China frees Japan ship after $35.6m paid, court says

SHANGHAI (AFP) - China on Thursday released a seized Japanese ship after owner Mitsui O.S.K. Lines paid 2.9 billion yen (S$35.6 million) to the Chinese side, a court said, in a dispute dating to the 1930s.

"The court has delivered a ruling at 8.30am on April 24, 2014, to lift the detention of the Baosteel Emotion ship," said a statement from the Shanghai Maritime Court, which ordered the seizure on Saturday.

Shanghai authorities said they impounded the large freight vessel in accordance with the law as Mitsui had failed to pay a Chinese firm.

But the case had political overtones given tense ties between the two Asian giants, which are locked in a territorial dispute over islands in the East China Sea.

Japanese media suggested the ship's seizure was meant to underline China's growing assertiveness before US President Barack Obama's arrival in Tokyo on Wednesday on the first leg of an Asian tour.

Mitsui had "fulfilled its obligations" by paying compensation and additional court costs of around 2.4 million yuan (S$483,154), the court said. It did not name the Chinese party awarded the compensation.

Media reports say that Mitsui's predecessor rented two ships on a one-year contract from a company called Zhongwei Shipping Co. in 1936.

The ships were reportedly commandeered by the Imperial Japanese Navy and were sunk during World War II.

A compensation suit was brought against Mitsui by the descendants of the founder of Zhongwei Shipping, and in 2007 a Shanghai court ordered Mitsui to pay compensation.

Mitsui said in a statement on Monday that it had been seeking an out-of-court settlement after China's supreme court rejected its appeal in 2011, but the vessel was "suddenly" impounded.

Japan lodged a formal diplomatic protest over the seizure and warned it could "intimidate Japanese companies doing business in China".