I have a real weed up my arse about cinematic racism. I'm not talking here about racist characters in films – these are essential characters in many a social drama – but films that are guilty of racist portrayals or xenophobic attitudes. I don't tolerate it in real life and don't see why I should have to in movies, especially as it is usually down to the ignorance or laziness of film-makers looking for a short-cut route to creating on-screen bad guys or a refusal to engage with another culture on anything more that a superficial level. As someone who has something of a love affair with Japan, the often stereotypical portrayal of the Japanese in western cinema particularly irks, but I'm just as critical of, say, a Serbian film that contains an ill-defined or cartoon American character. Any film that presents two very different cultures on a completely equal footing is a rare thing indeed, and as such is to be treasured. Which brings us to Merry Christmas Mr. Lawrence, which is set during World War 2 in a Japanese prisoner of war camp where the guards regularly abuse the British and Australian inmates. Ah. And two of the lead characters are played by rock stars. Oh bloody hell. But given that there is an inherent historical imbalance imposed by history itself – the Japanese themselves admit that their treatment of allied prisoners was at times downright brutal – and that the situation is one of extremes, this is without question one of the most even-handed and compelling examinations of cultural non-communication ever committed to film.

Set during the later stages of World War 2, the story revolves around Colonel John Lawrence, an English soldier and fluent Japanese speaker who is the Allied liaison officer in a Japanese prisoner of war camp in the East Indies, run by young Colonel Yonoi. Despite the hostile relationship between the guards and the prisoners, Lawrence is on quite amiable terms with Yonoi, who has a basic command of English, and the older Sgt. Gengo Hara, who is openly contemptuous of the prisoners, people he believes are inferior to the Japanese both for getting caught in the first place and for living with the shame of confinement. One day Yonoi is called to Batavia to partake in the trial of a captured English officer, the individualistic Captain Jack Celliers. As soon as he lays eyes on Celliers, Yonoi becomes strangely fascinated by him, saving him from a firing squad and protecting him within his own camp, but he does not count on the man's rebellious nature and his continual refusal to conform.

Though on the surface a prisoner-of-war drama, this is actually a film about the cross-cultural communication gap, the controlling power of desire and the strange and unexpected forms it can take. The communication issue between the Japanese and the English goes cinematically back to 1957 and David Lean's Bridge on the River Kwai, which also used the WW2 prisoner of war camp setting, and has recently resurfaced in the highly regarded independent movie Lost in Translation. But where Sofia Coppola created fully rounded characters in her English-speaking westerners, many of the Japanese characters were little more than cartoons, and one of the most remarkable features of Merry Christmas Mr. Lawrence is that despite being set in a situation of conflict in which history itself has imposed its own notions of right and wrong, all of the main characters are presented in a fully rounded and genuinely even-handed manner, no matter what their nationality. All have their strengths and flaws and Oshima doesn't shrink from showing them, but he also does not pass judgement on them or their actions, with the result that behind each and every action, no matter how seemingly unreasonable, is a human being, someone with whom we can on some level empathise.

Take, for example, camp guard Sgt. Hara. Initially shown casually assaulting one of the prisoners and presiding over the humiliation of another and a Korean guard that has been caught sexually assaulting the man, a short while later he is seen engaging in almost friendly discussion with Lawrence on the shame of captivity, and a one evening the two become almost co-conspirators, hiding together when Yonoi comes to the hospital to check on the condition of Celliers. Later still Celliers and Lawrence are saved from a possible death sentence when Hara gets drunk and laughingly tells them that he is Father Christmas. We may not fully understand the man's motivations, but we grow to like him nonetheless, and the film's humdinger of an ending is almost completely due to our engagement with him as a character and sympathy for him and his situation. Of course, this is down in no small part to the performance (in his first film role) of the now legendary Takeshi Kitano as Hara, balancing an almost casual attitude to violence with a mischievous humour with the sort of deftness that has become his trademark, though it's in the aforementioned final scene that he most clearly shines as an actor, beautifully underplaying a part that could so easily have been overstated.

That a director of Oshima's experience was able to work so well with his Japanese cast is not that surprising, but that he was able to extract similarly impressive and largely naturalistic performances from his international cast is admirable. Tom Conti in particular shines as Lawrence, a perfectly judged turn that provides the film with a figure around which the rest of the narrative and characters can revolve, a single reasonable man in the midst of madness. Conti's Japanese is particularly good, especially when you realise that he spoke not a word of the language (he learned it parrot fashion as a series of sounds), and his eye-rolling reaction to the folly of others says a lot about his relationship with those on both sides of the cultural divide. It is he that has the film's single swear word, which is spat out with such fury that it gives full voice to his frustration at the intransigent attitude of both his captors and his own comrades.

The potential weak links were always going to be the rock stars – their involvement may seem to have been triggered with one eye firmly on the marketplace – but Oshima's casting decisions were made very much with the narrative in mind: he wanted Celliers in particular to have an almost iconic status, something that the audience would instantly recognise and understand as having a fascination for Yonoi, and David Bowie most definitely supplies this. Crucially, though, both he and Ryuichi Sakamoto as Yonoi turn in very convincing performances, with Bowie nicely capturing both the rebelliousness and inner turmoil of Celliers' character, while the controlled anger in his statement to the court in which both we and Yonoi first encounter him is particularly convincing. In a nice nod to his musical status, Oshima has Bowie as Celliers sing 'Rock of Ages' painfully out of tune, and he later gets to say the line "I wish I could sing" without even a hint of irony.

Yonoi's fascination with Celliers is never explained but is always fascinatingly handled, a combination of Sakamoto's performance, savvy camera placement and movements, and Sakamoto's own stunningly effective score. The early scene in which Hara humiliates and almost executes a Korean guard for his homosexual behaviour has echoes later in Yonoi's own possible sexual attraction to Celliers, and Yanoi's cutting of a lock of the man's hair is shown as an almost intimate act. But Oshima also hints at something more spiritual, a meeting of souls rather than hearts. For Yonoi, Celliers represents purity in human form – the sight of his bruised body in court severely disturbs him and his night-time visit to inspect the progress of the man's recovery seem deeply personal, something not lost on the secretly watching Lawrence and Hara. The tragedy for Yanoi is that this is a one-way attraction, and Celliers' refusal to see Yonoi as anything other than an adversary is a narrative time bomb just waiting to go off, something that happens when Celliers directly challenges Yonoi's authority not with fists or a weapon, but with a kiss.

If initially the cultural gap appears to be weighted in favour of the prisoners – the brutality and inflexibility of their captors is met with protests, good humour and fortitude – it is as the story progresses that a surprising level of balance is reached. Yonoi's stubborn determination to discover the names of weapons and munitions experts amongst the prisoners, which ultimately provokes a confrontation that will harm both himself and the object of his fascination, is matched by the equally intransigent pig-headedness of British Group Captain Hicksley, who regards the Japanese simply as 'the enemy' and all attempts at communication with them as close to traitorous. Similarly intriguing is Celliers' back story, revealed when he and Lawrence are facing possible execution, a childhood in which his own sense of self was to prove more important to him than the needs of his younger brother. And if the English speaking audience is mystified by the Japanese sepuku (suicide) ritual, then the Japanese must be similarly bemused by the bizarre rites of public school initiation that scar Selliers' young brother for the rest of his life.

Individual scenes remain extraordinary, but the film's real power stems from its effect as a whole, and time has not dated one frame of this remarkable work. If anything, the reverse is true – on its release it was widely recognised as a bold and affecting work from one of modern cinema's most controversial and individualistic talents, but the passing years have confirmed the true greatness of a film that very comfortably and appropriately wears the badge of masterpiece.

Previously released on region 2 with a non-anamorphic and frankly below par transfer, this new disk from Optimum really sets things right. Framed at 1.85:1 and anamorphically enhanced, the picture here is very strong, exhibiting a very fine level of detail, nicely balanced contrast and very little evidence of compression artefacts, even in the darker, blue-tinted scenes. Some grain is occasionally visible, but never distractingly so. Colours are a tad muted in places, but this appears very much to be intentional – it's a good few years since I saw this at the cinema, so direct comparisons are hard to make, and there is no technical commentary to confirm this. On the whole, a most commendable transfer, though it has to be said that there is a tiny bit of frame instability here and there, with the film moving around in the projection gate, though this is rarely noticeable.

The soundtrack is Dolby 2.0 stereo and has undergone no remix from the original cinema version. Dialogue is inevitably central, with Ryuichi Sakamoto's gorgeous music and some sound effects spread across the front sound stage, though actual stereo separation is minimal. Though lacking the spread and frequency range a 5.1 mix would have brought, this is still a very serviceable and cleanly transferred track.

Interestingly, a redub of one word is very visible on the DVD – in the courtroom scene, when Celliers says "You know my commander in Java was captured in March" his mouth is clearly not saying "March" but what looks like "June." I have to presume this is a continuity correction made to the original cinema version.

As a Special Collector's Edition, the disk thankfully has more than just a solid transfer to justify that title.

The Oshima Gang Featurette (29:35) is a documentary on the making of the film produced to coincide with its original release and is a compelling inclusion, being based primarily around often fascinating interviews with Tom Conti, David Bowie, producer Jeremy Thomas, and Laurens Van der Post, author of The Seed and the Sower, the autobiographical novel on which the film was based. It also includes footage from the press conference at the 1983 Cannes Film Festival, where the film was nominated for the Palm D'Or but lost out to fellow Japanese director Shohei Imamura's Narayama bushiko. Framed at 4:3 and probably produced for UK TV, this appears to have been rescued from a non-hi-fi VHS tape – although the picture quality is generally acceptable, the sound is plagued by a constant and very audible hiss throughout. I'd like to think that this is because this was the only print of this documentary Optimum could find, in which case it is perfectly excusable, rather than it being the one someone at the office had on tape, which is not. Frankly I believe the former, and I happily tolerate the technical problems for the content.

An Interview with Jeremy Thomas (17:48) is a retrospective look back at the making of the film with the film's producer, a man whose CV boasts a whole slew of eye-catching international productions (Eureka and Insignificance with Nicolas Roeg, Naked Lunch and Crash with David Cronenberg, The Sheltering Sky, Little Buddha and The Dreamers with Bernardo Bertolucci, Gohatto with Oshima, Brother with Takeshi Kitano and Sexy Beast with Jonathan Glazer among them). Divided into caption-led chapters (though with no chapter stops) like 'Locations', 'Working with Oshima' and 'Ryuichi Sakamoto's Music', Thomas provides plenty of interesting information about the film, and duplication of points made in the featurette is rare. Shot on DV and transferred 16:9 anamorphic, it looks and sounds fine, but still has a surprising level of tape hiss hovering in the background.

An Interview with Ryuichi Sakamoto (11:01) is shot on 4:3 DV with the tape hiss that seems endemic to this disk's extra features (the framing is also a bit iffy). The interview is conducted in English, which Sakamoto is reasonably fluent in, and proves an interesting if unhurried discussion on the process of creating the score for the film and the demands of acting in it.

An Excerpt from 'Scenes at the Sea – The Life and Cinema of "Beat" Takeshi Kitano (3:10) is a short extract from a very solid documentary on Kitano that deals with his first film role and the Japanese public reaction to it (as he was known as a comedian, they laughed). The entire documentary can be found on VCI's region 2 disk of Kitano's Brother.

The Theatrical Trailer (3:03) is presented 4:3 and is in rather good shape. Interesting to see how the film was originally marketed to an international audience, though it always annoys me to see the final shot of the film included in a promotional trailer.

Merry Christmas Mr. Lawrence is extraordinary cinema, a prisoner-of-war story with far wider ambitions than the generic norm, successfully examining the cultural quirks of two very different nations, but in a way that makes it accessible to audiences from both and to the world at large. Beyond its power as drama it is a fascinating slice of film history – it was the first international success for the remarkable Jeremy Thomas, the film that first showcased the acting skills of comic Takeshi Kitano and introduced him to an international audience, and provided convincing evidence that David Bowie could be more than just an iconic on-screen presence. For Oshima, though, it marked the slowing down of his output, and he has only directed three films since, but for an international audience this remains his most accessible, and one of his most remarkable.

Despite some tape hiss on the extras, the DVD comes wholeheartedly recommended for its picture quality – which really does the film justice – and for the content of the extra features. Nice one, Optimum.