COPY
Sect. File No.9/926/49
NO. 39.
CRET
Sir,
GOVERNMENT HOUSE,
HONG KONG
30th December, 1949
I have the honour to refer to correspondence which has been exchanged on the subject of China National Air Corporation (C.N.A.C.), Central Air Transport Corporation (C.A.T.C.) and the National Resources Commission (N.R.C.). In reply to your telegram 1922 dated 28th December I have today replied by telegram 1397 which has summarised the position reached in the proceedings before the Supreme Court.
2. Such position is that 3 actions were commenced on the 24th November, 1949, in the Original Jurisdiction of the Supreme Court. In the first action No.517 of 1949, the Plaintiffs are described as the C.N.A.C. In the second action No.518 of 1949, the Plaintiffs are described as the C.A.T.C. In the third action, No.519 of 1949, the Plaintiffs are described as the N.R.C. In each of the three cases the Defendants are persons who are in possession of the property in Hong Kong claimed by the Plaintiffs in Hong Kong and who themselves claim such possession as servants of the Central Peoples Government of China. The writ in each action claims damages for trespass and injunctions restraining the Defendants by themselves, their servants, agents or otherwise from dealing with the property in Hong Kong alleged to belong to the Plaintiffs. In none of the three actions have any pleadings been filed but as regards all three, interim injunctions have been in force since the commencement of the actions to prevent either side from so dealing with the property as to deprive the side which may ultimately succeed of the property in issue. Subsequent proceedings before the Supreme Cort have been concentrated on action 519 of 1949, in which application to discharge interim injunctions were considered, but on the 30th December, by order of the Chief Justice the injunctions in that case remain in force pending further order, each side having liberty to apply. Injunctions in respect of Actions 517 and 518 likewise remain in force. In Actions 517 and 518 an application was made by Mr. Whiting Willauer and Major General Chennault to be joined as Plaintiffs, in each case on the ground that they had acquired the assets of the present Plaintiffs by purchase from the Government of the Republic of China on 12th December. On 22nd December in Action 517 the application was withdrawn and in Action 518 refused by the Chief Justice.
3. I have received a letter from the Chief Justice dated the 30th December in which His Honour explains, with the agreement of leading Counsel for the parties, that it has become apparent from the proceedings so far before him that, in all three cases, issues will inevitably arise as to what Governments were, since the commencement of the action, or are, recognised as de jure or de facto Governments of China and furthermore that question may also be anticipated as to the status of Formosa. In his letter Sir Leslie Gibson expresses the view that the Defendants in each action are likely to claim that the National Government ceased to be a de facto sovereign Government not later than the day it went to Formosa, and that the Central Peoples Government then, at the latest, became the de facto sovereign Government in China, It is therefore, in His Honour's view, necessary that the position be ascertained.
THE RIGHT HONOURABLE
ARTHUR CREECH HONES, M.P.
/40