Title of the Case: Barcelona Traction Year Year Promulgated/Judgment: First Phase- July 24, 1964; Second Phase- February 5, 1970 Tribunal: ICJ Applicant: Belgium Respondent: Spain 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 . After the Spanish Civil War, the company was declared bankrupt by a Spanish court and its assets were seized. The Belgian Government instituted a case against Barcelona Traction, Light and Power Company, Limited for damage claimed to have been caused to Belgian nationals, shareholders in the Canadian Barcelona Traction Company, by the conduct of various organs of the Spanish State for the expropriation of a corporation. The Spanish Government raised four preliminary objections to the application. The court rejected the first and the second objections concerning the jurisdiction of the court and ruled on the merits of the third and the fourth objections. The third objection of the Spanish Government was that the Belgium Government lacked capacity to submit any claim for wrongs done to a Canadian company even if the shareholders were Belgian. Issue: 1. 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? 2. Is the obligation of Spain an erga omnes where the obligation is towards the international community?
Ruling: 1. No. In order for a state to bring a claim in respect of the breach of an obligation owed to it, it must first establish its right to do so. This right is predicated on a showing that the defendant state has broken an obligation toward the national state in respect of its nationals. Note that there was no
treaty or special agreement of such a kind in force between Belgium and Spain. Only the company endowed with legal personality, could take action in respect of matters that were of a corporate character. A wrong done to the company frequently caused prejudice to its shareholders, but this did not imply that both were entitled to claim compensation. Whenever a shareholder’s interests were harmed by an act done to the company, it was to the latter than he had to look to institute appropriate action. An act infringing only the company’s rights did not involve responsibility towards the shareholders, even if their interests were affected. The general rule of international law authorized the national State of the company alone to exercise diplomatic protection for the purpose of seeking redress. No rule of international law expressly conferred such a right on the shareholder’s national State. For the above reasons, the Court is of the opinion that Belgium lacks standing to bring this action.
2. The concept of erga omnes appears in international law for the first time in two paragraphs of the judgment in the Barcelona Traction Case (Second Phase). The relevant text of the paragraphs 33 and 34 follow: 33. In particular, an essential distinction should be drawn between the obligations of a state towards the international community as a whole, and those arising vis-a vis another State in the field of diplomatic protection. By their very nature the former are the concern of all States. In view of the importance of the rights involved, all States can be held to have a legal interest in their protection; they are obligations erga omnes. 34. Such obligations derive, for example, in contemporary international law, from the outlawing of acts of aggression, and of genocide, as also from the principles and rules concerning the basic rights of human person, including protection from slavery and racial discrimination. The facts of the Barcelona Traction Case do not give grounds for a pronouncement as the one that the court made in the erga omnes obligations. As seen above, since the Court dealt with Belgium’s right to jus standi in seeking compensation for Belgian shareholders, the erga
omnes obligations pronouncement is not strongly related to the merits of the case.
