Barcelona Traction, Light and Power Company, Ltd. (Belgium v. Spain)

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Citation. I.C.J. 1970 I.C.J. 3.

Brief Fact Summary. An actions for damages against Spain (D) on the premise that its nationals as shareholders of the Barcelona Traction Co., incorporated and registered in Canada had been seriously harmed by Spain’s (D) actions resulting in expropriation, was brought by Belgium (P).

Synopsis of Rule of Law. The state of the shareholders of a corporation has a right of diplomatic protection only when the state whose responsibility is invoked is the national state of the company.

Facts. The Barcelona Traction, Light, and Power Co, was incorporated and registered in Canada for the purpose of developing and operating electrical power in Spain (D). The company was declared bankrupt by a Spanish court after the Spanish Civil War and its assets were seized. After the end of the Canadian interposition, an action for damages against Spain (D) was brought by Belgium (P) for what it termed expropriation of the assets of the traction Co. on the ground that a large majority of the stock of the company was owned by Belgian (P) nationals. Preliminary objections was raised by Spain (D) that the plaintiff lacked standing to bring suit for damages to a Canadian company.

Issue. Does the state of the shareholders of a company have a right of diplomatic protection if the state whose responsibility is invoked is not the national state of the company?

Held. Does the state of the shareholders of a company have a right of diplomatic protection if the state whose responsibility is invoked is not the national state of the company?

Discussion. As stated in the Restatement of the Foreign Relations Law of the United States S 185, failure of a state to pay just compensation for the taking of the property of an alien is wrongful under international law, regardless of whether the taking itself is conceived as wrongful. This wrongful taking is characterized either as tortious conduct or as unjust enrichment.