Tourists look at the floating palace in the distance on April 8. [Provided to China Daily]

Shenzhen, Guangdong - The hearing of the long-disputed "Sea Palace" case filed by its owner against a local government department was held at the Longgang district court on Tuesday.

The court session lasted for three hours before being adjourned but the judge's decision is yet to be made.

The Shenzhen Elite Offshore Entertainment Company, owner of the private recreation facility, which floats on the sea, first appealed to the court on March 28 and demanded 1 million yuan ($150,000) in compensation over the allegedly illegal revoking of its aquatic farming and fishing licenses by the Longgang district agricultural, fishery and oceanic bureau.

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The company filed a second appeal on April 13 after the department sent about 100 workers to demolish the floating villa.

The court accepted the two files on April 20 and decided to hold the hearings on May 24. But one day before the notice of the court session was delivered, the bureau was dissolved according to the government's reform plan.

Thus the court session was delayed and the Longgang economic promotion bureau, which took over the functions of the agricultural, fishery and oceanic bureau, became the defendant in the case.

Wang Tengfeng, the attorney for the plaintiff, said after the court session that the defendant's case was unconvincing.

Wang denied speculation that the accuser is pursuing financial interests in the legal suit.

"What we are appealing for is getting back the licenses that were taken from us," Wang told China Daily on Tuesday. "In a broader sense, we want to seek credit for our efforts in the exploration of offshore space."

Wang described the decisions made by the Longgang district oceanic bureau to retract the company's farm-fishing and leisure-fishing licenses as "hasty and unreasonable".

Meanwhile he insisted that construction work on floating bases had legal foundations, citing a city legal document on sea structures and a Guangdong government regulation on fish shelters.

However, according to a report by jcrb.com, the website of the Procuratorate Daily, the attorney for the defendant insisted that the company never obtained the legal right to use the sea area and therefore its possession of the sea area is illegal.

The bureau described its decision to retract the company's sea-farming licenses as self-correction.

The floating villa, located in Dongshan Bay at Nan'ao in eastern Shenzhen, started as cabins built on fishing rafts. In mid-2004, it was expanded to cover a sea area of more than 3,000 square meters.

The sea villa took shape in 2005, when a local real estate company started massive construction work in a bid to build a floating compound later known as "Palace On the Sea" because of its luxury.

The sea villa came under fire after the media revealed the luxury private club had never gained a permit to use the sea area.

In 2005, a local offshore surveillance team deemed the villa illegal and transferred the case to Shenzhen oceanic bureau. But the villa continued operating despite these disputes.

The Guangdong provincial oceanic bureau launched investigations into the case and deemed it an illegal construction on the sea in January 2010.

The Longgang district court ordered the company to dismantle the villa in May. The company removed the horse track and swimming pool from the villa, but the main body of the villa was preserved.

The company gained licenses for sea farming and leisure fishing from the Longgang district agricultural, fishery and oceanic bureau in December last year. But the bureau revoked its licenses shortly after the place reopened in February.