The Chen family's ship comes in, after four generations

In mourning for his father, the young man who slipped out of newly-Communist Shanghai in 1950 took with him little other than the paper contract representing his family's lost fortunes.

That paper contract, carefully preserved through decades of anguish, was the key piece of evidence that brought about an unprecedented commercial war reparations payment this week by Mitsui OSK, one of the world's largest shipping lines, to the Chen family, heirs to the man who landed as a refugee in Hong Kong 64 years ago.

"My family encountered a lot of difficulties but we stuck with it," said schoolteacher David Chen, whose Chinese name, Chungwei, recalls the Chung Wei Steamship Co owned by his great-grandfather, Chen Shuntong, in Shanghai in the 1930s. "I grew up with this case. Our sense of responsibility to it was stronger than anything."

Last week, the Shanghai Maritime Court impounded one of Mitsui OSK's bulk ore carriers in a deepwater port, to enforce a Y2.9bn ruling in favour of Mr Chen and his uncle. Mitsui said it paid Y4bn to free the ship on Thursday.

"I will certainly tell my father in heaven and my grandfather, because they have waited the longest: 'Now the company handed down from your ancestors can be developed'."

It is a very different era from that of his ancestors. In the 1930s, Shanghai was one of the biggest and most modern of cities in Asia, known as the "Pearl of the Orient." Gangsters, spies, singing girls, sailors and refugees crowded its narrow streets. Tiny sampans pulled up next to ocean lines at its famous waterfront, the Bund.

Chen Shuntong's four coal steamers were already decades old when he bought them at a knockdown price. But he was proud that Chung Wei Steamship commanded ocean-going vessels, and the industrialising Yangtze Delta needed coal. In 1936, as war clouds gathered, the company leased two of its ships to Daido Kaiun, a Japanese shipping line.

Within the year they were commandeered by the Japanese navy as it prepared to invade China, and payments ceased. The defending Nationalist government, the Kuomintang, scuttled Chung Wei's other two steamers at the mouth of the Yangtze River, in a futile attempt to stop the Japanese advance. The Chen fortune was lost.

After the war, Shanghai enjoyed a brief revival. Skyscrapers 20 stories high rose on the Bund. The KMT paid Chen Shuntong a token reparation, and he endeavoured to retrieve his other two ships from Daido Kaiun. But in 1947 he found out they too were gone - one torpedoed, the other lost in a typhoon. His son Chen Chiak Qun found the lease contract among his papers when Chen Shuntong died two years later.

Safe in Hong Kong, Chen Chiak Qun sought damages from Daido Kaiun. The Japanese shipping company argued that the fault lay with the Japanese military. In 1970, Mr Chen sued in Tokyo. Four years and $600,000 later, the court ruled that too much time had passed.

In 1988, his two sons tried again, this time in Shanghai. The court said Chung Wei Steamship Co no longer existed. The brothers - who operated a small trading company importing toys and wine to Shanghai - registered a company in Hong Kong under that name. Eventually, in 2003, they were allowed to resume the suit as individuals.

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By this time, Daido Kaiun had merged into Mitsui OSK, which also inherited a similar case brought by Dah Loh Industrial, another prewar Chinese shipping line. It told bondholders in 2006 that if claims for a combined Y32.5bn in damages were successful, it would "adversely affect the financial condition of Mitsui OSK Lines".

The political landscape was also changing. China waived reparations in 1972, in return for a massive influx of Japanese aid and investment. That, and other foreign investment, helped propel the Chinese economy to three decades of double-digit annual growth.

But by 2006 the mood - and economic might of the two nations - was shifting.

As Japan lobbied for a UN Security Council seat and militant Chinese groups goaded China's new leader Hu Jintao, hundreds of thousands of Shanghainese took to the streets to protest Japanese leaders' resumed visits to the country's most important war shrine, Yasukuni. In 2010, the Chinese economy surpassed Japan to become the second-largest in the world.

Amid tensions over the East China Sea, the Chinese government became more attentive to citizens wronged during the war. In 2007, the Shanghai Maritime Court ruled Mitsui should pay Y2.9bn to the Chen brothers. Mitsui unsuccessfully appealed, settled with Dah Loh's representative and tried to get the Chen family to accept about Y1.5bn. They refused.

"The money was already not really the point. My father has died and my grandfather died too pursuing this case, so we ought to get the full amount," said the youngest Mr. Chen, now a 45-year-old primary school math teacher.

He said his elderly uncles and aunts would decide what to do with the money. His father, who died two years ago, "had big plans for the business".

And as for himself, was he relieved by the conclusion of a case that began before he was born? "Relieved? Yes, I think it might be a relief."

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