U.S. COURT LETS CHINESE BOND SUIT DISMISSAL STAND
The Supreme Court left intact a
ruling that vacated a judgment ordering China to pay 41.3 mln
dlrs for allegedly defaulting on a 1911 loan to finance
construction of a railroad from Peking to Canton.
    The Imperial Government of China issued bonds in 1911 to
help construct a section of the so-called Hukuang railroad in
an agreement with British, German, French and American banks.
    According to court documents, payments on the loan were
made until the mid-1930s, when China was torn by civil war. The
present government, which came to power in 1949, has never
acknowledged the debt.
     Nine U.S. bondholders sued China for repayment of the loan
in 1979, less than a year after the normalization of relations
between Washington and Peking.
    A U.S. District Court in Alabama in 1982 issued a judgment
that the bondholders were entitled to all unpaid interest and
principal on the bonds, totaling 41.3 mln dlrs.
    But a U.S. Court of Appeals last July vacated the award,
ruling that the Chinese government was entitled to sovereign
immunity, and dismissed the lawsuit.
    Supported by the Reagan administration, China argued that
it could not be held liable for a debts involving bonds issued
in 1911 and that it enjoyed absolute immunity.
    The Supreme Court, without comment, declined to hear an
appeal by the bondholders seeking to reinstate their lawsuit.
 Reuter
