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Barcelona Traction: The Jus Standi of Belgium

Published online by Cambridge University Press:  28 March 2017

Herbert W. Briggs
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Extract

In its Judgment of February 5, 1970, in the Case Concerning the Barcelona Traction, Light and Power Company, Limited (New Application, 1962, Belgium v. Spain, Second Phase), the International Court of Justice, by a vote of 15 to 1, rejected, for lack of jus stanai, a Belgian claim of a right of diplomatic protection of alleged Belgian shareholders in a Canadian company allegedly victim of a series of denials of justice by Spanish authorities. Essentially, the Court’s decision denies the existence of any general rule of international law or of any special circumstances or considerations of equity which confer a right of diplomatic protection of national shareholders in a foreign company where the acts complained of were directed by authorities of a third state against the company rather than against any legal rights of the shareholders as such. The opinion of the Court is, for the most part, soundly reasoned and comes after thorough argument of the precedents and brilliant presentation of opposing contentions of law and fact by distinguished counsel. Attorneys may safely advise clients that the Court’s opinion sets forth the existing law and that any special protection of shareholders as such in a foreign company must be based on treaty stipulations or special agreements.

Type
Research Article
Information
American Journal of International Law , Volume 65 , Issue 2 , April 1971 , pp. 327 - 345
Copyright
Copyright © American Society of International Law 1971

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References

1 [1970] I.C.J. Rep. 3; AJ.I.L.653 (1970). The French text is authoritative.

2 As the Court itself observes, loc. cit. 47, par. 90.

3 The explicit nature of the Belgian claim to afford diplomatic protection to a Canadiancompany appears in the following Belgian Submission:“II. QueI'Etatespagnolest en conséquencetenu de rétablirinégralement la BarcelonaTraction danssesbiens, droits et inérêtstelsqu'ilsexistaientavant le 12 ftvrier1948 et qu'ilesttenu de plus d'assurerTindemnisation de cettesociété pour tousautresprejudices … souffert[s] par la Barcelona Traction … le montant de la diteindemnitéàverser-àI'Etat beige … . “ ( C.I.J ., Memoire du Gouvernement Beige, June 15, 1959,p. Ill , par. (262).) No reference to Belgian interests appears in the main or alternativeSubmissions. Only in the subsidiary plea are such references found.

4 Other preliminary objections challenged the jurisdiction of the Court and assertedthe inadmissibility of the claim for non-exhaustion of local remedies. See C.I.J., Exceptions Préliminaire sprésentées par le GouvernementEspagnol, May 21, 1960, 287pages, with three volumes of Annexes of some 1830 pages.

5 Translation by the Registry. I.C.J. Distr. 60/145, Sept. 12, 1960, p. 273 (mimeo.).See also Exceptions Préliminaires, cited, p. 285.

6 [1961] I.C.J. Rep. 9.

7 [1962] I.C.J. Rep. 310.

8 Cf. [1970] I.C.J. Rep. 12.

9 1.C.J., Exceptions Préliminairesprésentées par le GouvernementEspagnol, March 15, 11963, 275 pp., with Annexes of 789 pp. Cf. also [1964] I.C.J. Rep. 11-12.

10 [1964] I.C.J. Rep. 6, 41, 47; excerpted in 59 A.J.I.L. 131 (1965). The decisionsrejecting the pleas to the jurisdiction of the Court are worth a separate study but willnot be treated here. In addition to the Spanish Exceptions Préliminaires of March 15,1963 (cited above in note 9), the following documentation should be consulted: C.I.J.,Observations et Conclusions du Gouvernement Beige, dated Aug. 14, 1963, 280 pp.,with Annexes, Vol. I, pp. 1-200; Vol. II, pp. 205-469; and I.C.J., Oral Proceedings,March 11 to May 19, 1964, in Barcelona Traction Co. case, 1019 pp., I.C.J. Distr.65/5 and 65/5 bis.

11 [1964] I.C.J. Rep. 15-16.

12 Cf. Oral Pleading of Professor Ago, July 21, 1969, I.C.J., C.R. 69/63, pp. 57 ff.See also the Separate Opinion of Judge Philip C. Jessup, [1970] I.C.J. Rep. 202 ff.,211 ff,.who would have found against Belgium on some of these points. Judge AndréGros also believed that Belgium had failed to prove a real link between the investmentof Belgian shareholders in Barcelona Traction and the Belgian economy. Ibid. 282-283.

13 [1964] I.CJ.Rep. 45.

14 Ibid/

15 Ibid. 44. Italics added.

16 Ibid. 46. The Court noted as implicit recognition of this conclusion by theparties the extent to which they had gone into questions of the merits in their writtenand oral pleadings ostensibly directed to the admissibihty of the claim.

17 Ibid. 46, 47. Of the seven judges voting against joinder, Judges Wellington Koo(ibid. 51 ff.) and Gaetano Morelli(ibid. 85, 110 ff.) would have rejected the objection.

18 62 Dept. of State Bulletin 625 (May 18, 1970) (Address of the Secretary of Stateto the American Society of International Law, April 25, 1970). The Court and several to the American Society of International Law, April 25, 1970). The Court and severaljudges were explicit in charging the parties with responsibility for the protracteddelays in the proceedings. Cf. [1970] I.C.J. Rep. 30 (par. 27), 113 (Fitzmaurice),221 (Jessup).

19 See C.I.J., Mémoire du Gouvemement Beige, Oct. 30, 1962, 197 pp., with Annexesof 1083 pp.; Contre-Mémoire du GouvemementEspagnol, Dec. 31, 1965, 765pp., with nine volumes of Annexes; Réplique du Gouvemement Beige, May 16, 1967,783 pp., with Annexes of 847 pp.; Duplique du GouvemementEspagnol, June 30,1968, 1065 pp., with Annexes of 1772 pp. This documentation will later appear inthe Court's publications, plus additional documents introduced during the oral pleadings,which, the Court notes in its Report for 1968-1969 to the General Assembly(G.A.O.R., 24th Sess., Supp. No. 5 (A/7605), par. 30), brought the total documentationin the case to some 18,000 pages.

20 The oral hearings at the 64 public sittings between April 15 and July 22, 1969,added several thousand pages to the documentation of the case.

21 Cf. p. 330 above.

22 See, e.g., Spanish notes of Jan. 3, 1952, June 10, 1957, Sept. 30, 1957, Oct. 9,1961, to the Belgian Government, Annexes 261, 264, 266 and 269, respectively, toMémoire Beige, Oct. 30, 1962. See also Belgian claims to protect the Barcelona TractionCompany in the Belgian note of Feb. 6, 1958, to the Spanish Government, ibid., Annex 267; and, above, note 3, for the Belgian submissions in the discontinued claimbrought in 1958.

23 The final Belgian submissions cover no less than 14 pages (pp. 16-29) of [1970]I.C.J. Reports.

24 I.C.J., C.R. 69/64, Verbatim Record (mimeo.) of July 22, 1969, pp. 62, 46-47, 77.See also Professor Ago's earlier pleadings of March 23, 1964, and June 20, 1969, onthe point.

25 [1964] I.C.J. Rep. 16.

26 [1970] I.C.J. Rep. 31, par. 29.

27 ibid. 222 ft.

28 Ibid. 225.

29 Ibid. 46.

30 For extensive citations to cases in which the Permanent Court and the InternationalCourt of Justice have exercised this liberty of appreciation, see my pleadings onbehalf of Honduras before the Court in the Arbitral Award of the King of Spain case(Honduras o. Nicaragua, 1960), I.C.J. Pleadings, II, 103-105.

31 [1970] I.C.J. Rep. 32, par. 32.

32 Cf. Oral Pleadings, Professor Ago, March 23, 1964, I.C.J. Distr. 65/5, C.R. 64/10,pp. 202 ff., and May 7, 1964, ibid., C.R. 64/36, pp. 847 ff.; Contre-Mé§moireEspagnol,Dec. 31, 1965, Ch. VI, Sec. I, §5, pp. 643 ff., pars.11 ff., and Sec. Ill, §3, pp. 715 ff.,pars. 95 ff.; DupliqueEspagnol, June 30, 1968, Vol. II, Part III, Ch. II, §1, pp. 933ff., and Sec. II, pp. 999 ff.; Oral Pleadings, Professor Ago, June 19, 20, 1969, I.C.J.,C.R. 69/43 and 44, and July 22, 1969, ibid., C.R. 69/64.

33 [1970] I.C.J. Rep. 12.Cf. also, final Belgian submissions of July 14, 1969, ibid. 23, 25.

34 Cf. Oral Pleadings of Professor Michel Virally, Counsel for Belgium, May 9, 1969, I.C.J., C.R. 69/18, pp. 37, 39 ff., and July 7, 1969, ibid., C.R. 69/53, pp. 36 ff.; andE. Lauterpacht, July 7, 1969, ibid., C.R. 69/53, pp. 16 ff. For earlier Belgian pleadingsregarding her jus standi, see Observations Beiges, Aug. 14, 1963, pp. I l l ft., par.131; Oral Pleadings, Professor Georges Sauser-Hall, April 16 and 17, 1964, I.C.J. Distr.65/5, C.R. 64/24, 25, pp. 545, 556 ff., and May 15, 1964, ibid., 64/41, pp. 971 ff.;Oral Pleadings, Mr. ElihuLauterpacht, May 14, 1964, ibid., 64/41, pp. 947 ff.; RepliqueBeige, May 16, 1967, Part III, Ch. II, Sec. I, pp. 634 ff., pars. 873 ff.

35 P.C.I.J., Ser. A, No. 2, p. 12, Judgment of Aug. 30, 1924.

36 See note 32 above, for citations.

37 Cf. Oral Pleadings of Professor Roberto Ago, June 20, 1969, I.C.J., C.R. 69/44,pp. 26-27, and July 22, 1969, ibid., C.R. 69/64, p. 46.

38 Ibid., C.R. 69/44, p. 12 (June 20, 1969).

39 Ibid., C.R. 69/54, pp. 12-14 (July 8, 1969). Cf. [1970] I.C.J. Rep., par. 49, wherethe Court notes “that the Belgian Government did not base its claim on an infringementof the direct rights of the shareholders.“

40 [1970] I.C.J. Rep. 32-33.

41 It is all the more surprising, therefore, to find Judge Sir Gerald Fitzmaurice statingin his Separate Opinion that he did not base his agreement with the Court's Judgmentfinding the Belgian claim inadmissible “on any consideration turning on thequestion of to whom, or to what entity, was the obligation owed in this case, not toact in a manner contrary to international law.” Ibid. 65-66. His reasons for releasingclaimant state from proving violation of an obligation owed to it by the respondentstate are far from convincing and appear to be based, in part, upon his expressedpreference for having the Court decide an abstract legal question (cf. his par. 5)rather than the actual issue before it, viz., whether claimant had jusstandi in thecircumstances.

42 [1970] I.C.J. Rep., par. 51. For the arguments as presented by counsel for Belgium,see Observations Beiges, Aug. 14, 1963, pp. 179 ff., 184 ff., pars. 175 ff.; I.C.J.Distr. 65/5, Oral Pleadings, Georges Sauser-Hall, April 16, 17, 20, 1964, C.R.64/24, 25, 26, pp. 545, 557, 559, 596, and May 15, 1964, C.R. 64/41, p. 971; OralPleadings, E. Lauterpacht, May 14, 1964, ibid., pp. 948 ff., 958; Replique Beige, May15, 1967, pars. 873 ff.; Oral Pleadings, Michel Virally, May 12 and July 7, 1969, I.C.J.,C.R. 69/19 and 53.

43 [1970] I.C.J. Rep., par. 51.

44 Cf. citations, note 42 above.

45 [1970] I.C.J. Rep. 131.

46 Ibid. 188, 194.

47 Ibid. 37, 38.

48 Cf., on the point, Oral Pleadings, Professor Ago, June 20, 1969, I.C.J., C.R. 69/44,pp. 34 ff.

49 [1970] I.C.J. Rep., pars.38, 37 and 39.

50 Ibid,, par. 50.

51 Hid.

52 Cf., e.g., Oral Pleadings, Professor Virally, May 12, 1969, I.C.J., C.R. 69/19, p. 24.This fallacy that the Court's renvoi to internal law leads to the subordination of internationallaw is also embraced by Judge Gros, [1970] I.C.J. Rep. 272, and by Judgead hoc Riphagen, ibid. 335 ff.

53 Ibid., pars. 38, 50. The thrust of much of the Separate Opinion of Judge Fitzmauricewas that while the municipal law distinctions between company and shareholderrights must be maintained in international law, limitations on the rights of corporatepersonality comparable to those found in domestic law should be developed byanalogy in international law so as to permit diplomatic protection of shareholders assuch. Ibid. 67, 71 ff.However, the limitations envisaged by Belgium and Sir Gerald were the creature ofcertain legislative presumptions of national law and policy and the case law applyingthem (e.g., presumptions of share ownership for tax purposes, shareholders’ derivativeactions, etc.) which had no counterpart in international law. It was not open to theCourt to create a new law by analogy, although at one point the late Professor GeorgesSauser-Hall, as counsel for Belgium, called upon the Court to create and apply “outof whole cloth” (“tailler en pleindrap“) rules of international law applicable to thespecial case (“cosd'espéce“). Cf. I.C.J. Distr. 65/5, C.R. 64/26, pp. 596-597 (April20, 1964). The plea was not pursued in the Belgian submissions.

54 Ibid., pars. 41-44.

55 Ibid., par. 46.

56 Cf. Professor Virally :“Surtoutf quepersonne ne contestece point. La Belgiquenese préoccupe du préjudicesubi par la Barcelona Traction elle-même —ce qui seraitI'affaire du Canada —maisbien de celui qui a étésupporté par sespropresnationaux,actionnaires de la sociéte'.” I.C.J., C.R. 69/19, pp. 18-19, Oral Pleading of May 12,1969.

57 [1970] I.C.J. Rep. 23 (V), 25-26 (VI). Italics added. The Belgian contentionbased upon indirect injury to the shareholders through the direct injury to the Companyis referred to above.

58 Ibid., pars. 55-63.

59 Ibid., par. 58.

60 Ibid., par. 45. Cf. Oral Pleading, Professor Virally, May 12, 1969, I.C.J., C.R.69/19, p. 28. Judge Tanaka goes even beyond the Belgian arguments rejected by theCourt in maintaining that only the shareholders of a company can be the object ofdiplomatic protection, “not the company itself which has nothing but a Active existenceand can only play the role of a technique …” [1970] I.C.J. Rep. 132.

61 Ibid., pars. 64-68.

62 Ibid., pars. 69-84.

63 Ibid., par. 70.

64 [1955] I.C.J. Rep. 4; 49 A.J.I.L. 396 (1955).See further, on the irrelevance ofNottebohm to Barcelona Traction, below, pp. 342-343.

65 [1970] I.C.J. Rep., pars.71 ff.

66 Ibid. 44.

67 Ibid., pars. 85-87.

68 Ibid., par. 88.

69 Ibid., pars. 89-90.

70 Ibid., pars. 92-101.

71 Ibid., pars. 102-103. Cf. the Court's statement of the issue before it, ibid., pars.32, 35, 36.

72 Cf. ibid. 42; 79 ff. (Fitzmaurice); 170 ff., 186 ff. (Jessup); 280 ff. (Gros). Seeabove, p. 340.

73 [1970] I.C.J. Rep., par. 98.

74 Ibid. 80 (Fitzmaurice), 188 (Jessup). Judge Fitzmaurice appears to have hadsome doubts about the applicability of Nottebohm. Ibid. 76, 81. Judge Jessup, startingfrom the premise that Canada, the state of incorporation, had no right to claimon behalf of Barcelona Traction (ibid. 170), slipped easily into the Belgian negativeproof argument that no rule or principle of international law “forbids” a right ofdiplomatic protection to the shareholders’ state (ibid. 188, 194).

75 Ibid. 280.

76 Ibid. 281.

77 Ibid. 279-280.

78 In “the event, Judges Jessup and Gros voted to dismiss the Belgian claim as inadmissiblefor lack of proof of Belgian national character of the claim. Ibid. 170, 202-220 (Jessup); 282-283 (Gros). Judge Fitzmaurice, “with some reluctance,” foundthe claim inadmissible “broadly for the principal reason on which the Judgment isbased—namely that in respect of an injury done to a company, prima facie the company'sgovernment alone can sustain an international claim.” Ibid. 64. Judge KotaroTanaka, though voting with the majority, thought the Belgian claim should have beendismissed on the merits. Ibid. 114-160. It thus appears that the three judges referredto by implication in the Court's dispositif were Judges Gros, Jessup and Tanaka,although most of Judge Fitzmaurice's separate opinion also reads like a dissentingopinion. The only dissenting opinion labeled such was that of Judge Willem Riphagen,ad hoc Judge designated by Belgium.One wonders about the propriety of separate opinions which go so far afield as someof those in this case. Perhaps judges, restrained as such from active publication, tooeagerly seize the opportunity to write overly lengthy observations on matters they wouldprefer to decide rather than confining their observations precisely to the issues actuallybefore the Court.

79 [1959] I.C.J. Rep. 30.

80 [1970] I.C.J. Rep., par. 32.

81 Ibid., par. 102.

82 [1964] I.C.J. Rep. 164.

83 Cf. the views of Judge Morelli, ibid. 110 ff.

84 Ibid. 44-45; and see above, p. 331.

85 [1970] I.C.J. Rep. 228.

86 ibid., pars. 32, 88, 102.