadership, headed by President Xi Jinping, to toughen relations with Japan.

Rulings made in favor of such plaintiffs could lead to further confiscations of assets in China.

As of December 2011, a total of 22,790 Japanese companies were operating in China.