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''Case Concerning Barcelona Traction, Light, and Power Company, Ltd'' ICJ_1
is_a_public_international_law.html" ;"title="970
ICJ 1
is a public international law">970
ICJ 1
is a public international law case, concerning the abuse of rights.


Facts

Barcelona Traction, Light, and Power Company, Ltd was a corporation incorporated in Canada, with Toronto headquarters, that made and supplied electricity in
Spain , image_flag = Bandera de España.svg , image_coat = Escudo de España (mazonado).svg , national_motto = '' Plus ultra'' (Latin)(English: "Further Beyond") , national_anthem = (English: "Royal March") , ...
. It had issued bonds to non-Spanish investors, but during the Spanish Civil War (1936–1939), the Spanish government refused to allow BTLP to transfer currency to pay bondholders the interest that they were due. In 1948, a group of bondholders sued in Spain to declare that BTLP had defaulted on the ground that it had failed to pay the interest. The Spanish court allowed the 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 , image_flag = Bandera de España.svg , image_coat = Escudo de España (mazonado).svg , national_motto = '' Plus ultra'' (Latin)(English: "Further Beyond") , national_anthem = (English: "Royal March") , ...
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 to declare BTLP bankrupt. Of the shares, 88% were owned by Belgians. The Belgian government complained, insisting the Spanish government had not acted properly. It made an initial claim at the
International Court of Justice The International Court of Justice (ICJ; french: Cour internationale de justice, links=no; ), sometimes known as the World Court, is one of the six principal organs of the United Nations (UN). It settles disputes between states in accordan ...
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.


Judgment

The International Court of Justice held that Belgium had no legal interest in the matter to justify it bringing a claim. Although Belgian shareholders 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 have been direct shareholder rights only (such as to dividends) that were affected, and 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 do so, that 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 decided that a state is bound to give the same legal protection to foreign investments and nationals for natural or legal persons when it admits them to its territory. Padilla Nervo J wrote the following:


Significance

The decision is important in
public international law International law (also known as public international law and the law of nations) is the set of rules, norms, and standards generally recognized as binding between states. It establishes normative guidelines and a common conceptual framework for ...
because it demonstrates the importance of protections of corporate nationality in nominal ("paper") terms over effective nationality (''
siège social Siège social ( French, usually translated as "head office") is a concept in international law for determining the nationality of companies. It is essentially based on effective nationality, as opposed to “paper nationality”, where the company ...
'') where the ownership effectively resides. Unless a principle of law permits a country to espouse a national's claim in the ICJ, there cannot be an espousal. The case is also important as it demonstrates how the concept of
diplomatic protection In international law, diplomatic protection (or diplomatic espousal) is a means for a state to take diplomatic and other action against another state on behalf of its national whose rights and interests have been injured by that state. Diplomatic ...
under international law can apply equally to corporations as to individuals. It also expanded the notion of obligations owed (in relation to everyone) in the international community.


See also

*
Public international law International law (also known as public international law and the law of nations) is the set of rules, norms, and standards generally recognized as binding between states. It establishes normative guidelines and a common conceptual framework for ...
*
List of International Court of Justice cases The list of International Court of Justice cases includes contentious cases and advisory opinions brought to the International Court of Justice since its creation in 1946. Forming a key part of international law, 181 cases have been entered onto ...
*
United States corporate law United States corporate law regulates the governance, finance and power of corporations in US law. Every state and territory has its own basic corporate code, while federal law creates minimum standards for trade in company shares and governanc ...


Notes

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References

* International Court of Justice cases 1970 in case law