TOKYO (AFP) - Tokyo on Monday warned that the seizure of a Japanese ship in Shanghai over pre-wartime debts threatened ties with China and could undermine the basis of their post-war diplomatic relationship.
Authorities in Shanghai seized the large freight vessel in a dispute over what the Chinese side says is unpaid bills relating to the 1930s, when Japan occupied swathes of China.
The move is the latest to illustrate the bitter enmity at the heart of Tokyo-Beijing ties, with the two sides embroiled in a spat over the ownership of a small archipelago and snapping at each other over differing interpretations of history.
Shanghai Maritime Court said on Saturday it had seized "the vessel 'Baosteel Emotion' owned by Mitsui O.S.K. Lines... for enforcement of an effective judgement" made in December 2007.
"The arrested vessel will be dealt with by the law if Mitsui O.S.K. Lines, Ltd. still refuses to perform its obligations," the Maritime Court said.
Chinese and Hong Kong media said the seizure was related to a verdict by a court in Shanghai that said Mitsui had to pay about 2.9 billion yen (S$35.4 million) in relation to the leasing of two ships nearly 80 years ago.
Reports said in 1936, Mitsui's predecessor, Daido Shipping Co. rented two ships on a one-year contract from Zhongwei Shipping Co.
However, the ships were commandeered by the Imperial Japanese Navy and were sunk during World War II, reports said.
A compensation suit was brought against Mitsui by the descendants of the founder of Zhongwei Shipping Co., and in 2007, a Shanghai court ordered Mitsui to pay about 2.9 billion yen in compensation.
Mitsui appealed against the court's decision, but in December 2010, the Supreme People's Court turned down their petition for the case to be retried.
Mitsui has argued that it is not liable for paying compensation given that the ships that Daido rented were requisitioned by the Japanese military during the war, Kyodo said.
On Monday, Japan's chief government spokesman, Yoshihide Suga said the seizure undermined the 1972 joint communique that normalised ties between Japan and China, in which Beijing agreed to renounce "its demand for war reparation from Japan".
"It could also intimidate Japanese companies doing business in China as a whole and hence Japan is deeply worried and strongly expects China to take appropriate measures," he said.
The case appears to be the first time the assets of a Japanese company have been confiscated in a lawsuit relating to wartime or occupation compensation, Japan's Kyodo News reported.
But it comes as a set of lawsuits related to wartime forced labour in Japan have been filed in China against Japanese corporations.
China has long maintained a policy of not accepting such civil lawsuits. But a Beijing court for the first time has agreed to hear a lawsuit by Chinese citizens demanding compensation from Japanese firms over forced labour, their lawyer said last month.
"Including this incident, China's set of policies on this issue could shake up in a profound way the spirit of normalising diplomatic ties between Japan and China, that is inscribed in the 1972 joint communique," Suga said Monday.
The value of Japanese companies' investment in China dropped by half in the first quarter of this year from a year earlier to about US$1.21 billion (S$1.52 billion), Chinese government data said.