Whether or not Belgium had legal interest in the matter to justify it

BARCELONA TRACTION, LIGHT AND POWER COMPANY LTD. bringing a claim

(BELGIUM vs. SPAIN)

Topic: Remedy of a person who feels aggrieved by the acts of a foreign
government
FACTS:
Barcelona Traction, Light, and Power Company, Ltd was
a corporation incorporated in Canada, with Toronto headquarters, that
made and supplied electricity in Spain. It had issued bonds to non-Spanish
investors, but during the Spanish Civil War(1936-9) the Spanish
government refused to allow BTLP to transfer currency to pay bondholders
the interest they were due. In 1948 a group of bondholders sued in Spain to
declare that BTLP had defaulted on the ground it had failed to pay the
interest. The Spanish court allowed their claim.
HELD:
NO. 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
only be if direct shareholder rights (such as to dividends) were affected, that
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, this 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 business was sold, the surplus distributed to the bondholders, and a The court also said that a state is bound to give the same legal protection
small amount was paid to shareholders. The shareholders in Canada to foreign investments and nationals, either for natural or legal persons,
succeeded in persuading Canada and other states to complain when it admits them to its territory.
that Spain 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 declaring BTLP bankrupt. Of the
shares, 88 per cent were owned by Belgians, and the Belgian government
complained, insisting the Spanish government had not acted properly.

They made an initial claim at the International Court of Justice 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.

ISSUE: