Peru’s finance minister on Wednesday defended the country’s handling of a dispute over land bonds on which it had defaulted decades ago and which has been challenged by a U.S. hedge fund in international arbitration.

Last month, Connecticut-based Gramercy Funds Management LLC, which owns about 10,000 of the individual land bonds, filed a notice of intent to initiate arbitration under the U.S.-Peruvian free-trade agreement to seek more than $1.3 billion from the South American country for failing to pay the debt.

“That’s their right; we’ll follow those procedures wherever they take us,” Alonso Segura,the country’s minister of economy and finance, said on the sidelines of the annual inPeru roadshow in New York.

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