BELGIUM v. SPAIN (BARCELONA TRACTION bringing a claim.

Although Belgian shareholders

CASE) [1970]
FACTS:
Barcelona Traction, Light and Power Company
Limited (BTLP) was a corporation incorporated
in Canada, with Toronto headquarters that made and
supplied electricity in Spain. It had issued bonds to non-
Spanish investors, but during the Spanish Civil
War (1936-9) the Spanish government refused to allow
BTLP to transfer currency to pay bondholders the
interest they were due.
In 1948 a group of bondholders sued in Spain to
declare that BTLP had defaulted on the ground it had
failed to pay the interest. The Spanish court allowed
their claim. The business was sold, the surplus
distributed to the bondholders, and a small amount was
paid to shareholders.
The shareholders in Canada succeeded in
persuading Canada and other states to complain
that Spain had denied justice and violated a series of
treaty obligations. However, Canada eventually
accepted that Spain had the right to prevent BTLP from
transferring currency and declaring BTLP bankrupt. Of
the shares, 88 per cent were owned by Belgians, and
the Belgian government complained, insisting the
Spanish government had not acted properly.
suffered if a wrong was done to the company, it was
only the company's rights that could have been
infringed by Spain's actions.
It would only be if direct shareholder rights
(such as to dividends) were affected, that the state of
the shareholders would have an independent right of
action. It was a general rule of international law that
when an unlawful act was committed against a
company, only the state of incorporation of the
company could sue, and because Canada had chosen
not to, this was the end.
The idea of a "diplomatic protection" of
shareholders was unsound because it would create
confusion and insecurity in economic relations as shares
are 'widely scattered and frequently change hands'. The
court also said that a state is bound to give the same
legal protection to foreign investments and nationals,
either for natural or legal persons, when it admits them
to its territory.

They made an initial claim at the International

Court of Justice in 1958, but later withdrew it to allow
negotiations. Subsequent negotiations broke down, and
a new claim was filed in 1962. Spain contended that
Belgium had no standing because BTLP was a Canadian
company.

ISSUE:

WON the state of the shareholders of a

company have a right of diplomatic protection if the
state whose responsibility is invoked is not the national
state of the company.

RULING:

The International Court of Justice held that

Belgium had no legal interest in the matter to justify it