An independent Japanese judicial panel on Monday ruled that the captain of a Chinese trawler that collided with two Japan coastguard ships should be indicted, a report said.

The incident last September off a disputed but uninhabited chain of islands in the East China Sea, known as Senkaku in Japan and Diaoyu in China, provoked a major diplomatic row between Beijing and Tokyo.

Prosecutors dropped charges against the skipper, Zhang Qixiong, in January but a judicial panel ruled on Monday that he "merits indictment" after being asked to review the case, Kyodo News reported.

Zhang was arrested and held for nearly three weeks, sparking a massive showdown between Beijing and Tokyo, leading to a freeze in political exchanges and affecting exports of rare earth minerals, a key component in Japan's high-tech sector.

Tokyo eventually backed down amid mounting pressure from Beijing and sent Zhang back to China.

In February the Japanese coastguard reportedly sent Zhang a $170,000 bill to cover repairs to its damaged ships and other expenses stemming from the collision.

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