International Law - Retroactive Recognition of De Facto Government Not Invalidation of Acts of Prior De Jure Government

On December 12, 1949, the Chiang regime on Formosa accepted the offer of an American group headed by General Chennault to purchase the physical assets of the Nationalist-operated Central Air Transport Corporation, including forty aircraft located at Hong Kong. The British government ceased to recognize the Nationalists as the de jure government of China on January 5, 1950. Thereafter the British announced that they recognized the Communist regime as the de facto government of those parts of China they actually controlled, effective October 1, 1949, the date the Communists had proclaimed themselves the government of China. The Chennault corporation brought an action in Hong Kong against the CATC, seeking an order declaring it the owner of the forty planes.

The action was dismissed on the ground, inter alia, that the recognition of the Communist regime operated retroactively to "validate" its actions and to invalidate the actions of the Chiang government subsequent to October 1, 1949, thereby annulling the sale of December 12, 1949. On appeal to the Privy Council, held, reversed. Retroactivity of recognition operates primarily "to validate acts of a de facto government which has subsequently become the new de jure government, and not to invalidate acts of the previous de jure government." Civil Air Transport, Inc. v. Central Air Transport Corp.,[1953] A.C. (P.C. 1952) 70 at 93.