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The Barcelona Traction, Light and Power Company Case Icj Reports, 1970

The Barcelona Traction, Light and Power Company was incorporated in Canada in 1911 to develop electric power in Catalonia, Spain through subsidiary companies. In 1936, servicing of bonds was suspended due to the Spanish Civil War. After the war, Spain refused to authorize foreign currency transfers needed to resume bond payments. In 1948, a Spanish court declared the company bankrupt and seized its assets. Belgium argued this violated international law protecting foreign investments. The International Court of Justice held that once a state admits foreign investments, it assumes obligations under international law to protect them. Only the state of nationality can bring a claim for violations of those obligations.

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411 views2 pages

The Barcelona Traction, Light and Power Company Case Icj Reports, 1970

The Barcelona Traction, Light and Power Company was incorporated in Canada in 1911 to develop electric power in Catalonia, Spain through subsidiary companies. In 1936, servicing of bonds was suspended due to the Spanish Civil War. After the war, Spain refused to authorize foreign currency transfers needed to resume bond payments. In 1948, a Spanish court declared the company bankrupt and seized its assets. Belgium argued this violated international law protecting foreign investments. The International Court of Justice held that once a state admits foreign investments, it assumes obligations under international law to protect them. Only the state of nationality can bring a claim for violations of those obligations.

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reyna amor condes
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THE BARCELONA TRACTION, LIGHT AND POWER COMPANY CASE

ICJ REPORTS, 1970

FACTS:

• The Barcelona Traction, Light and Power Company, Limited, was incorporated in 1911 in Toronto
(Canada), where it has its head office.

• For the purpose of creating and developing an electric power production and distribution system in
Catalonia (Spain) it formed a number of subsidiary companies, of which some had their registered
offices in Canada and the others in Spain.

• In 1936 the subsidiary companies supplied the major part of Catalonia's electricity requirements.

• According to the Belgian Government, some years after the first world war Barcelona Traction's share
capital came to be very largely held by Belgian nationals, but the Spanish Government contends that
the Belgian nationality of the shareholders is not proven.

• In 1936 the servicing of the Barcelona Traction bonds was suspended on account of the Spanish civil
war. After that war the Spanish exchange control authorities refused to authorize the transfer of the
foreign currency necessary for the resumption of the servicing of the sterling bonds.

• Subsequently, when the Belgian Government complained of this, the Spanish Government stated that
the transfers could not be authorized unless it were shown that the foreign currency was to be used
to repay debts arising from the genuine importation of foreign capital into Spain, and that this had not
been established.

• On 12 February 1948 a judgment was given declaring the company bankrupt and ordering the seizure
of the assets of Barcelona Traction and of two of its subsidiary companies. Pursuant to this judgment
the principal management personnel of the two companies were dismissed and Spanish directors
appointed.

• Proceedings were brought without success in the Spanish courts. The Court found that in 1948
Barcelona Traction, which had not received a judicial notice of the bankruptcy proceedings, and was
not represented before the Reus court, took no proceedings in the Spanish courts until 18 June and
thus did not enter a plea of opposition against the bankruptcy judgment within the time-limit of eight
days from the date of publication of the judgment laid down in Spanish legislation.

• The Belgian Government contends, however, that the notification and publication did not comply with
the relevant legal requirements and that the eight-day time-limit never began to run. Representations
were made to the Spanish Government by the British, Canadian, United States and Belgian
Governments as from 1948 or 1949.

ISSUE:

Whether or not a State assumes an obligation concerning the treatment of foreign investments based on
general international law, once the state admits foreign investments or foreign nationals into its territory?

HELD:
YES, A state assumes an obligation concerning the treatment of foreign investments based on general
international law, once the state admits foreign investments or foreign nationals into its territory. It is highly
imperative to draw a distinction between those obligations of a state toward the international community as
a whole and those arising from the field of diplomatic protection. It is only the party to whom an international
obligation is due can bring a claim if a breach of an obligation that is the subject of diplomatic protection
occurs.

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