Update, 10 p.m.: A Chinese court said on Thursday that it has released a ship owned by Japanese shipping firm Mitsui OSK Lines Ltd., which had been seized in a contract dispute, after the Japanese firm paid up. China's Supreme Court said in a statement, carried on its official microblog, that the seizure order had been lifted as of 8:30 am (1:30 a.m. BST) Thursday.

Original story:

Japanese shipping firm Mitsui OSK Lines Ltd. has paid about $39 million to a Chinese court toward securing the release of one of its ships, which was seized over an alleged payment dispute dating back to World War II, Japanese media reported.

Shanghai Maritime Court said the seizure related to unpaid compensation for two Chinese ships leased in 1936 and used by the Japanese army before sinking at sea, Japan's Kyodo news agency said.

Mitsui's ship, the 226,434 deadweight-tonne ore carrier Baosteel Emotion, was seized Saturday. Mitsui OSK spokesman Atsushi Seki told Reuters that he couldn't immediately confirm the reports.

According to the Yomiuri newspaper and public broadcaster NHK, quoting unnamed sources, Mitsui had paid about 4 billion yen in compensation and interest to the Chinese court, Reuters reported Wednesday.

Seki said the company was still working to release the ship, which the Chinese court took over Mitsui's alleged failure to pay compensation stemming from a wartime contractual obligation.

"The Japanese government considers the sudden seizure of this company's ship extremely regrettable," Chief Cabinet Secretary Yoshihide Suga said Monday, the BBC reported. "This is likely to have, in general, a detrimental effect on Japanese businesses working in China."

The owners of the shipping company, identified by the Kyodo agency as Zhongwei Shipping, sought compensation after World War Two and the case was reopened at a Shanghai court in 1988, according to China's Global Times said.

In 2007, the court ruled that Mitsui had to pay 190 million yuan ($30.5 million, £18 millon) as compensation for the two ships leased to Daido, a firm later part of Mitsui, the Global Times and Kyodo said.

The shipping firm appealed against the decision, but it was upheld in 2012, Kyodo noted. The news agency said that this seems to be the first time that a Japanese company asset had been confiscated as war-linked compensation.

The seizure comes as ties between Japan and China are greatly strained amid rows over East China Sea islands that both nations claim and various historical issues.

Earlier this year, a court in China for the first time accepted a case filed by Chinese citizens seeking compensation from Japanese firms over forced labor during World War Two.

Japan has always held that the issues war-related compensation was settled by a 1972 agreement between the two sides when ties were normalized, the BBC explained.

But for the first time, a Chinese court has ignored that agreement, and China's government seems to be giving full support, the BBC continued.

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