1.

BARCELONA TRACTION, LIGHT AND POWER COMPANY, LIMITED CASE

(Belgium vs. Spain)
1970

FACTS: The Barcelona Traction, Light and Power Company, Ltd. is a holding company incorporated in
Canada in 1911, and its head office is located in Toronto. It had created a large number of subsidiary
companies, some of which were incorporated in Canada, too, while others were registered in Spain;
most of the shares of these subsidiaries were owned by Barcelona Traction. The object of this vast
corporate complex was to produce and distribute electric power in the Spanish province of Catalonia.

According to the Belgian Government, claimant state in this case, a large part of the shares of Barcelona
Traction have been continuously owned, since the end of the First World War, by Belgian nationals.

The bankruptcy decree engendered an impressive number of judicial proceedings initiated by the
governments of UK, US, Canada and Belgium to make diplomatic representations to recover the assets
of Barcelona Traction. While the other States concerned seem to have discontinued their actions, the
Belgian Government eventually submitted its claim on behalf of Barcelona Traction to the ICJ.

ISSUE: WON the Belgian Government has established Jus Standi to exercise diplomatic protection of
Belgian shareholders in a Canadian company.

HELD: NO, the Court found that Belgium had no legal standing to exercise diplomatic protection of
shareholders in a Canadian company in respect of measures taken against the company in Spain, as the
right to exercise diplomatic protection on behalf of a corporation belonged to the State in which the
corporation was incorporated and had its registered office (State of Nationality of a Corporation).

As reaffirmed by the decision in the case at bar, in principle a corporation is to be protected by the State
of nationality of the corporation and not by the State(s) of nationality of the shareholders of a
corporation. However, there are exceptions to this principle which include: (1) where the corporation
has ceased to exist in its place of incorporation and, (2) where the State of incorporation was itself
responsible for inflicting injury on the company and the shareholders’ sole means of protection was
through their State(s) of nationality.

Since there was no genuine link or the permanent and close connection between the state Belgium and
the corporation, Belgium cannot exercise diplomatic protection as it lacks the requisites under the state
of nationality of a corporation.