Belgium v Spain (Barcelona Light, Traction and Power Case)

This is yet another case that shows the weakness of international law and its tendency to get bound up in details rather than attending to actual justice. The Barcelona Traction Light and Power Company was incorporated in Canada, but its business operations were primarily in Spain, where it generated electricity. Roughly 88% of the company was owned by Belgian nationals, so we have Belgians owning a Canadian company operating in Spain. Truly an international enterprise. Spain at the time was run by a fascist dictator named Francisco Franco. As a dictator, he was essentially not bound by any political or judicial constraints. The company had borrowed money, but during the civil war which brought Franco to power, they could not pay those bonds, and after the war they were prevented from doing so. Franco used this as a pretext to put the company into bankruptcy, invalidate all of the overseas shares, and reconstitute the company as a Spanish company. Essentially stealing the company and all of its assets from the true owners. The government of Belgium, on behalf of the shareholders, took an action in the International Court of Justice. The Spanish argued that if there was a complaint, it was the company's complaint. The company was incorporated in Canada, and so the Belgian government had no standing to bring any action in international law. Those shareholders should have complained to the Canadian government. The court was therefore faced with a choice of whether to allow a country, Belgium, to protect its citizens, or whether to prefer a technical interpretation which would result in an unjust outcome. Inevitably, because international law just doesn't work, they went for the technical but unjust option. The court said, In the view of the court, as a result, the damage to shareholders was mere collateral damage, and it should have been Canada rather than Belgium bringing this case. Spain got away with the theft on a technicality, and in international law it's now clear that companies cannot intervene on behalf of their nationals, no matter how badly they are treated, if they are merely shareholders of a company incorporated in another country. For more UN videos visit www.un.org