The freighter, packed with 286 illegal immigrants from Fuzhou, ran aground off the coast of New York City after four months at sea, killing 10 of the stowaways after they were ordered to swim ashore when the ship grounded.

According to an indictment brought before a Manhattan federal court in December 1994, Cheng had smuggled about 3,000 Fujianese to the US since 1984 with the help of the American-Chinese gang Fuk Ching.

US authorities requested her extradition from Hong Kong to face allegations of 'gross criminal conduct, universally deplored, international in its ramifications'.

Chief Executive Tung Chee-hwa approved the extradition request in May last year.

But Cheng's counsel, Andrew Bruce, SC, told the Court of Appeal yesterday that Mr Tung's action was wrong because Cheng's alleged crimes were subject to a time limit and that American authorities had no power to prosecute her.

'A person should not be sent halfway around the world against her will if it is harsh, unjust and oppressive to do so,' he said.

He added his client did not know she was a 'fugitive from justice' as the indictment had been sealed.

But Mr Justice Anthony Rogers, Mr Justice Frank Stock and Mr Justice Conrad Seagroatt yesterday dismissed the appeal. The reasons for their decision will be handed down at a later date.

The decision was the latest in a string of legal defeats for Cheng. She has been in custody at Tai Lam women's detention centre since her April 2000 arrest at Chek Lap Kok airport ended a five-year worldwide manhunt.

Cheng is accused of conspiring to smuggle illegal aliens from the mainland and to hold them hostage at 'safe houses' in New York, New Jersey and Maryland for ransom from their families.

She is also charged with taking migrants hostage and threatening them with death or injury.