Barcelona Traction, Light and

Power Company Case, ICJ Reports
Presented by:
Rachel Anne Z. Bautista
• FACTS:
Barcelona Traction, Light and Power Company, Limited which was incorporated in Canada to
distribute electric power in Spain and formed a number of subsidiary companies. Spanish holders of
bonds of Barcelona Traction petitioned in Spanish Court for declaration of bankruptcy on account to
failure to pay the interest on the bonds. Belgium, one of the shareholders of Barcelona Traction initiated
proceedings against Spain in the world Court, alleging essentially creeping expropriation and claiming
some $90 million reparation, or 88% of the sum represents the Belgian share interest in the company.
Now, Belgian Government filed with the International Court of Justice an Application against the
Spanish Government seeking reparation for damage allegedly caused to the Barcelona Traction.
Spain objected the Court’s jurisdiction, on the basis that the Barcelona Traction Company was not a
Belgian company and that Belgium had no right to exercise diplomatic protection, including standing in
the World Court, on behalf of mere shareholder. In other words, Spain objected since the injury was to
the company and not the shareholder, Belgium had no right to bring the claim.
ISSUE:
Does Belgium have the Jus standi (right to bring an action to court) to exercise diplomatic protection of
shareholders in a Canadian company
• RULING:
No. The Court rejected the Belgian claim on the grounds that it did not have a legal interest in
the matter. Although shareholders may suffer if wrong is done to a company, it is only the rights
of the company that have been infringed thus entitle it to institute action.
The court denied the existence under customary international law of an inherent right for the
national State of shareholders in a foreign company to exercise diplomatic protection.
However, there are instances which general rule might not take effect which are the following:
a. the case of the company having ceased to exist
b. the case of the protecting State of the Company lacking the capacity to take action
As to the first possibilities, the Court observed that whilst Barcelona Traction had lost all its
assets in Spain, it cannot be contended that the corporate entity of the company had ceased to
exist or had lost its capacity to take corporate action. Second, the Canadian Government had
exercised the protection of Barcelona Traction for number of years