Summaries of Judgments, AdvNot an official documents of the Internationa
l Court of Justice
CASECONCERNING THEBARCELONATRACTION, LIGHTAND
POWER COMPANY ,IMITED (SECOND PHASE)
Judgmentof 5
Initsjudgmentinthe secondphaseoftht:caseconcerning nies. Pursuantto thisjudgment the principal management
theBarcelonaTraction,Light andRwer C'ompanyL , imited personneloftheWID companiesweredismissedandSpanish
(New Application: 1962) (Belgium v. SIpain),the Court directors appointed. Shortly afterwards, thesemeasures
rejectedBelgium'sclaimbyfifteen votestalone. shmesofthesubsidiarycompaniesbwerecreated,whichwere
Theclaim,which wasbrought beforetheCourt on19June soldbypublicauctiionin 1952toa newly-formed company,
1962,aroseoutoftheadjudicationinbankruptcyinSpainof FuerzasElectricas~dCataluiia, S.A.(Fecsa),whichthere-
Barcelona Traction,a companyincorporat1:in Canada.Its uponacquiredcomlpletecontroloftheundertakinginSpain.
objectwasto seekreparatiofordamageallegedbyBelgium
tohavebeensustainedbyBelgiannationals;,shareholdersin Proceedingswensbrought withoutsuccessintheSpanish
thecompany,asaresultofactssaidtobecontrarytointerna- courts by variousc:ompaniesor persons. According tothe
tionallaw committed towardthecompanybyorgansofthe Spanish Government,2,736 orders were madein the case
SpanishState. ancl494judgments givenby lowerand 37by highercourts
TheCourtfoundthatBelgiumlacked jusstanditoexercise before itwassubmitted tothe InternationalCourtofJustice.
diplomaticprotectionof shareholdersina1Canadiancom- TheCourtfoundthatin 1948Barcelona Tractionw , hichhad
pany withrespectto measurestakenagainstthatcompanyin notreceivedajudicialnoticeofthebankruptcyproceedings,
Spain. andwasnotreprese:nted beforetheReuscourt,tookno pro-
JudgesPetdn andOnyeamaappendedajoint declaration ceedingsinthe Spanishcourtsuntil 18Juneandthusdid not
totheJudgment; JudgeLachsappendedad~xlaration.Presi- withinthetime-limitofeight daysfromthe dateofpublica-nt
dent Bustamantey Riveroand JudgesSir GeraldFitzmau- tion of thejudgment laiddownin Spanishlegislation.The
rice, Tanaka, Jessup, Morelli, Padilla hlervo, Gros and Belgian Governme:ntcontends, however, thatthe notifica-
AmmounappendedSeparateOpinions. tion andpublicationdid not complywiththe relevant legal
Judgead hocRiphagenappendedaDissentingOpinion. requirementsandthattheeight-daytime-limitneverbeganto
run.
Background ofEventsintheCase
(paras.8-24 ofthe Judgment) Representationswere madetotheSpanishGovernmenb t y
the British, Canadian,United States and BelgianGovern-
TheBarcelona Traction, LighatndRwer Company,Lim- mentsasfrom 19481or 1949.The interpositionoftheCana-
ited,wasincorporatedin 1911inToronto(Chnada),whereit dim Governmentct:asedentirelyin 1955.
hasitsheadoffice.Forthepurposeofcreatinganddevelop-
ingan electricpower productionanddistributionsystemin Proceedings beforethe International ourtand the Nature
Catalonia (Spain)it formeda number ofubsidiarycompa- oftheClaim
nies, of whichsomehad their registered offices in Canada(paras.1-7 and263 1oftheJudgment)
and the othersin Spain. In 1936the subsidiary companies TheBelgian Government fileda first Application wthe
supplied themajor partof Catalonia'seltxtricity require-Court againstthe Spanish Governmentin 1958.In 1961 it
ments. According tothe BelgianGovernlr~ent,omeyears gave notice of discontinuanceof the proceedings,with a
after thefirstworld warBarcelona Traction'sshare capitalview tonegotiationsbetween therepresentativesof thepri-
SpanishGovernmentcontendsthatthelgBe1g:ianationalityof vate interestsconceimed,andthecasewasremoved fromthe
the shmeholdersisnot proven. Court's General List. The negotiationsaving failed, the
Belgian Governmenton19June1962submitted totheCourt
BarcelonaTraction issuedseveralseries bonds,princi- a newApplication.In 1963the SpanishGovernmentraised
pally in sterling. The sterlingbonds were serviced outoffourpreliminaryobjectionstothis Application.Byits Judg-
transfersto Barcelona Tractioneffectedby the subsidiary ment of 24July1964,the Courtrejectedthefirst and second
companiesoperatingin Spain.In 1936the servicingof the objectionsandjoinedthethirdandfourthtothe merits.
Barcelona lktion bondswas suspended on accountof the
Spanishcivilwar.After thatwartheSpanishexchangecon- Inthesubsequent:written anoralproceedingstheParties
trolauthoritiesrefusedtoauthorizethetransferoftheforeignobservedthatthenum~usulaelngthofthe proceedingswasdue
currencynecessaryfortheresumptionofthf:servicingofthe tothevery long time-limits requestedby the Partiesfor the
complainedof this, theSpanishGovernmentstated thatthe preparationof their writtenpleadingsand totheir repeated
transfers couldnot be authorized unlessit ,wereshownthat.requestsfor anextensionof those limits. The Court didnot
the foreigncurrencywas to be usedto repaydebts arising findthatit shouldrefusethoserequests,butit remainedcon-
from the genuineimportationof foreign capital intoSpain,vincedthatit wasin the interestof the authorityof interna-
andthat thishad notbeenestablished. tional justicefor caws to be decided without unwarranted
delay.
In 1948threeSpanish holdersofrecently acquired Barce-
lona 'liaction sterlingbonds petitionedthatcourt of Reus The claim submittedto the Courthad beenpresented on
(RovinceofTarragona)foradeclarationadjiudgingthecom- behalfof natural andjuristic persons, alleged Belgian
pany bankrupt,on,accountoffailuretopaytlheinterestonthe nationalsandshareholdersinBarcelonaTraction,acompany
bonds.On 12February 1948 ajudgmentwasgivendeclaring incorporatedinCanadaandhavingitsheadofficethere.The
thecompany bankruptandorderingthe seizureoftheassets objectof the Applicationwas reparation fordamagealleg-
of BarcelonaTractionand of two of its subsidiarycompa- edlycaused tothoserpersonsbytheconduct,saidtobecon-traryto internationallaw, of variousorgansof the Spanish capacitytotakeaction.Asregardsthefirstofthesepossibili-
Statetowardsthatcompany. ties, the Court observed that whit arcelonaTractionhad
lostdl itsassetsinSpainandbeenplacedinreceivershipin
The third preliminaryobjectionof the SpanishGovern- Canada,itcouldnotbecontendedthatthecorporateentityof
ment,whichhadbeen joinedto themerits,wastothe effect thecompanyhadceasedtoexistorthatithadlostitscapacity
that theBelgianGovernme.ntlackedcapacityto submit any to take corporateaction. ofar asthe secondpossibilitywas
claim in respectof wrongsdone to a Canadialncompany, concerned,it was not disputed that thecompanyhad been
even if the shareholdersw8e:eelgian.Th~e foruthprelimi- incorporatedin Canada andhad its registered offiin that
theeffectthat localremediesavailablinSlpainlhadnotbeeno country, andits Canadian nationalityhad receivedgeneral
exhausted. recognition. TheCanadian Governmenthad exercised the
protectionofBarcelona'Ifactionforanumberofyears.Ifata
The case submitted to the Court principally concerned certain point the Canadian Governmentceased to act on
three States, Belgium,painandCanada,anditwasaccord- behalf of Barcelona 'Ifaction, it nonethelessretained its
ingly necessaryto dealwit1a seriesof problemsarisingout capacity todo so, whichthe Spanish Governmenh t ad not
ofthis triangularrelationship. questioned.Whateverthe reasonsfortheChadian Govern-
ment'schangeofattitude,thatfactcouldnotconstituteajus-
TheBelgian Government'jsus standi tificationfortheexerciseofdiplomaticrolectionbyanother
(paras.32-101oftheJudgment) -overnment.
TheCourtfirst addressed itselto theqi~estisn,raisedby It had been maintainedthat a Statecould make a claim
thethirdpreliminaryobjection,whichhadbeenjoinedtothe wheninvestmentsby itsnationalsabroad,suchinvestments
merits,oftherightofBelgi~u~ tmexercisediplomaticprotec- being part of a nationaleconomicresources, were
tion of Belgian shareholdersin a compimyincorporated prejuoliciallyaffectedin violationof the lrofhthe state
in Canada*the measuresc.c)m~laineo df h;avingbeentaken itselto haveitsnationals enjoya certain treatment. But,in
in relationnot to any Belgiannational to the company thepresentstateofaffairs,sucharightcouldonly~sult from
itself. a treatyor specid agreement.And noinstrumentof sucha
TheCourtobservedthat,whenaStateadmittedintoitster- kindwas inforcebetweenBelgiumandSpain.
rit0ryforeignin~e~fXIlentt~foreignnationalsit Wasbound ~thad alsobeenmaintainedthat, forreasons ofequity,a
toextendtothemtheprotec1:ioo nfthelawandassumedobli- state shouldbe able, incertaincases,to takeuptheprotec-
gationsconcerning thetrerltmentto be affordedthem. But tionof its nationals, in a company whichhad
suchobligationswerenotabsolute.Inordertobringaclaim beenthevictim ofa violatioof internationallawme court
in respectof the breachof suchan obligationa Statemust consitleredthattheadoptionofthetheoryofdiplomaticpro-
firstestablishits righttotro. tectionof shareholdersassuchwouldopen thedoor tocom-
In the fieldofdiplomaticprotection, internationallawwas petingclaimsonthe partofdifferentStates,whichcouldcre-
in continuous evolutionand was called ypon 1:orecognize ate an atmosphereof insecurityin internationaleconomic
institutionsofmunicipallaw. Inmunicipallaw, theconcept relations.ntheparticularcircumstancesofthepRsentcase,
of the companywas foundledon a firmdistinctionbetween wherethecompany'snationalStatewasabletoact,theCourt
therightsofthecompanyandthoseoftheshareholder.Only wasnot of the opinionthatjus standiwasconferredon the
the company,which wasendowedwith legal personality, Belgian Governmenb tyconsiderationsofequity.
couldtakeactionin respectof mattersthatwereof a corpo-
ratecharacter. A wrong done to the company frequently ~h ~ ~ ~ ~ t ~ ~ ~ ~ ~ i ~ i ~ ~
caused prejudiceto its sharmholder, ut this did not imply (pm. 102 103ofthe Judgment)
thatboth wereentitledto claimcompensation.Whenevera
shareholder's interestsre harmedby an act doneto the Thc:Court tookcognizanceof the greatamountof docu-
company, itwasto the latterthathe hadtc,lookto institute mentary andother evidence submittedby the Parties and
appropriateaction. An act infringing onl:thecompany's :fullyappreciatedtheimportanceof thelegalproblemsraised
rights didnot involveresponsibilitytowan$ the sharehold- bytheallegationwhich wasattherootoftheBelgianclaim
ers,eveniftheir interestswt:reaffected.In forthesitu- andwhichconcerneddenialsofjustice allegedlycommitted
ationtobedifferent, theactcomplainedof mustbeaimedat byorgansof theSpanishState.However,thepossessionby
thedirectrightsoftheshare'holderssuch(whichwasnotthe theBelgianGovernmeno tfarightofprotectionwasaprereq-
caseheresincethe Belgian Governmenh taditselfadmitted uisite for the examinationof such problems.Sincenojus
thatithad notbaseditsclaironaninfringeimeno tfthedirect standibeforetheCourthadbeenestablished,it wasnot for
rightsoftheshareholders). theCourttopronounceupon anyother aspectofthe case.
Internationallaw had to refer to those rules generally Accordingly,the Court rejected the Belgian Govern-
acceptedbymunicipallegalsystems. Aninjuryto the share- ment's claimby 15votesto 1.12 votesofthemajoritybeing
holder's interestsresultingmaninjurytothe rightsofthe based on thereasonssetout above.
companywas insufficientt'cf)ounda claim. Whereit wasa
questionof an unlawful actcommittedagainsta company DECLARATIONS AND SEPARAT AND
representingforeigncapital,thegeneralruleofinternational DISSENTIN OGPINIONS
law authorized the national Stateof the companyaloneto
exercise diplomaticprotectionfor the purpose of seeking Judge ad hocRiphagenappended totheJudgmenta Dis-
redress. No rule ofinterndonal law expresslyconferred sentingOpinionin whichhestatedthathe wasunabletocon-
sucharightonthesharehol~tlern 'sationalState. cur in the Judgmentas the legalreasoningfollowedby the
The Court considered winlethetrheremi&t not be, in the Court appearedto him to fail to appreciate thenature of
present case,specialcirculnstancesforwhich the general therubs ofcusto~arypublicinternationallawapplicablein
rulemight not take effect.'wosituationsneededtobe stud- thePsent case.
ied:(a) thecaseof the company havingcerlsedto exist,and Amongthe fifteen membersof the majority,three sup
(b) the caseof the protecti~gtateof the company lacking portedthe operative provisionsof the Judgment(rejecting
77the BelgianGovernment's claim)for diffei-entreasons, and portedtheoperative:provisiooftheJudgmentonthebasisof
appendedSeparateOpinionsto the Judgme:ntJ.udgeTanaka the reasoning setout in theJudgment(lackofjus srandion
statedthatthetwopreliminaryobjectionsjoinedtothemerits thepartofthe shareholders'nationalState).PresidentBusta-
oughtto havebeendismissed,butthatthe BelgianGovern- manteyRiveroandJudgesSirGeraldFitzmaurice,Morelli,
ment's allegation concerning denials of justice was FadillaNervoandAmmoun(SeparateOpinions)andJudges
unfounded.JudgeJessupcametothe concln~siothataState, Petdn and Onyearna(joint declaration)and Judge Lachs
undercertain circumstances,had a rightto presenta diplo- (declaration)statedthat nevertheless therewerecertaindif-
maticclaimonbehalfofshareholderswho wereitsnationals, ferencesbetweentheirreasoningand that containedin the
but that Belgium hadnot succeededin provingthe Belgian Judgment,orthattherewerecertainobservationswhich they
nationality,betweenthe criticaldates, of those naturaland wishedtoadd.
juristicpersonsonwhosebehalf ithad soughttoclaim.Judge (JudgeSir MuharnrnadZafrullaKhan had informed the
Grosheldthat itwasthe Statewhosenationaleconomy was President at the beginningof the Preliminary Objections
adversely affectedthatpossessedthe righttotakeactionbut stage that,havingbeenconsultedby oneof thePartiescon-
thatproofof Barcelona Traction's appurtenance ttoe Bel- cerning the casebsfore his electionas a Member of the
gianeconomyhadnot beenproduced. Court, he consideredthat he ought not to participatein its
Among the twelve members ofthe majority who sup- decision.)
Summary of the Judgment of 5 February 1970