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CASE NO.

16
BARCELONA TRACTION, LIGHT AND POWER COMPANY (BELGIUM VS. SPAIN) • Belgium through its conduct misled Spain about the import of the
19701 discontinuance, for which Spain would not have agreed to, and would not
thereby have suffered prejudice.
FACTS:
IV. The proceedings are contrary to the Hispano-Belgian Treaty of Conciliation,
• The Barcelona Traction, Light and Power Company (BLTPC) was incorporated in Judicial Settlement and Arbitration, as a result the ICJ lacks jurisdiction.
Toronto, Canada for the purpose of creating and developing an electric power
production and distribution system in Catalonia,Spain. • Article 17 (4)2 of the Treaty had already lapsed in 1946, and no substitution
• It formed a number of concession-holding subsidiary companies, of which some of the present for the former Court had been effected. As such, the Treaty
had their registered offices in Canada and the others in Spain. had ceased to contain any valid jurisdictional clause when Spain was
• Some years after the first world war, the BLTPC’s share capital came to be very admitted to the UN and became a party to the Statue in 1955.
largely held by Belgian nationals. • Further, Article 373 applied only between States which had become parties
• However, the servicing of the BLTPC bonds was suspended on account of the to the Statute previous to the dissolution of the Permanent Court.
Spanish civil war.
• After that war the Spanish exchange control authorities refused to authorize the V. The Belgian government has no legal capacity to protect the Belgian interests
transfer of the foreign currency necessary for the resumption of the servicing of the on behalf of which it had submitted its claim.
sterling bonds.
• Eventually, the company was declared bankrupt. • International law does not recognize, in respect of injury caused by a State
• Belgium then filed an Application with the ICJ against the Spanish government to the foreign company, any diplomatic protection of shareholders exercised
seeking reparation for damages claimed to have been caused to the Belgian by a State other than the national State of the company.
national shareholders of the company.
• Later however, Belgium gave notice of discontinuance of the proceedings, with a 1ST RULING OF THE COURT IN JULY 24 1964
view to negotiations between the representatives of the private interests concerned,
and the case was removed from the Court's General List. I. DISCONTINUANCE
• The negotiations having failed, the Belgian Government submitted to the Court a
new Application. • Belgium’s notice of discontinuance was confined strictly to the proceeding
instituted by the first Application thus not waiving its right to institute
SPAIN’S ARGUMENTS: proceedings anew.
• The obligation of establishing that the discontinuance meant something
I. The Belgian Government gave notice of discontinuance of the proceedings with more than the decision to terminate those proceedings was placed upon
a view to negotiations between the representatives of the private interests Spain.
concerned.
II. AGREEMENT BETWEEN PARTIES
• This was due to the right conferred upon it (Belgium) by Article 69,
paragraph 2, of the Rules of Court. To this, Spain presented no objection. • No evidence as to the taking place of any such agreement.
• This discontinuance precluded Belgium from bringing the proceedings.
• Further, a discontinuance must always be taken as signifying a renunciation III. ESTOPPEL
of any further right of action.
• Alleged misrepresentations not clearly established. Also, the Court did not
II. There had already been an understanding between the Parties. see what Spain stood to lose by agreeing to negotiate on the basis of a
simple discontinuance.
• The representatives of the private Belgian interests had made an approach
with a view to opening negotiations and that the representatives of the
Spanish interests had laid down as a prior condition the final withdrawal of 2 If the other methods of settlement provided for in the Treaty failed, either
the claim. party could bering any dispute of a legal nature before the Permanent Court
of International Justice.
III. Belgium is estopped from denying the real import of the discontinuance. 3 “Whenever a treaty or convention in force provides for reference of a

matter . . . to the Permanent Court of International Justice. the matter shall,


1 Jessa Alvarez as between the parties to the present Statue, be referred to the ICJ.”
• If it had not agreed to the discontinuance, the previous proceedings would • Only the company, which was endowed with legal personality, could take action in
simply have continues, whereas negotiations offered a possibility of finally respect of matters that were of a corporate character.
settling the dispute. • Whenever a shareholder's interests were harmed by an act done to the company, it
was to the latter that he had to look to institute appropriate action.
IV. CONTRARY TO THE TREATY/ICJ JURISDICTION • An act infringing only the company's rights did not involve responsibility towards the
shareholders, even if their interests were affected. In order for the situation to be
• Treaty processes could not be regarded as exhausted so long as the right different, the act complained of must be aimed at the direct rights of the shareholder
to bring new proceedings otherwise existed and until the case had been as such (which was not the case here since the Belgian Government had itself
prosecuted to judgment. admitted that it had not based its claim on an infringement of the direct rights of the
• In 1945 the treaty drafters had intended to preserve as many jurisdictional shareholders).
clauses as possible from becoming inoperative by reason of the prospective
dissolution of the Permanent Court. It was thus difficult to suppose that they ON BELGIUM’S JUS STANDI
would willingly have contemplated that the nullification of the jurisdictional
clauses whose continuation it was desired to preserve would be brought Belgium has no jus standi!
about by the very event the effects of which Article 37 was intended to • General Rule: State of the company can seek redress. International law had to refer
parry. to those rules generally accepted by municipal legal systems.
• The 1927 Treaty being in force and containing a provision for reference to • An injury to the shareholder's interests resulting from an injury to the rights of the
the Permanent Court, and the parties to the dispute being parties to the company was insufficient to found a claim.
Statute, the matter was one to be referred to the International Court of • Where it was a question of an unlawful act committed against a company
Justice which was the competent forum. representing foreign capital, the general rule of international law authorized the
• Also, States becoming parties to the Statute after the dissolution of the national State of the company alone to exercise diplomatic protection for the
Permanent Court must be taken to have known that one of the results of purpose of seeking redress.
their admission would be the reactivation by reason of Article 37 of certain • No rule of international law expressly conferred such a right on the shareholder's
jurisdictional clauses. national State.
• It had been maintained that a State could make a claim when investments by its
V. LEGAL CAPACITY OF BELGIUM nationals abroad, such investments being part of a State's national economic
resources, were prejudicially affected in violation of the right of the State itself to
• Belgium has jus standi. have its nationals enjoy a certain treatment. But, in the present state of affairs, such
• The question of the jus standi of a government to protect the interests of a right could only result from a treaty or special agreement. And no instrument of
shareholders raised an antecedent question of what was the juridical such a kind was in force between Belgium and Spain.
situation in respect of shareholding interests, as recognized by international
law.
• Belgium thus necessarily invoked rights which, so it contended, were
conferred on it in respect of its nationals by the rules of international law
concerning the treatment of foreigners.
• Hence a finding that it had no jus standi would be tantamount to a finding
that those rights did not exist and that the claim was not well-founded in
substance.

2ND RULING OF THE COURT IN FEBRUARY 5, 1970

ON RIGHT OF BELGIUM TO TO EXERCISE DIPLOMATIC PROTECTION OF


BELGIAN SHAREHOLDERS IN A COMPANY INCORPORATED IN CANADA

Municipal law applied to international law


• In the field of diplomatic protection, international law was in continuous evolution
and was called upon to recognize institutions of municipal law. In municipal law, the
concept of the company was founded on a firm distinction between the rights of the
company and those of the shareholder.