## Facts

- Barcelona Traction, Light and Power Company, Ltd. was incorporated in Canada and headquartered in Toronto, but operated electric power enterprises in Spain.
- Belgian nationals held a substantial majority of the company’s shares (about 88%).
- Spain restricted foreign exchange transfers during the Spanish Civil War period, preventing the company from remitting foreign currency to pay interest on foreign-held bonds.
- Spanish judicial proceedings later declared the company in default and bankrupt; its Spanish assets were sold, bondholders were satisfied, and shareholders received only a small residual amount.
- Canada, as the company’s State of incorporation, initially protested but later accepted Spain’s measures as lawful.
- Belgium brought proceedings seeking compensation, alleging Spain committed internationally wrongful acts (including expropriation and denial of justice) that injured Belgian shareholders through injury to the company.

## Issues

1. Whether Belgium could exercise diplomatic protection for Belgian shareholders for measures taken by Spain against a company incorporated in Canada.
2. Whether any general rule of international law, special circumstances, or equitable considerations allowed shareholder-based diplomatic protection in this setting.
3. If standing existed, whether Spain’s conduct amounted to internationally wrongful acts against the protected interests.

## Decision

- The ICJ rejected Belgium’s claim in its entirety for lack of standing (*jus standi*).
- The Court held that the primary right to exercise diplomatic protection for injury to a corporation belongs to the corporation’s national State, ordinarily the State of incorporation.
- The Court found no general rule permitting Belgium to protect shareholders where the alleged wrongs were directed at the company rather than at shareholder rights as such.
- The Court found no special circumstances (including Canada’s inaction) and no equitable basis that transferred or created a substitute right of protection for Belgium.
- Because Belgium lacked standing, the Court did not determine the merits of the alleged expropriation or denial of justice.

## Legal Principles

- A corporation is a legal person distinct from its shareholders; injury to the company is not treated as a direct injury to shareholders for diplomatic protection purposes.
- The State of incorporation (and, in this approach, the company’s formal nationality link) is generally the proper State to espouse claims for injury to the corporation.
- Shareholder losses flowing from injury to the company are typically indirect or derivative and do not, without more, give the shareholders’ State an independent claim.
- Recognizing broad shareholder-based diplomatic protection risks multiple, competing international claims and legal insecurity.
- A shareholders’ State may have a basis to act only in exceptional situations (e.g., where the company’s national State cannot act or other narrowly defined circumstances), which were not present here.
- The Court distinguished obligations owed to the international community as a whole from obligations tied to protection of private economic interests; the latter do not themselves create community-wide standing.

## Conclusion

The ICJ held that Belgium could not invoke diplomatic protection for Belgian shareholders to challenge Spain’s treatment of a Canadian-incorporated company, reaffirming that corporate nationality controls standing and that shareholder injury from harm to the company is ordinarily indirect and non-actionable by the shareholders’ State.


Barcelona Traction, Light & Power Co. (Belg. v. Spain), 1970 I.C.J. 3 (Feb. 5)