## Facts

- In 1911, the Imperial Government of China issued bearer bonds to finance construction of a portion of the Hukuang Railway; the loan was arranged through an international banking consortium.
- The bonds were serviced for a period, with payments apparently continuing until the mid-1930s.
- Bondholders alleged a 1937 agreement renegotiated the bonds’ terms, but the district court found no agreement was reached.
- Bondholders filed a putative class action in the Northern District of Alabama seeking unpaid principal and interest and invoked jurisdiction under the Foreign Sovereign Immunities Act of 1976 (FSIA).
- The People’s Republic of China (PRC) initially did not appear, asserting absolute sovereign immunity, and the district court entered a default judgment exceeding $41 million.
- After judgment, the PRC appeared and moved under Federal Rule of Civil Procedure 60(b) to vacate the default judgment.
- The district court set aside the default judgment and later dismissed the action for lack of subject-matter jurisdiction, concluding the FSIA does not apply retroactively to pre-1952 conduct.

## Issues

1. Whether the district court abused its discretion under Rule 60(b) by setting aside the default judgment entered against the PRC.
2. Whether the FSIA applies retroactively to confer subject-matter jurisdiction over claims arising from a foreign sovereign’s 1911 bond issuance and related pre-1952 conduct.

## Decision

- The Eleventh Circuit affirmed the order setting aside the default judgment.
- The Eleventh Circuit affirmed the dismissal for lack of subject-matter jurisdiction.
- The court held the FSIA does not apply retroactively to confer jurisdiction over transactions occurring before the United States adopted the restrictive theory of sovereign immunity in 1952.

## Legal Principles

- Relief from a default judgment under Rule 60(b) is reviewed for abuse of discretion; courts may consider the presence of substantial defenses, including jurisdictional defenses.
- A default judgment against a foreign sovereign may be vacated where the sovereign presents non-frivolous jurisdictional defenses and reopening is justified under Rule 60(b), including Rule 60(b)(6).
- Statutes are presumed to apply prospectively absent clear congressional intent to the contrary, particularly where retroactive application would affect settled legal expectations.
- The FSIA’s jurisdictional regime does not retroactively remove the absolute immunity foreign states were understood to enjoy for pre-1952 conduct; therefore, it does not create subject-matter jurisdiction for such claims.

## Conclusion

The Eleventh Circuit upheld vacatur of the default judgment and affirmed dismissal because the FSIA did not retroactively confer subject-matter jurisdiction over claims based on China’s pre-1952 bond-related conduct, leaving U.S. courts without jurisdiction over the PRC in this action.


Jackson v. People’s Republic of China, 794 F.2d 1490 (11th Cir. 1986)