Source: http://www.siliconera.com/2011/11/17/square-enix-license-unreal-engine-3-again-for-multiple-projects/

Square Enix have licensed Epic Games’ Unreal 3 engine for the development of multiple games. Epic’s Japanese division, set up in April 2010 to provide support to Unreal 3 licensees in Japan, arranged the deal.

This isn’t the first time that Square Enix have have worked on games using Unreal 3.The Last Remnant, a role-playing game released for the PC and Xbox 360 in 2008, used Unreal 3 as well. Development of that game, unfortunately, was made unstable by the constant back and forth collaboration required between Epic and Square Enix, in order to make the engine ready for use.

One of the many problems was that the engine had to be translated into Japanese before Square’s developers could use it. Once this process began, translation errors presented another hurdle to cross. Epic were also in the process of frequently updating Unreal 3, which caused synchronization problems with Square’s own development cycle on The Last Remnant.

Aside from Square Enix, other Japanese developers such as Grasshopper Manufactureand CyberConnect 2 are Unreal 3 licensees as well. Grasshopper used the game forShadows of the Damned, and CC2 are using it for Asura’s Wrath.

Gross.

Though,
I'm not sure how licensing works.
It doesn't really make sense for JRPG's because they already have assets and an engine. But for other types of games it would.

if they license it couldn't it be for Eidos. Or a square-enix published title like the game for by the portal creator.

lol.

So why did they even make their own engine? (which is better than UE3)