Sunday, April 27, 2014

Japanese Relations with China Tense with Longshoremen and Shipping Line Caught in the Middle

Ancient Court Cases and Even Older Real Estate Disputes Spring Up to Create International Problems
Shipping News Feature

CHINA – JAPAN – ASIA – US – Chinese Customs officials have arrested three female employees from the Chinese arm of Japanese conglomerate Marubeni subsidiary, Columbia Grain, a company that has locked out local longshoremen from the Japanese group’s Port of Portland grain facility in the long running US East coast dispute. According to reports, the PRC customs officers detained three Chinese nationals in the port city of Qingdao on suspicion of tax evasion, but this arrest comes amid rising territorial tensions between the two nations and just days after China arrested and subsequently released the Japanese flagged iron ore carrier Baosteel Emotion in a dispute that dates back to the second world war.

On April 19, 2014, the MOL operated iron ore carrier Baosteel Emotion was impounded by Chinese authorities in Zhejiang province, China. The arrest is connected to an incident which occurred in June and October, 1936, when two freighters, the SS Junpo Maru and the SS Shin Taihei Maru were chartered from Chinese shipowner Chung Wei Steamship, by Daido Kaiun (predecessor of Navix Line which merged with MOL in 1999), and commandeered by the Japanese government but later lost at sea. The Shin Taihei Maru (previously named Hsin Taiping when owned by Chung Wei) was wrecked during a typhoon on October 31, 1938, and the Junpo Maru (named Shun Foong under Chung Wei) was hit by a torpedo from the US submarine Barbero on December 12, 1944.

After a few failed attempts, the Chen family which owned Chung Wei Steamship finally managed to bring forward a lawsuit seeking financial compensation from what had now become MOL. In 2007, the Shanghai Maritime Court ruled that MOL should pay the Chen Family (Chung Wei now dissolved) the equivalent of ¥2.92 billion. MOL disagreed and appealed the decision but in 2010, the judgement was upheld with future appeals also failing.

With the Baosteel Emotion impounded, MOL ended up paying the ¥2.92 billion ($29 million) fine in leasing fees on April 23, including interest and damages, as well as paying ¥2.4 million ($385,000) in legal fees. The incident comes in the light of ever delicate Sino-Japan relations which have worsened of late. One of the principal areas of dispute is over disputed territorial claims for various islands including the Diaoyu Islands (China)/ Senkaku Islands (Japan).

Similar in many respects to a host of other island territory disagreements worldwide, the Falklands/Malvinas (UK/Argentina), the Chagos Archipelago (UK/Mauritius), Islas Chafarinas and Perejil Island (Spain/Morocco), the islands which sit in the East China Sea are currently under Japanese control but claimed by both the People’s Republic of China and Taiwan.

Japan recently embarked on a development programme including the construction of a military radar installation on Yonaguni Island, just ninety miles from the Senkaku Island group which was bound to stir up China which is also pressing a claim for the Spratly Islands in the South China Sea where it disputes sovereignty with Malaysia, the Philippines, Taiwan, Vietnam and Brunei. Objections to the new development may be interpreted either as an attempt by China to preserve the status quo or a move to extend the PRC’s area of influence.

In either case tensions were high enough last week to encourage President Obama to say he would back the Japanese should a military solution over Yonaguni be required, short of declaring who actually had the right to claim the islands, the President tactfully pointed out that he had no wish to change the current Japanese administration of the territory involved. The islands, formerly administered by the Japanese were controlled by the US after the Second World War until they passed them back in 1971/2. As with many such disputes their proximity to major shipping lanes and the potential for mineral and hydrocarbon recovery make them an interesting piece of real estate to anyone who feels they can justify a claim.

Photo: MV Baosteel Emotion courtesy of Mitsui OSK Line.