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tionals. 25 fmancial operator. The essence of the Belgian claim on the merits in the
casethat follows would have been that Belgians had been the victims of
A position similar to this has been taken by the U.S. foreign exchange, bankruptcy, and related official actions that squeezed
Foreign Claims Settlement Commission. 26 This rule out the Belgian equity investment in the Barcelona Traction corporate
may, of course, be by agreement between the complex. In the jargon of international claims practice the case as seen
governments of the claimant and the respondent states. by Belgium involved "creeping expropriation" and "denial of justice."
The British position on this issue is generally similar, sub- A portion of the opimion of the court appears below.]
28. For the sake of clarity, the Court willbriefly recapitulate the claim
ject to a significant qualification:
and identify the entities concerned in it. The claim is presented on
[Modem] British practice still insists that the claimant should be a behalf of natural and juristic persons, alleged to be Belgian nationals and
British national both at the time when the injury was sdered and at the shareholders in the Barcelona Traction, Light and Power Company,
time when the claim is presented. In practice, the adoption of the rule Limited. The submissions of the Belgian Government make it clear that
that claims may be taken up in concert with the state whose nationality the object of its Application is reparation for damage allegedly caused to
the claimant has acquired subsequent to the date of injury mitigates the these persons by the conduct, said to be contrary to international law, of
hardship of the general rule. . . .27 various organs of the Spanish State towards that company and various
other companies in the same group.
c. Juristic Persons (Corporation).The increase in inter-
29. In the fmt of its submissions, more specikally in the Counter-
national trade and investment during the past several Memorial, the Spanish Government contends that the Belgian Applica-
decades has seen an increase in the importance of deter- tion of 1962 seeks, though disguisedly, the same object as the Applica-
mining the nationality of various corporate enterprises. tion of 1958, i.e., the protection of the Barcelona Traction company as
The law regarding this subject, after a period of some un- such, as a separate corporate entity, and that the claim should in conse-
certainty, is now fairly clearly defined. It has long been es- quence be dismissed. However, in making its new Application, as it was
chosen to frame it, the Belgian Government was only exercising the
tablished that a state might espouse the claim of a corpora- freedom of action of any State to formulate its claims in its own way.
tion incorporated within the state, even though its stock The Court is therefore bound to examine the claim in accordance with
is, in fact, totally owned by foreign nationals. 28 the explicit content imparted to it by the Belgian Government.
Moreover, until 1970 it was generally accepted that a state 30. The States which the present case principally concerns are
might espouse an international claim of its citizen Belgium, the national State of the alleged shareholders, Spain, the State
whose organs are alleged to have committed the unlawful acts corn-
stockholders in a foreign corporation if their stock in- plained of, and Canada, the State under whose laws Barcelona Traction
terests amounted to a substantial portion of the total was incorporated and in whose temtory it has its registered office
shareholdii. In 1970, the International Court of Justice ("head office" in the terms of the by-laws of Barcelona Traction).
spoke to this issue and, in so doing, clarif~ed a question of 31. Thus. the Court has to deal with a series of problems arising out
corporate representation on an international level that had of a triangJlar relationship. involving the State whose nationals are
shareholders in a company incorporated under the laws of another State,
long been a subject of uncertainty. in whose tenitory it has its registered office; the State whose organs are
alleged to have committed against the company unlawful acts prejudicial
BARCELONA TRACTION, LIGHT AND POWER CO., LTD.
(BELGIUM V. SPAIN) to both it and its shareholders; and the State under whose laws the corn-
International Court of Justice, 1970
pany is incorporated, and in whose temtory it has its registered ofice.
I19701 1.C.J.Rep. 3.
32. In these circumstances it is logical that the Court should fust ad-
dress itself to what was originally presented as the subject matter of the
[In this case,the parent company in the corporate complex involved third preliminary objection: namely the question of the right of Belgium
was incorporated in 1911 in Canada; but after the First World War ap to exercise diplomatic protection of Belgian shareholders in a company
proximately 85% of its shares came to be held by Belgian nationals, which is a juristic entity incorporated in Canada, the measures corn-
largely through complicated arrangements involving some very large plained of having been taken in relation not to any Belgian national but
Belgian holding companies. Belgium wished to be allowed to show that to the company itself.
its nationals as shareholders had been seriously hmed by actions of the ***
Spanish state after the Spanish Civil War. These included, according to 35. * In order to bring a claim in respect of the breach of such an
the Belgian memorials in an earlier ICI case dropped in 1961 in expecta- obligation, a State must fmt establish its right to do so, for the rules on
tion of a diplomatic settlement: denial from 1940 on of foreign exchange the subject rest on two suppositions:
licenses to the Traction Company and some of its Spanish subsidiaries to The fmt is that the defendant State has broken an obligation
permit service on bonds payable in pounds sterling; a 1948 bankruptcy towards the national State in respect of its nationals. The second is
proceeding in Spain brought by Spanish purchmrs of "defaulted" ster- that only the party to whom an international obligation is due can
ling bonds of which the Traction Company itself had not received fair bring a claim in respect of its breach. (Reparation for Injuries Suffered
notice; an unfair time limit on appeal in the bankruptcy case; and the in the Service of the United Nations, Advisory Opinion, I.C.J. Re-
eventual passage of very substantial influence over the corporate struc- ports 1949, pp. 181-182.)
ture in Spain to one Juan March. In the present case it is therefore essential to establish whether the
Although the memorials do not mention the matter in just this way,
March, known widely as the "Match King" of Spain, was often reported losses allegedly suffered by Belgian shareholders in Barcelona Traction
were the consequence of the violation of obligations of which they were
to have been a significant fmancial supporter of Franco's insurgency the beneficiaries. In other words: has a right of Belgium been violated on
against the Spanish Republic and known as a highly skilled and secretive
account of its nationals' having suffered infringement of their rights as
25. 8 M. Whiteman, Digest of International Law, 1243 (1967). shareholders in a company not of Belgian nationality?
26. Id. at 1245-47. 36. Thus it is the existence of absence of a right, belonging to
27. Sinclair, Nationali@ of Chim: Britirh Practice [1950] Brit. Y.B. Belgium and recognized as such as international law, which is decisive
Int'l L. 125, 144. for the problem of Belgium's capacity.
28. Agency of Canadian Car and Foundry Co. Case (United States This right is necessarily limited to intervention [by a State] on
v. Germany) 5 G. Hackworth, supra, note 7 at 833-37. behalf of its own nationals because, in the absence of a special agree-