Case Concerning Barcelona Traction, Light, and Power

Company, Ltd
 6External links

Facts[edit]
Barcelona Traction, Light, and Power Company, Ltd was a corporation incorporated in Canada,
with Toronto headquarters, that made and supplied electricity in Spain. It had issued bonds to non-Spanish
investors, but during the Spanish Civil War (1936-9) the Spanish government refused to allow BTLP to transfer
currency to pay bondholders the interest they were due. In 1948 a group of bondholders sued in Spain to declare
that BTLP had defaulted on the ground it had failed to pay the interest. The Spanish court allowed their claim. The
business was sold, the surplus distributed to the bondholders, and a small amount was paid to shareholders. The
shareholders in Canada succeeded in persuading Canada and other states to complain that Spain had denied
justice and violated a series of treaty obligations. However, Canada eventually accepted that Spain had the right to
prevent BTLP from transferring currency and declaring BTLP bankrupt. Of the shares, 88 per cent were owned by
Belgians, and the Belgian government complained, insisting the Spanish government had not acted properly. They
made an initial claim at the International Court of Justice in 1958, but later withdrew it to allow negotiations.
Subsequent negotiations broke down, and a new claim was filed in 1962. Spain contended that Belgium had no
standing because BTLP was a Canadian company.

Judgment[edit]
The International Court of Justice held that Belgium had no legal interest in the matter to justify it bringing a claim.
Although Belgian shareholders suffered if a wrong was done to the company, it was only the company's rights that
could have been infringed by Spain's actions. It would only be if direct shareholder rights (such as to dividends)
were affected, that the state of the shareholders would have an independent right of action. It was a general rule of
international law that when an unlawful act was committed against a company, only the state of incorporation of the
company could sue, and because Canada had chosen not to, this was the end. The idea of a "diplomatic protection"
of shareholders was unsound because it would create confusion and insecurity in economic relations as shares are
'widely scattered and frequently change hands'. The court also said that a state is bound to give the same legal
protection to foreign investments and nationals, either for natural or legal persons, when it admits them to its
territory.
Padilla Nervo J said the following.

“
The history of the responsibility of States in respect to the treatment of foreign nationals is the history of
abuses, illegal interference in the domestic jurisdiction of weaker States, unjust claims, threats and even
military aggression under the flag of exercising rights of protection, and the imposing of sanctions in order to
oblige a government to make the reparations demanded.

Special agreements to establish arbitral tribunals were on many occasions concluded under pressure, by
political, economic or military threats.
The protecting States, in many instances, are more concerned with obtaining financial settlements than with
preserving principles. Against the pressure of diplomatic protection, weaker States could do no more than to
preserve and defend a principle of international law, while giving way under the guise of accepting friendly
settlements, either giving the compensation demanded or by establishing claims commissions which had as a
point of departure the acceptance of responsibility for acts or omissions, where the government was, neither in
fact nor in law, really responsible.
In the written and in the oral pleadings the Applicant has made reference, in support of his thesis, to arbitral
decisions of claims commissions—among others those between Mexico and the United States, 1923.
These decisions do not necessarily give expression to rules of customary international law, as ... the
Commissions were authorized to decide these claims "in accordance with principles of international law,
justice and equity," and, therefore, may have been influenced by other than strictly legal considerations. ... ”
Now the evolution of international law has other horizons and its progressive development is more promising,
as Rosenne wrote:
There is prevalent in the world today a widespread questioning of the contemporary international law. This
feeling is based on the view that for the greater part international law is the product of European imperialism
and colonialism and does not take sufficient account of the completely changed pattern of international
relations which now exists....
Careful scrutiny of the record of the Court may lead to the conclusion that it has been remarkably perceptive
of the changing currents of international thought. In this respect it has performed a major service to the
international community as a whole, because the need to bring international law into line with present-day
requirements and conditions is real and urgent.
The law, in all its aspects, the jurisprudence and the practice of States change as the world and the everyday
requirements of international life change, but those responsible for its progressive evolution should take care
that their decisions do, in the long run, contribute to the maintenance of peace and security and the betterment
of the majority of mankind.
In considering the needs and the good of the international community in our changing world, one must realize
that there are more important aspects than those concerned with economic interests and profit making; other
legitimate interests of a political and moral nature are at stake and should be considered in judging the
behavior and operation of the complex international scope of modern commercial enterprises.
It is not the shareholders in those huge corporations who are in need of diplomatic protection; it is rather the
poorer or weaker States, where the investments take place, who need to be protected against encroachment by
powerful financial groups, or against unwarranted diplomatic pressure from governments who appear to be
always ready to back at any rate their national shareholders, even when they are legally obliged to share the
risk of their corporation and follow its fate, or even in case of shareholders who are not or have never been
under the limited jurisdiction of the State of residence accused of having violated in respect of them certain
fundamental rights concerning the treatment of foreigners. It can be said that, by the mere fact of the existence
of certain rules concerning the treatment of foreigners, these have certain fundamental rights that the State of
residence cannot violate without incurring international responsibility; but this is not the case of foreign
shareholders as such, who may be scattered all over the world and have never been or need not be residents of
the respondent State or under its jurisdiction.
In the case of the Rosa Gelbtrunk claim between Salvador and the United States, the President of the
arbitration commission expressed a view which may summarize the position of foreigners in a country where
they are resident. This view was expressed as follows:
A citizen or subject of one nation who, in the pursuit of commercial enterprise, carries on trade within the
territory and under the protection of the sovereignty of a nation other than his own, is to be considered as
having cast in his lot with the subjects or citizens of the State in which he resides and carries on business.
(Italics added.)
"In this case," Schwarzenberger remarks, "the rule was applied to the loss of foreign property in the course of
a civil war. The decision touches, however, one aspect of a much wider problem: the existence of international
minimum standards, by which, regarding foreigners, territorial jurisdiction is limited." ...
Much has been said about the justification for not leaving the shareholders in those enterprises without
protection.
Perhaps modem international business practice has a tendency to be soft and partial towards the powerful and
the rich, but no rule of law could be built on such flimsy bases.
Investors who go abroad in search of profits take a risk and go there for better or for worse, not only for better.
They should respect the institutions and abide by the national laws of the country where they chose to go.
Barcelona Traction, Light and Power Company, Limited, Belgium v Spain (New
Application, 1962), Belgium v Spain, Preliminary Objections, Judgment, [1964] ICJ
Rep 6, ICGJ 151 (ICJ 1964), 24th July 1964, United Nations [UN]; International Court
of Justice [ICJ]
Date:
24 July 1964
Content type:
International court decisions
Jurisdiction:
United Nations [UN]; International Court of Justice [ICJ]
Citation(s):
[1964] ICJ Rep 6 (Official Citation)
ICGJ 151 (ICJ 1964) (OUP reference)
Product:
Oxford Reports on International Law [ORIL]

Module:
International Courts of General Jurisdiction [ICGJ]
How to rule on the admissibility of Belgium's claim for Spanish reparations to compensate for damage allegedly caused to
Belgian nationals (shareholders in the Canadian Barcelona Traction Company) by the Spanish government.

Whether the discontinuance of an earlier application on the same facts (Removal From List, Order; Barcelona Traction, Light
and Power Company, Limited, Belgium v Spain) prevented the Court from later deciding on the merits of the case.

Whether the Court had jurisdiction to hear the dispute under Article 17(4) of the 1927 Treaty between Belgium and Spain, which
provided that either party could bring any dispute of a legal nature before the Permanent Court of International Justice (‘PCIJ’),
and under Article 37 of the Statute of the International Court of Justice, considering the dissolution of the PCIJ in 1946.

Whether to decide on the issue of whether international law recognized the jus standi of Belgium in its claim to protect Belgian
shareholding interests in respect of injury caused by a state to a foreign company, as opposed to a claim to protect actual
Belgian natural or juristic persons permitted by the principle of diplomatic protection.
Barcelona Traction, Light and Power Company,
Limited (Belgium v. Spain); Preliminary Objections
Publisher International Court of Justice (ICJ)

Publication Date 24 July 1964

Type of Decision I.C.J. Reports 1964, p. 9, 12

Cite as Barcelona Traction, Light and Power Company, Limited (Belgium v. Spain);
Preliminary Objections, International Court of Justice (ICJ), 24 July 1964,
available at: https://www.refworld.org/cases,ICJ,402391b04.html [accessed 13
January 2020]

Comments This is a case summary, as provided by the Court.

Judgment of 24 July 1964

Proceedings in the case concerning the Barcelona Traction, Light and Power Company, Limited (Belgium v. Spain)
were instituted by an Application of 19 June 1962 in which the Belgian Government sought reparation for damage
claimed to have been caused to Belgian nationals, shareholders in the Canadian Barcelona Traction Company, by
the conduct of various organs of the Spanish State. The Spanish Government raised four Preliminary Objections.
The Court rejected the first Preliminary Objection by 12 votes to 4, and the second by 10 votes to 6. It joined the
third Objection to the merits by 9 votes to 7 and the fourth by 10 votes to 6.
President Sir Percy Spender and Judges Spiropoulos, Koretsky and Jessup appended Declarations to the
Judgment.
Vice-President Wellington Koo and Judges Tanaka and Bustamante y Rivero appended Separate Opinions.
Judge Morelli and Judge ad hoc Armand-Ugon appended Dissenting Opinions.
***
First Preliminary Objection
In its Judgment, the Court recalled that Belgium had on 23 September 1958filed with the Court an earlier Application
against Spain in respect of the same facts, and Spain had then raised three Preliminary Objections. On 23 March
1961 the Applicant, availing itself of the right conferred upon it by Article 69, paragraph 2, of the Rules of Court, had
informed the Court that it was not going on with the proceedings; notification having been received from the
Respondent that it had no objection, the Court had removed the case from its List (10 April 1961). In its first
Preliminary Objection, the Respondent contended that this discontinuance precluded the Applicant from bringing the
present proceedings and advanced five arguments in support of its contention.
The Court accepted the first argument, to the effect that discontinuance is a purely procedural act the real
significance of which must be sought in the attendant circumstances.
On the other hand, the Court was unable to accept the second argument namely that a discontinuance must always
be taken as signifying a renunciation of any further right of action unless the right to start new proceedings is
expressly reserved. As the Applicant's notice of discontinuance contained no motivation and was very clearly
confined to the proceedings instituted by the first Application, the Court considered that the onus of establishing that
the discontinuance meant something more than a decision to terminate those proceedings was placed upon the
Respondent.
The Respondent, as its third argument, asserted that there had been an understanding between the Parties; it
recalled that the representatives of the private Belgian interests concerned had made an approach with a view to
opening negotiations and that the representatives of the Spanish interests had laid down as a prior condition the
final withdrawal of the claim. According to the Respondent what was meant by this was that the discontinuance
would put an end to any further right of action, but the Applicant denied that anything more was intended than the
termination of the then current proceedings. The Court was unable to find at the governmental level any evidence of
any such understanding as was alleged by the Respondent; it seemed that the problem had been deliberately
avoided lest the foundation of the interchanges be shattered. Nor had the Respondent, on whomlay the onus of
making its position clear, expressed any condition when it indicated that it did not object to the discontinuance.
The Respondent Government then advanced a fourth argument, having the character of a plea of estoppel, to the
effect that, independently of the existence of any understanding, the Applicant had by its conduct misled the
Respondent about the import of the discontinuance, but for which the Respondent would not have agreed to it, and
would not thereby have suffered prejudice. The Court did not consider that the alleged misleading Belgian
misrepresentations had been established and could not see what the Respondent stood to lose by agreeing to
negotiate on the basis of a simple discontinuance; if it had not agreed to the discontinuance, the previous
proceedings would simply have continued, whereas negotiations offered a possibility of finally settling the dispute.
Moreover, if the negotiations were not successful and the case started again, it would still be possible once more to
put forward the previous Preliminary Objections. Certainly the Applicant had framed its second Application with a
foreknowledge of the probable nature of the Respondent's reply and taking it into account but, if the original
proceedings had continued, the Applicant could likewise always have modified its submissions.
The final argument was of a different order. The Respondent alleged that the present proceedings were contrary to
the spirit of the Hispano-Belgian Treaty of Conciliation, Judicial Settlement and Arbitration of 19 July 1927 which,
according to the Applicant, conferred competence on the Court. The preliminary stages provided for by the Treaty
having already been gone through in connection with the original proceedings, the Treaty could not be invoked a
second time to seise the Court of the same complaints. The Court considered that the Treaty processes could not
be regarded as exhausted so long as the right to bring new proceedings otherwise existed and until the case had
been prosecuted to judgment.
For these reasons, the Court rejected the first Preliminary Objection.
Second Preliminary Objection
To found the jurisdiction of the Court the Applicant relied on the combined effect of Article 17 (4) of the 1927 Treaty
between Belgium and Spain, according to which if the other methods of settlement provided for in that Treaty failed
either party could bring any dispute of a legal nature before the Permanent Court of International Justice, and Article
37 of the Statute of the International Court of Justice, which reads as follows:
"Whenever a treaty or convention in force provides for reference of a matter . . . to the Permanent Court of
International Justice, the matter shall, as between the parties to the present Statute, be referred to the International
Court of Justice."
As the principal aspect of its objection, the Respondent maintained that although the 1927 Treaty might still be in
force, Article 17 (4) had lapsed in April 1946 on the dissolution of the Permanent Court to which that article referred.
No substitution of the present for the former Court had been effected in that article before the dissolution, Spain not
being then a party to the Statute; in consequence, the 1927 Treaty had ceased to contain any valid jurisdictional
clause when Spain was admitted to the United Nations and became ipso facto a party to the Statute (December
1955). In other words Article 37 applied only between States which had become parties to the Statute previous to
the dissolution of the Permanent Court, and that dissolution had brought about the extinction of jurisdictional clauses
providing for recourse to the Permanent Court unless they had previously been transformed by the operation of
Article 37 into clauses providing for recourse to the present Court.
The Court found that this line of reasoning had first been advanced by the Respondent after the decision given by
the Court on 26 May 1959 in the case concerning the Aerial Incident of 27 July 1955(Israel v. Bulgaria). But that
case had been concerned with a unilateral declaration in acceptance of the compulsory jurisdiction of the
Permanent Court and not with a treaty. It thus had reference not to Article 37 but to Article 36, paragraph 5, of the
Statute.
As regards Article 37, the Court recalled that in 1945 its drafters had intended to preserve as many jurisdictional
clauses as possible from becoming inoperative by reason of the prospective dissolution of the Permanent Court. It
was thus difficult to suppose that they would willingly have contemplated that the nullification of the jurisdictional
clauses whose continuation it was desired to preserve would be brought about by the very event the effects of which
Article 37 was intended to parry.
Only three conditions were actually stated in Article 37. They were that there should be a treaty in force; that it
should contain a provision for the reference of a matter to the Permanent Court; and that the dispute should be
between States parties to the Statute. In the present case the conclusion must be that the 1927 Treaty being in
force and containing a provision for reference to the Permanent Court, and the parties to the dispute being parties to
the Statute, the matter was one to be referred to the International Court of Justice, which was the competent forum.
It was objected that this view led to a situation in which the jurisdictional clause concerned was inoperative and then
after a gap of years became operative again, and it was asked whether in those circumstances any true consent
could have been given by the Respondent to the Court's jurisdiction. The Court observed that the notion of rights
and obligations that are in abeyance but not extinguished was common; States becoming parties to the Statute after
the dissolution of the Permanent Court must be taken to have known that one of the results of their admission would
be the reactivation by reason of Article 37 of certain jurisdictional clauses. The contrary position maintained by the
Respondent would create discrimination between States according as to whether they became parties to the Statute
before or after the dissolution of the Permanent Court.
As regards Article 17 (4) more particularly, the Court considered that it was an integral part of the 1927 Treaty. It
would be difficult to assert that the basic obligation to submit to compulsory adjudication provided for in the Treaty
was exclusively dependent on the existence of a particular forum. If it happened that the forum went out of
existence, the obligation became inoperative but remained substantively in existence and could be rendered
operative once more if a new tribunal was supplied by the automatic operation of some other instrument. Article 37
of the Statute had precisely that effect. Accordingly, "International Court of Justice" must now be read for
"Permanent Court of International Justice".
As a subsidiary plea, the Respondent contended that if Article 37 of the Statute operated to reactivate Article 17 (4)
of the Treaty in December 1955, what came into existence at that date was a new obligation between the Parties;
and that just as the original applied only to disputes arising after the Treaty date, so the new obligation could apply
only to disputes arising after December 1955. The dispute was accordingly not covered since it had arisen previous
to December 1955. In the opinion of the Court, when the obligation to submit to compulsory adjudication was
revived as to its operation, it could only function in accordance with the Treaty providing for it and it continued to
relate to any disputes arising after the Treaty date.
For these reasons the Court rejected the second Preliminary Objection both in its principal and in its subsidiary
aspects.
Third and Fourth Preliminary Objections
The Respondent's third and fourth Preliminary Objections involved the question of whether the claim was
admissible. The Applicant had submitted alternative pleas that these objections, unless rejected by the Court,
should be joined to the merits.
By its third Preliminary Objection the Respondent denied the legal capacity of the Applicant to protect the Belgian
interests on behalf of which it had submitted its claim. The acts complained of had taken place not in relation to any
Belgian natural or juristic person but in relation to the Barcelona Traction Company, a juristic entity registered in
Canada, the Belgian interests concerned being in the nature of shareholding interests in that company. The
Respondent contended that international law does not recognize, in respect of injury caused by a State to the
foreign company, any diplomatic protection of shareholders exercised by a State other than the national State of the
company. The Applicant contested this view.
The Court found that the question of the jusstandi of a government to protect the interests of shareholders raised an
antecedent question of what was the juridical situation in respect of shareholding interests, as recognized by
international law. The Applicant thus necessarily invoked rights which, so it contended, were conferred on it in
respect of its nationals by the rules of international law concerning the treatment of foreigners. Hence a finding by
the Court that it had no jusstandi would be tantamount to a finding that those rights did not exist and that the claim
was not well-founded in substance.
The third Objection had certain aspects which were of a preliminary character, but involved a number of closely
interwoven strands of mixed law, fact and status to a degree such that the Court could not pronounce upon it at the
present stage in full confidence that it was in possession of all the elements that might have a bearing on its
decisions. The proceedings on the merits would thus place the Court in a better position to adjudicate with a full
knowledge of the facts.
The foregoing considerations applied a fortiori to the fourth Preliminary Objection, wherein the Respondent alleged
failure to exhaust local remedies. This allegation was in fact inextricably interwoven with the issues of denial of
justice which constituted the major part of the merits of the case.
Accordingly, the Court joined the third and fourth Preliminary Objections to the merits.
Barcelona Traction, Light and Power Company,
Limited (Belgium v. Spain); Second Phase
Publisher International Court of Justice (ICJ)

Publication Date 5 February 1970

Type of Decision I.C.J. Reports 1970, p. 3

Cite as Barcelona Traction, Light and Power Company, Limited (Belgium v. Spain);
Second Phase, International Court of Justice (ICJ), 5 February 1970, available at:
https://www.refworld.org/cases,ICJ,4040aec74.html [accessed 13 January 2020]

Comments This is a case summary, as provided by the Court.

Judgment of 5 February 1970

In its judgment in the second phase of the case concerning the Barcelona Traction, Light and Power Company,
Limited (New Application: 1962) (Belgium v. Spain), the Court rejected Belgium's claim by fifteen votes to one.
The claim, which was brought before the Court on 19 June 1962, arose out of the adjudication in bankruptcy in
Spain of Barcelona Traction, a company incorporated in Canada. Its object was to seek reparation for damage
alleged by Belgium to have been sustained by Belgian nationals, shareholders in the company, as a result of acts
said to be contrary to international law committed towards the company by organs of the Spanish State.
The Court found that Belgium lacked jus standi to exercise diplomatic protection of shareholders in a Canadian
company with respect to measures taken against that company in Spain.
Judges Petrén and Onyeama appended a joint declaration to the Judgment; Judge Lachs appended a declaration.
President Bustamante y Rivero and Judges Sir Gerald Fitzmaurice, Tanka, Jessup, Morelli, Padilla Nervo, Gros and
Ammoun appended Separate Opinions.
Judge ad hoc Riphagen appended a Dissenting Opinion.
Background of Events in the Case
(paras. 8-24 of the Judgment)
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 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.
Barcelona Traction issued several series of bonds, principally in sterling. The sterling bonds were serviced out of
transfers to Barcelona Traction effected by the subsidiary companies operating in Spain. 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.
In 1948 three Spanish holders of recently acquired Barcelona Traction sterling bonds petitioned the court of Reus
(Province of Tarragona) for a declaration adjudging the company bankrupt, on account of failure to pay the interest
on the bonds. 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. Shortly afterwards,
these measures were extended to the other subsidiary companies. New shares of the subsidiary companies were
created, which were sold by public auction in 1952 to a newly-formed company, Fuerzas Electricas de Cataluna,
S.A. (Fecsa), which thereupon acquired complete control of the undertaking in Spain.
Proceedings were brought without success in the Spanish courts by various companies or persons. According to the
Spanish Government, 2,736 orders were made in the case and 494 judgments given by lower and 37 by higher
courts before it was submitted to the International Court of Justice. 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. The interposition of the Canadian Government ceased entirely in 1955.
Proceedings before the International Court and the Nature of the Claim
(paras. 1-7 and 26-31 of the Judgment)
The Belgian Government filed a first Application with the Court against the Spanish Government in 1958. In 1961 it
gave notice of discontinuance of the proceedings, with a view to negotiations between the representatives of the
private interests concerned, and the case was removed from the Court's General List. The negotiations having
failed, the Belgian Government on 19 June 1962 submitted to the Court a new Application. In 1963 the Spanish
Government raised four preliminary objections to this Application. By its Judgment of 24 July 1964, the Court
rejected the first and second objections and joined the third and fourth to the merits.
In the subsequent written and oral proceedings the Parties supplied abundant material and information. The Court
observed that the unusual length of the proceedings was due to the very long time-limits requested by the Parties
for the preparation of their written pleadings and to their repeated requests for an extension of chose limits. The
Court did not find that it should refuse those requests, but it remained convinced that it was in the interest of the
authority of international justice for cases to be decided without unwarranted delay.
The claim submitted to the Court had been presented on behalf of natural and juristic persons, alleged to be Belgian
nationals and shareholders in Barcelona Traction, a company incorporated in Canada and having its head office
there. The object of the Application was reparation for damage allegedly caused to those persons by the conduct,
said to be contrary to international law, of various organs of the Spanish State towards that company.
The third preliminary objection of the Spanish Government, which had been joined to the merits, was to the effect
that the Belgian Government lacked capacity to submit any claim in respect of wrongs done to a Canadian company
even if the shareholders were Belgian. The fourth preliminary objection, which was also joined to the merits, was to
the effect that local remedies available in Spain had not been exhausted.
The case submitted to the Court principally concerned three States, Belgium, Spain and Canada, and it was
accordingly necessary to deal with a series of problems arising out of this triangular relationship.
The Belgian Government's jus standi
(paras. 32-101 of the Judgment)
The Court first addressed itself to the question, raised by the third preliminary objection, which had been joined to
the merits, of the right of Belgium to exercise diplomatic protection of Belgian shareholders in a company
incorporated in Canada, the measures complained of having been taken in relation not to any Belgian national but to
the company itself.
The Court observed that when a State admitted into its territory foreign investments or foreign nationals it was
bound to extend to them the protection of the law and assumed obligations concerning the treatment to be afforded
them. But such obligations were not absolute. In order to bring a claim in respect of the breach of such an obligation,
a State must first establish its right to do so.
In the field of diplomatic protection, international law was in continuous evolution and was called upon to recognize
institutions of municipal law. In municipal law, the concept of the company was founded on a firm distinction
between the rights of the company and those of the shareholder. Only the company, which was endowed with legal
personality, could take action in respect of matters that were of a corporate character. A wrong done to the company
frequently caused prejudice to its shareholders, but this did not imply that both were entitled to claim compensation.
Whenever a shareholder's interests were harmed by an act done to the company, it was to the latter that he had to
look to institute appropriate action. An act infringing only the company's rights did not involve responsibility towards
the shareholders, even if their interests were affected. In order for the situation to be different, the act complained of
must be aimed at the direct rights of the shareholder as such (which was not the case here since the Belgian
Government had itself admitted that it had not based its claim on an infringement of the direct rights of the
shareholders).
International law had to refer to those rules generally accepted by municipal legal systems. An injury to the
shareholder's interests resulting from an injury to the rights of the company was insufficient to found a claim. Where
it was a question of an unlawful act committed against a company representing foreign capital, the general rule of
international law authorized the national State of the company alone to exercise diplomatic protection for the
purpose of seeking redress. No rule of international law expressly conferred such a right on the shareholder's
national State.
The Court considered whether there might not be, in the present case, special circumstances for which the general
rule might not take effect. Two situations needed to be studied: (a) the case of the company having ceased to exist,
and (b) the case of the protecting State of the company lacking capacity to take action. As regards the first of these
possibilities, the Court observed that whilst Barcelona Traction had lost all its assets in Spain and been placed in
receivership in Canada, it could not be contended that the corporate entity of the company had ceased to exist or
that it had lost its capacity to take corporate action. So far as the second possibility was concerned, it was not
disputed that the company had been incorporated in Canada and had its registered office in that country, and its
Canadian nationality had received general recognition. The Canadian Government had exercised the protection of
Barcelona Traction for a number of years. If at a certain point the Canadian Government ceased to act on behalf of
Barcelona Traction, it nonetheless retained its capacity to do so, which the Spanish Government had not
questioned. Whatever the reasons for the Canadian Government's change of attitude, that fact could not constitute
a justification for the exercise of diplomatic protection by another government.
It had been maintained that a State could make a claim when investments by its nationals abroad, such investments
being part of a State's national economic resources, were prejudicially affected in violation of the right of the State
itself to have its nationals enjoy a certain treatment. But, in the present state of affairs, such a right could only result
from a treaty or special agreement. And no instrument of such a kind was in force between Belgium and Spain.
It had also been maintained that, for reasons of equity, a State should be able, in certain cases, to take up the
protection of its nationals, shareholders in a company which had been the victim of a violation of international law.
The Court considered that the adoption of the theory of diplomatic protection of shareholders as such would open
the door to competing claims on the part of different States, which could create an atmosphere of insecurity in
international economic relations. In the particular circumstances of the present case, where the company's national
State was able to act, the Court was not of the opinion that jus standi was conferred on the Belgian Government by
considerations of equity.
The Court's Decision
(paras. 102 and 103 of the Judgment)
The Court took cognizance of the great amount of documentary and other evidence submitted by the Parties and
fully appreciated the importance of the legal problems raised by the allegation which was at the root of the Belgian
claim and which concerned denials of justice allegedly committed by organs of the Spanish State. However, the
possession by the Belgian Government of a right of protection was a prerequisite for the examination of such
problems. Since no jus standi before the Court had been established, it was not for the Court to pronounce upon
any other aspect of the case.
Accordingly, the Court rejected the Belgian Government's claim by 15 votes to 1, 12 votes of the majority being
based on the reasons set out above.
DECLARATIONS AND SEPARATE AND
DISSENTING OPINIONS
Judge ad hoc Riphagen appended to the Judgment a Dissenting Opinion in which he stated that he was unable to
concur in the Judgment as the legal reasoning followed by the Court appeared to him to fail to appreciate the nature
of the rules of customary public international law applicable in the present case.
Among the fifteen members of the majority, three supported the operative provisions of the Judgment (rejecting the
Belgian Government's claim) for different reasons, and appended Separate Opinions to the Judgment. Judge Tanka
stated that the two preliminary objections joined to the merits ought to have been dismissed, but that the Belgian
Government's allegation concerning denials of justice was unfounded. Judge Jessup came to the conclusion that a
State, under certain circumstances, had a right to present a diplomatic claim on behalf of shareholders who were its
nationals but that Belgium had not succeeded in proving the Belgian nationality, between the critical dates, of those
natural and juristic persons on whose behalf it had sought to claim. Judge Gros held that it was the State whose
national economy was adversely affected that possessed the right to take action but that proof of Barcelona Traction
appurtenance to the Belgian economy had not been produced.
Among the twelve members of the majority who supported the operative provision of the Judgment on the basis of
the reasoning set out in the Judgment (lack of jus standi on the part of the shareholders' national State), President
Bustamante y Rivero and Judges Sir Gerald Fitzmaurice, Morelli, Padilla Nervo and Ammoun (Separate Opinions)
and Judges Padrone and Onyeama (joint declaration) and Judge Lachs (declaration) stated that nevertheless there
were certain differences between their reasoning and that contained in the Judgment, or that there were certain
observations which they wished to add.
(Judge Sir Muhammad Zafrulla Khan had informed the President at the beginning of the Preliminary Objections
stage that, having been consulted by one of the Parties concerning the case before his election as a Member of the
Court, he considered that he ought not to participate in its decision.)
Case Concerning The 1970 Barcelona Traction, Light and Power Company, Ltd.
(Belgium vs. Spain)

FACTS:

Barcelona Traction, Light and Power Company (BTLP) was a Canadian utility company that
operated light and power utilities in Catalonia, Spain. It was incorporated in Canada, with Toronto
headquarters, that made and supplied electricity in Spain. Most of its shareholders were Belgium
nationals. 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.
When the Belgian Government complained of this, the Spanish Government stated that the transfer
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; it had not been established. Three
Spanish holders of recently acquired Barcelona Traction Sterling Bonds petitioned Court of Reus for
the declaration of the company’s bankruptcy on the account of failure to pay the interest on the bonds.
The Court granted the petition and ordered the seizure of the assets of Barcelona Traction and of two
of its subsidiary companies. The business was sold, the surplus distributed to the bondholders, and a
small amount was paid to the shareholders. The shareholders in Canada persuaded its state and the
others to complain that Spain had denied justice and violated a series of treaty obligations. However,
Canada eventually accepted that Spain had the right to prevent BTLP from transferring currency and
declaring the latter bankrupt.
In behalf of the Belgian nationals who had invested in BTLP, Belgium sued Spain in the International
Court of Justice (ICJ) in 1962, on the premise that the latter was responsible for acts in violation of
international law that had caused injury to the Canadian Corp., and its Belgian shareholders. Spain
contented that Belgium had no just standi because BTLP Company, Ltd., was a Canadian Company.

ISSUE:

Whether or NOT Belgium have the jus standi to exercise diplomatic protection of shareholders,
right and jurisdiction to bring Spain to court for the actions of a Canadian Company.

HELD:

No. In the field of diplomatic protection, international law was in continuous evolution and was
called upon to recognize institutions of municipal law. In municipal law, the concept of the company
was founded on a firm distinction between the rights of the company and those of the shareholders.
Only the company which was endowed with legal personality, could act in respect of matters that were
of a corporate character. Whenever a shareholder’s interest was harmed by an act done to the
company, it was to the latter that he had to look to institute appropriate action. An act infringing only
the company’s rights did not involve responsibility towards the shareholders, even if their interest were
affected. International law had to refer to those rules generally accepted by municipal legal systems.
An injury to the shareholder’s interest resulting from an injury to the rights of the company was sufficient
to find claim.

Where it was a question of an unlawful act committed against representing foreign capital, the
general rule of international law authorized the national state of the company alone to exercise
diplomatic protection for the purpose of seeking redress. No rule of international law expressly
conferred such a right on the shareholder’s national state. The Court considered whether there might
not be in the present case special circumstances for which the general rule might not take effect. There
are two situations need to be studied: a.) case of the company having ceased to exist, b.) the case of
the protecting State of the company lacking the capacity to act. The Court observed that whilst
Barcelona Traction had lost all its assets in Spain and been placed in receivership in Canada, it could
not be contended that the Corporate entity of the company had ceased to exist or that it had lost its
capacity to take corporate action. As to the second situation, it was not disputed that the company had
been incorporated in Canada and it had its registered office in that country, and its Canadian nationality
had received general recognition.

The Canadian Government had exercised the protection of Barcelona Traction for several years.
If at a certain point the Canadian Government ceased to act on behalf of Barcelona Traction, it
nonetheless retained its capacity to do so, which the Spanish Government had not questioned. This
fact could not constitute a justification for the exercise of diplomatic protection by another government.
It had been maintained that a State could make a claim when investments by its nationals abroad, such
investments being part of a State’s national economic resources, were prejudicially affected in violation
of the right of the State itself to have its nationals enjoy a certain treatment. But, in the present case,
such a right could only result from a treaty or special agreement. And no treaty or special agreement
of such a kind was in force between Belgium and Spain. If by reason of equity, a State should be able
to take up the protection of its nationals, shareholder in a company which had been victim of a violation
of international law.

The Court considered that the adoption of the theory of diplomatic protection of shareholders as
such would open the door to competing claims on the part of different States, which could create an
atmosphere of insecurity in international economic relations. In the circumstances of the present case,
where the company’s national State was able to act, the Court was not of the opinion that jus standi
was conferred on the Belgian Government by considerations of equity.
CLASSIC CASES: BARCELONA TRACTION-CASE (1970)
By Kenneth Manusama

Posted November 22, 2016

In Classic Cases

When teaching international law there are always cases that are mentioned, but never truly discussed. We either
just quote a few sentences, or only refer to them as a source for a point to be made. These could, in good
conscience, be called Classic Cases, but not too many people have actually delved into them. I think. I also
thought that the Barcelona Traction-case is one of those cases. But when I started reading the case in depth, I
kind of understood why not too many people actually read the damn thing. I, for one, had troubling going
through economic principles and corporate structures. Or I was just distracted for a couple of days.
BARCELONA TRACTION, LIGHT & POWER COMPANY

Belgium tried to exercise a right of diplomatic protection on behalf of the Belgian shareholders of the Barcelona
Traction, Light & Power Company. This company was registered and had its head office in Canada. It operated
a number of subsidiaries in Spain, under Spanish law, through which it provided electricity in Spain. The
Belgian shareholders, or rather sterling bondholders, were paid interest on their bonds through foreign currency
transfers from the subsidiaries to Barcelona Traction (you still with me?). Question: In this triangular
relationship, can Belgium actually bring a claim against Spain for damages to the Belgian bondholders?
Because they had invested in a Canadian company, not a Spanish one. According to the International Court of
Justice, Belgium could only do so if the company ceased to exist, or if the company’s national state lacks the
capacity to act on behalf of the company.

NATIONALITY OF CORPORATIONS

For diplomatic protection, the injured persons must have the nationality of the state doing the protection, but
these persons must also use, exhaust all the legal remedies available in the state where they were actually
injured. For individuals, we used to refer to the Nottebohm-case – another Classic Case. But we look to
the Barcelona Traction-case as the source for the rule determining the nationality of corporations. The Court
recited the ’traditional rule’ that diplomatic protection can only be exercised by the state where it is registered
and has its registered office. Barcelona Traction was a Canadian company. And that was that. That is one of the
main reasons we use the Barcelona Traction-case.
OBLIGATIONS ERGA OMNES

So there is more. Even more so in passing, by way of a so-called obiter dictum, the Court distinguished between
different kinds of obligations. In the Barcelona Traction-case, the Court explained that some international legal
obligations are so important that all States have an interest in their protection. Prohibitions on genocide, slavery,
racial discrimination are examples of what are called obligations erga omnes. When such obligations are
violated, all States have a right to hold the offending State accountable and legally responsible. But ’obligations
the performance of which is the subject of diplomatic protection are not of the same category.’ Great. And the
Court moves on to say more relevant things.
INVESTMENT TREATIES

The Court eventually decided that Belgium did not have standing, was not allowed to bring a claim. Only
Canada could, although not on behalf of its Belgian shareholders. Canada would have been able to exercise
diplomatic protection for Canadian shareholders. But these days, as the Court also noted, the protection of
investors – like shareholders – is regulated through bilateral investment treaties. And these include investor-
state dispute settlement through arbitration, as is now included in the proposal for TTIP. I thought I’d throw that
one one in there.
Erga omnes
From Wikipedia, the free encyclopedia

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Erga omnes is a Latin phrase which means "towards all" or "towards everyone". In legal terminology, erga
omnes rights or obligations are owed toward all. For instance, a property right is an erga omnes entitlement, and
therefore enforceable against anybody infringing that right. An erga omnes right (a statutory right) can here be
distinguished from a right based on contract, unenforceable except against the contracting party.

International law[edit]
In international law, it has been used as a legal term describing obligations owed by states towards the community
of states as a whole. An erga omnes obligation exists because of the universal and undeniable interest in the
perpetuation of critical rights (and the prevention of their breach). Consequently, any state has the right to complain
of a breach. Examples of erga omnes norms include piracy and genocide. The concept was recognized in
the International Court of Justice's decision in the Barcelona Traction case [(Belgium v Spain) (Second Phase) ICJ
Rep 1970 3 at paragraph 33]:
… an essential distinction should be drawn between the obligations of a State towards the international community
as a whole, and those arising vis-à-vis another State in the field of diplomatic protection. By their very nature, the
former are the concern of all States. In view of the importance of the rights involved, all States can be held to have a
legal interest in their protection; they are obligations erga omnes. [at 34] Such obligations derive, for example, in
contemporary international law, from the outlawing of acts of aggression, and of genocide, as also from the
principles and rules concerning the basic rights of the human person, including protection from slavery and racial
discrimination. Some of the corresponding rights of protection have entered into the body of general international
law . . . others are conferred by international instruments of a universal or quasi-universal character.

Examples[edit]
 In its opinion of 9 July 2004, the International Court of Justice found "the right of peoples to self-determination"
to be a right erga omnes.[1] The finding referred to article 22 of the Covenant of the League of Nations.

The International Law Commission[edit]

The UN’s International Law Commission has codified the erga omnes principle in its draft articles on State
responsibility as it, in article 48 (1)(b) of these articles, allows all States to invoke a State responsibility which
another State incurred due to its unlawful actions, if “the obligation breached is owed to the international community
as a whole”. The ILC refers directly in its comments to this article to the erga omnes principle and the ICJ’s
acceptance of it in the Barcelona Traction case.[2]
THE CONCEPT OF ERGA OMNES OBLIGATIONS IN INTERNATIONAL LAW
Abstract
In international law, the concept of erga omnes obligations refers to specifically determined
obligations that states have towards the international community as a whole. In general legal theory
the concept “erga omnes” (Latin: ‘in relation to everyone’) has origins dating as far back as Roman
law and is used to describe obligations or rights towards all. In municipal law it has the effect
towards all in another, general context.
The concept is very important because in today’s structure of international society, composed of
independent entities giving rise, as a rule, to legal relations on a consensual basis, erga
omnes obligations can further enable the International Court of Justice to go beyond reciprocal
relations among states based on consent in further developing international law on the basis of a
natural law approach. By its very nature this affects the freedom of state consent and the
sovereignty of states.
This paper will try to shed some light on this concept by analysing its meaning in international law,
starting from its appearance, consequent development and its position at the present time.

Key words: erga omnes obligations, ratio decidendi, obiter dicta, stare decisis, jus cogens norms,
aggression, genocide, slavery, racial discrimination, torture, self-determination.

Introduction
In its dictum on the Barcelona Traction case, the International Court of Justice, as the primary
judicial organ of the United Nations, gave rise to the concept of erga omnes obligations in
international law. The World Court specifically enumerated four erga omnes obligations: the
outlawing of acts of aggression; the outlawing of genocide; protection from slavery; and protection
from racial discrimination.i In this judgment the Court drew a distinction between the erga
omnes obligations that a state has towards the international community as a whole and in whose
protection all states have a legal interest, and the obligations of a state vis-à-vis another state.
In international law, the concept of erga omnes obligations refers to specifically determined
obligations that states have towards the international community as a whole. Such obligations, as
enumerated above, have been determined by the Barcelona Traction case, together with other
subsequently developed obligations, such as the obligation to respect the principle of self-
determination in the Case Concerning East Timorii and the Advisory Opinion on the Legal
Consequences of the Construction of a Wall in Occupied Palestinian Territory,iii and the erga
omnes obligation prohibiting the use of torture which was recognized by the International Criminal
Tribunal for Yugoslavia (hereinafter, the ICTY) in the Furundzija caseiv .
While erga omnes obligationsare specifically determined in international law, in general legal theory
the concept “erga omnes” (Latin: ‘in relation to everyone’) has origins dating as far back as Roman
law and is used to describe obligations or rights towards all. In municipal law it has the effect
towards all in another, general context. For example, a property right is an erga omnes right while a
right based on a contract is only enforceable towards the contracting party and is “inter
partes” (Latin: between the parties) (Emanuel 1999: 186).
The concept is very important because in today’s structure of international society, composed of
independent entities giving rise, as a rule, to legal relations on a consensual basis, erga
omnes obligations can further enable the International Court of Justice to go beyond reciprocal
relations among states based on consent in further developing international law on the basis of a
natural law approach. By its very nature this affects the freedom of state consent and the
sovereignty of states.
This paper will try to shed some light on this concept by analysing its meaning in international law,
starting from its appearance, consequent development and its position at the present time.
The appearance of the concept in international law
The concept of erga omnes appears in international law for the first time in two paragraphs of the
judgment in the Barcelona Traction Case (Second Phase), Belgium v. Spain which the I.C.J. delivered
on February 5, 1970.v The relevant text of the paragraphs 33 and 34 follow:
33. In particular, an essential distinction should be drawn between the obligations of a state towards
the international community as a whole, and those arising vis-a vis another State in the field of
diplomatic protection. By their very nature the former are the concern of all States. In view of the
importance of the rights involved, all States can be held to have a legal interest in their protection;
they are obligations erga omens.
34. Such obligations derive, for example, in contemporary international law, from the outlawing of
acts of aggression, and of genocide, as also from the principles and rules concerning the basic rights
of human person, including protection from slavery and racial discrimination.vi
The facts of the Barcelona Traction Case do not give grounds for a pronouncement as the one that
the court made on the erga omnes obligations and the impact it produced. This actually is the main
basis for criticism and calls for a brief summary of the case and a comprehensive analysis on the
significance of the pronouncement. The case arose out of the adjudication in a bankruptcy case by a
Spanish court of the Barcelona Traction Light and Power Company, Limited, a Canadian company.
Belgium filed an application seeking reparation for damages sustained by Belgium nationals,
shareholders in the company, as a result of acts contrary to international law committed by organs of
the Spanish state. The Spanish Government raised four preliminary objections to the application
(Ragazzi 2002: 3). The court rejected the first and the second objections concerning the jurisdiction
of the court and ruled on the merits of the third and the fourth objections. The third objection of the
Spanish Government was that the Belgium Government lacked capacity to submit any claim for
wrongs done to a Canadian company even if the shareholders were Belgian.
On the third preliminary question, the court reasoned that an injury to the shareholder’s interests did
not confer rights on the shareholder’s national state to exercise diplomatic protection for the
purposes of seeking redress. That right is conferred on the national state of the company alone. No
international law rule expressly confers such a right on the shareholder’s national state. The
possession by the Belgian Government of a right of protection was a prerequisite for examination,
and since no jus standi before the Court had been established, it was not for the Court to pronounce
upon any other aspect of the case.
As seen above, since the Court dealt with Belgium’s right to jus standi in seeking compensation for
Belgian shareholders, the erga omnes obligations pronouncement is not strongly related to the merits
of the case. This calls for us to first address briefly the issue of jus standi and actio popularis and,
more extensively, the criticisms of the pronouncement (Ragazzi 2002: 7).
Erga omnes and actio popularis.
According to the pronouncement in the Barcelona Traction case, all states have legal interests in the
protection of the rights involved in the pronouncement (Jennings and Watts 1997: 5). The
pronouncement in the Barcelona Traction case is stated in regard to erga omnes obligations in the
line of reasoning related to standing (jus standi), and this raises the issue of the existence of actio
popularis in international law.
The concept of actio popularis derives from Roman law and indicates an action brought by a citizen
asking the court to protect a public interest, without any need to show an individual interest in
pursuing its claim (Hsiung 2004: 19).
However, the International Court of Justice in the South West Africa case held that proceedings in
defence of legal rights and interests require those rights or interests to be clearly vested in those
who claim them and that actio popularis is not known to international law as it stands at present
(Jennings and Watts 1997: 5). Although the concepts of actio popularis and erga omnes are in some
respects associated, the two are distinct and independent of each other.
Criticism of the pronouncement
The judgment has not been immune from criticism. Some scholars have raised doubts as to whether
this reference to obligations erga omnes was necessary or appropriate for the court to reach its
conclusion on jus standi.
McCaffrey, a former member of the International Law Commission, has expressed the view that this
reference was a “gratuitous statement” which was made in the context of a case “whose facts and
legal issues hardly required such a pronouncement” (Ragazzi 2002: 5). Mann has written that obiter
dicta like that on the obligations erga omnes “convey the impression of having been studiously
planted in the text or artificially dragged into the arena” and that it was a reaction to the I.C.J
judgment on the South West Africa case.vii
As it appears from the facts of the case and from the main criticisms of the judgment, we have to
reflect on the distinction between ratio decidendi and obiter dicta in international law and, more
specifically, in terms of the pronouncement of the Court in regards to erga omnes obligations.
Since the basis for criticisms of the pronouncement are mainly based on the distinction between ratio
decidendi and obiter dicta, an analysis of the distinction follows.
Article 38 (d) of the Statute of the I.C.J defines judicial decisions as subsidiary means for the
determination of rules of law, while Article 59 reads that: “the decision of the Court has no binding
force except between the parties and in the respect of that particular case (Shahabudeen 1997: 55-
107). Strictly speaking, the I.C.J. does not observe a doctrine of precedent but strives to maintain
judicial consistency (Brownlie 2003: 21).
In a situation where the doctrine of precedent is not or cannot be strictly observed, and the erga
omnes pronouncement of the court is not ratio decidendi but obiter dicta, it is legitimate to try to
determine its importance.
Ratio decidendi is a term in widespread use in common law municipal legal systems, denoting
general reasons or grounds given for a judicial or arbitral decision (Grant and Barker 2003: 416).
According to the doctrine of precedent (stare decisis), the only part of a decision that is binding for
future cases is the ratio decidendi (Grant and Barker 2003: 416). It essentially includes the principal
proposition or propositions of law determining the outcome of a case, or the only legal considerations
necessary for the decision of a particular case (Brownlie 2003: 42). This should constitute the
precedent for future cases containing similar facts and circumstances. Obiter dicta would than include
all the propositions of law which are not part of the ratio decidendi. According to Brownlie, obiter
dicta are those lesser propositions of law stated by tribunals or individual members of tribunals, i.e.,
propositions not directed to the principal matter in issue (Brownlie 2003: 42).
This distinction should not be especially significant for I.C.J. decisions, because if the court draws the
distinction this would mean that it accepts the doctrine of stare decisis at a theoretical level
(Shahabudeen 1997: 152). However, individual judges have regarded some of the reasons given by
the court as ratione decidendi and others as obiter dicta (Shahabudeen 1997: 155). In fact, Judge de
Castro referred to what he considered to be “the obiter reasoning expressed” on the erga
omnes pronouncement of the court on the Barcelona Traction case (Shahabudeen 1997: 155). Judge
Lachs, too, later observed of the erga omnes pronouncement that the statement “was not necessary
in the judgment, but it was a good opportunity to nail down certain provisions of the law and indicate
where states are obliged to act vis-à-vis the international community as a whole” (Shahabudeen
1997: 159). Thus it is difficult to deny the existence of the distinction in the jurisdiction of the court.
To sum up, there is strong recognition that the pronouncement of the court is obiter dicta. However,
this conclusion on its own does not diminish the value of the pronouncement in itself.
As noted by Ragazzi, the value of each obiter dicta, or even of a ratio decidendi, can be only based
on the merits of a pronouncement that considers the background, content and consequent
development of the pronouncement itself. This conclusion applies especially to our case.
The significance of the pronouncement concerning erga omnes obligations
In order to determine the value of the pronouncement, an analysis is required of the background,
content and consequent development of the pronouncement.
The very expression “obligations erga omnes” predates the dictum of the International Court. For
example, among others, Lachs, a member of the International Law Commission, used the term erga
omnes in the course of a debate on draft Article 62 of the Vienna Convention on the Law of Treaties
(treaties providing for the obligations or rights of third states) (Ragazzi 2002: 8). Lachs was elected a
judge and took part in the decision on the Barcelona Traction case. The pronouncement names
four erga omnes obligations: the outlawing of acts of aggression; the outlawing of genocide;
protection from slavery; and protection from racial discrimination. Why did the Court enumerate
exactly these specific examples and not others? When analysed, the examples will justify their
presence in the pronouncement since their position has been well established in international law and
has developed from numerous treaties, judicial decisions, state practice, declarations and resolutions,
etc., which have evolved to customary rules of international law of a peremptory character. The brief
summary that follows of each of the four erga omnes obligations will serve to shed light on their
importance.

a. The outlawing of acts of aggression

The outlawing of acts of aggression is the first example of the dictum (Ragazzi 2002: 5). The United
Nations Charter gives the basic framework on the issue of the use of force.vii Thus, Article 2,
paragraph 4 states:
“All members shall refrain in their international relations from the threat or use of force against the
territorial integrity or political independence of any state, or in any other manner inconsistent with
the purposes of the United Nations.”
The term ‘aggression’ is not stated in the Article, suggesting that not all forms of illegal use of force
amount to aggression. According to Article 1 of UN General Assembly Resolution 3314, adopted by
consensus in 1974, “aggression is the use of armed force by a State against the sovereignty,
territorial integrity or political independence of another State, or in any other manner inconsistent
with the Charter of the United Nations, as set out in the definition” (Jennings and Watts 1997: 429).
During the work of codification of the law of treaties, the prohibition of aggression and the prohibition
of the use of force were actually the most cited example of peremptory norms, or rules jus
cogens norms. (Jus cogens is defined as: “a peremptory norm of general international law accepted
and recognized by the international community of States as a whole, as a norm from which no
derogation is permitted and which can be modified only by a subsequent norm of general
international law having the same character.”)ix While in the Barcelona Traction case the outlawing of
acts of aggression is mentioned as an erga omnes obligation, I.C.J. in the case of Military and
Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America)x stated that
the prohibition of the use of force as mentioned in the Charter has achieved the status of customary
international law and called it a “fundamental or cardinal principle of such law”.xi Judge Sette-Camara
filed a separate opinion in which he named the prohibition of use of force a peremptory rule of
international law.xii
Therefore, from the character of the prohibition of use of force, which is widely recognized as a jus
cogens norm it is incontrovertible that the prohibition of aggression is valid erga omnes, i.e., it is
opposable to all states without exception and affects the interests of all (Ragazzi 2002: 74-79).
b. The outlawing of genocide
Governments and human rights organizations have often termed genocide the most heinous of
international crimes (Ratner and Abrams 2001: 26-46; The origins of the term genocide can be
traced back to the Second World War barbarism of the Holocaust. Apparently it was a Polish Lawyer,
Raphael Lemkin, who coined the term genocide in 1944. For an insightful discussion on genocide, see
Power 2007). The first official documents related to genocide can be traced to the Nuremberg trials.
The principles proclaimed in Nuremberg were recognized as principles of international law by
Resolution 95, unanimously adopted by the General Assembly of the United Nations. Then the
Convention for the Prevention and Punishment of Genocide was introduced. Article 1 of the
Convention on the Prevention and Punishment of the Crime of Genocide reads:
“The Contracting Parties confirm that genocide, whether committed in time of peace or in time of
war, is a crime under international law which they undertake to prevent and to punish.”xiii
Today there is wide support for the view that the customary rule against genocide, like the rule
outlawing acts of aggression, belongs to jus cogens (Cassese 2003: 98).
In addition, at the level of state responsibility it is now widely recognized that customary rules on
genocide impose erga omnes obligations on all member states of the international community,
granting the right to require that acts of genocide be discontinued (Cassese 2003: 98).
In the case of the Application of the Convention on the Prevention and Punishment of the Crime of
Genocide (Bosnia and Herzegovina v. Serbia and Montenegro), both parties referred to the concept of
obligations erga omnes.xiv The Court adopted the view that territorial restrictions do not apply to
rights and obligations that are erga omnes (Brownlie 2003: 568).
“The rights and obligations enshrined by the [Genocide] Convention are rights and obligations erga
omnes. The Court notes that the obligation each State thus has to prevent and to punish the crime of
genocide is not territorially limited by the Convention”.xv
The other important I.C.J. opinion related to genocide is the Advisory Opinion on the Genocide
Convention.xvi In November 1950, the General Assembly asked the Court to give an advisory opinion
on certain questions relating to reservations relating to the Genocide Convention (Ragazzi 2002: 98).
The I.C.J. remarked that the parties to the Genocide Convention were able to make reservations, but
not all kind of reservations indiscriminately (Ragazzi 2002: 100). The court further declared that the
principles underlying the Genocide Conventions are principles which are recognized by civilized
nations as binding on states, even without any conventional obligation.xvii
In the Barcelona Traction case the Court distinguished between two kinds of obligations while
addressing the issue of legal standing; whereas in the advisory opinion on the Genocide Convention,
the International Court was addressing an issue relating to the law of treaties (Ragazzi 2002: 102).
The universal opposability of the prohibition of genocide in the International Court’s advisory opinion
on the Genocide Convention presents clear elements of analogy with the dictum on obligations erga
omnes with respect to both its substance and terminology, and the advisory opinion may be regarded
as a “precedent” of the dictum on obligations erga omnes (Ragazzi 2002: 104).
c. Protection from slavery
International efforts to abolish slavery are more than two centuries old, leading to some eighty
conventions and documents on the subject (Ratner and Abrams 2001: 112-116).
While the dictum on obligation erga omnes in the Barcelona Traction case refers only to slavery, it
would be logical to assume that the prohibition extends to the slave trade, since if slavery is
prohibited then there cannot be any trade in slaves (Ragazzi 2002: 106). The emergence of the
prohibition of slavery and the slave trade can be well explained through the Enterprise and the
Lawrence cases (Ragazzi 2002: 107).
Enterprise, an American brig, was sailing in 1835 from the District of Columbia to South Carolina with
a large number of slaves on board. The ship entered a port in Bermuda due to some problems it
encountered on the journey. The captain was served a writ of habeas corpus requiring his
appearance before the court and the production of the slaves. The British commissioner noted that
when a vessel with a cargo of slaves travels out of a territory where a law protecting slavery prevails,
then the natural right of the slaves to freedom revives. Most of the slaves chose to remain on shore
since they were told that they were free. The United States then claimed compensation for the loss
suffered under the exclusive jurisdiction rule, which applied to the ship even if the vessel was forced
by unavoidable circumstances into a port of a foreign country. The umpire of the case, Mr. Bates,
noted that the Enterprise had entered the port in distress and therefore had an absolute right to
protection under the law of nations and the laws of hospitality and of compensation. He noted that it
would have been different if, at the time of the American claim, slavery could be regarded as
prohibited under international law, but it could not.
The Lawrence, an American brig on voyage from Cuba to Cabenda at the end of 1848, was forced
into the Freetown port in Sierra Leone. The Lawrence was considered to be a slave-trading vessel
because it was well equipped for the slave trade. The same umpire, Mr. Bates, 13 years after
the Enterprise case, decided that the owners of the Lawrence had no claim because at the time of
condemnation the African slave trade “was contrary to the laws of nations” and prohibited by all
civilized nations and by the laws of the United States (Ragazzi 2002: 112).
The reasoning employed by Mr. Bates drew the attention of the International Law Commission in its
work on the law of state responsibility. The question set forth was: Would a modern umpire decide in
the same way if the same case arose again? (Ragazzi 2002: 113) The answer is ‘no’, because today
slavery and the slave trade are prohibited not only by the law of “civilized nations”, but also by an
international rule that the international community as a whole regards as peremptory (jus cogens)
(Ragazzi 2002: 115). Slavery and the slave trade, once lawful practices in international society, have
gradually become unlawful and are now prohibited erga omnes . (Ragazzi 2002: 116). As a matter of
customary international law, the slave trade itself incurs criminal responsibility insofar as all states
would appear to have at least permissive jurisdiction to proscribe domestic law against it when
committed anywhere (Ratner and Abrams 2001: 26-46; 114).
d. Protection from racial discrimination
A convenient starting-point from which to examine this obligation is the principle that all human
beings are equal (Ragazzi 2002: 118). The Charter of the United Nations and the Universal
Declaration of Human Rights, as well as many other international and regional instruments and
municipal law constitutional provisions, provide for basic provisions on equality. Racial discrimination
is universally rejected as an inadmissible derogation from this principle of equality. Specific
provisions against racial discrimination can be found in general and regional treaties, including: the
International Covenant on Civil and Political Rights (in particular, the Preamble and Article 2); the
International Covenant on Economic, Social and Cultural Rights (in particular, Articles 2, 7 and 13);
as well as International Declarations such as the Final Act of Helsinki, Article 7, etc (Ragazzi 2002:
118).
A decisive step in the emergence of a general prohibition on racial discrimination was taken in the
1960s with the adoption of the United Nations Declaration on the Elimination of All Forms of Racial
Discrimination, and then again in a Convention with the same title. Article 1, paragraph 1 of this
Convention defines racial discrimination as follows:
“Any distinction, exclusion, restriction or preference based on race, color, descent, or nationality or
ethnic origin which has the purpose or effect of nullifying or impairing the recognition, enjoyment or
exercise, on an equal footing, of human rights and fundamental freedoms in the political, economic,
social, cultural or any other field of public life”.
Furthermore, even the I.C.J. in its advisory opinion on Namibia affirmed that South Africa, as the
former mandatory for South West Africa, was bound to respect human rights and fundamental
freedoms for all without racial discrimination, any contrary policy being a flagrant violation of the
purposes and principles of the Charter (Ragazzi 2002: 118).
Today there is overwhelming support for the view that the prohibition of racial discrimination is the
subject of an international custom and that this international custom belongs to jus cogens (Brownlie
2003: 489). Moreover, in his dissenting opinion on the case of South West Africa, Judge Tanaka
discussed the prohibition of racial discrimination and concluded that that the prohibition of racial
discrimination, which is in itself contrary to the principle of equality among human beings, is subject
to a prohibition opposable to all states (Ragazzi 2002: 130). Thus it shares the same peremptory
character as the rules giving rise to other obligations erga omnes listed by the International Court in
its judgment in the Barcelona Traction case.

Consequent development
After the pronouncement, references to the concept of obligations erga omnes have occurred both in
the judgments and advisory opinions rendered by the International Court, some of which will also be
addressed in the following pages.xviii In his dissenting opinion on the East Timorxix case (where
references to erga omnes obligations were also made), Judge Weeramantry listed the following cases
as those in which the International Court dealt with the question of obligations erga omnes: Northern
Cameroon, South West Africa, Nuclear Tests, Hostages, and Border and Transborder Armed Actions
(Nicaragua v. Honduras).
However, the most important evolution beyond the Barcelona Traction Case was the emergence of
the erga omnes obligation to respect the right to self-determination in the East Timor case and in the
advisory opinion on the Legal Consequences of the Construction of a Wall in the Occupied Palestinian
Territory, and the erga omnes obligation on the prohibition of torture recognized by the ICTY in the
Furundzija case.xx
In the East Timor case, the court dealt with the application of Portugal against Australia, according to
which Australia had by its conduct failed to observe the obligation to respect the duties and powers of
Portugal as the administering power and the right of the people to self- determination and related
rights.xxi Relevant to our case is the pronouncement in regard to the right of self-determination. In
the Court’s view, the right of peoples to self-determination is irreproachable, since it evolved from
the Charter and from United Nations practice, and has an erga omnes character. It is significant, it
should be noted, that the Court did not say “erga omnes obligations” but rather “erga
omnes character”.
However, paragraph 155 of the I.C.J. advisory opinion requested by the General Assembly on the
“Legal Consequences of the Construction of a Wall in Occupied Palestinian Territory” states that
obligations erga omnes are the obligation to respect the right to self-determination and certain
obligations under international humanitarian law.xxii Obviously, the court expressly states the “erga
omnes obligation” to respect the right to self-determination and also refers to the East Timor case as
a source on the same line of reasoning.xxiii
Since the right to self determination, according to some scholars, is a jus cogens norm (Brownlie
2003: 489) and since the I.C.J. has clearly referred to it as an erga omnes obligation, by drawing an
analogy with the other erga omnes obligations in the Barcelona Traction case deriving from jus
cogens norms, it is safe to regard the obligation to respect the right to self determination as an erga
omnes obligation.
Furthermore, in the Furundzija case, the International Criminal Tribunal for Yugoslavia in paragraph
151 held that:
“Furthermore, the prohibition of torture imposes upon States obligations erga omnes, that is,
obligations owed towards all the other members of the international community, each of which then
has a correlative right. In addition, the violation of such an obligation simultaneously constitutes a
breach of the correlative right of all members of the international community and gives rise to a
claim for compliance accruing to each and every member, which then has the right to insist on
fulfilment of the obligation or in any case to call for the breach to be discontinued.”
The Tribunal clearly refers to the prohibition of torture as an erga omnes obligation. Furthermore, the
prohibition of torture is also frequently referred to as a jus cogens norm (a norm of a peremptory
character) in international law. Again, by drawing analogy with the obligations specified in the
Barcelona case, it is safe to add the erga omnes obligation of the prohibition of torture to the group
of well established erga omnes obligations in international law to date.

Conclusion
The significance of erga omnes obligations as analysed above has been growing tremendously in
international law. The Court’s pronouncement on the Barcelona Traction case on obligations erga
omnes, while obiter dictum, is relevant and has been gaining increasing significance ever since.
The concept was not unknown and had evolved prior to the pronouncement. Moreover, the examples
enumerated by the court originated from peremptory norms of international law, for the character of
which there is overwhelming acceptance.
The concept of erga omnes obligations was used on numerous occasions in the pleadings of parties
and by the Court after it first appeared in the Barcelona Traction case.
Last but not least, the concept is further recognized and established by adding the respect of the
right to self-determination to the group of erga omnes obligations and the erga omnes obligation on
the prohibition of torture.
This paper presents strong arguments that erga omnes obligations have enabled the International
Court of Justice to make use of, as Sir Herch Lauterpacht said of the advisory opinion on the
Genocide Convention, “judicial legislation” (Shaw 2003: 24-26; 48-53) for obligations on states that
are by “their nature” the concern of the international community as a whole, on the character of
which a decision is given by the I.C.J. as the primary judicial body in international law.
The importance of the existence of erga omnes obligations lies in the attempt to go beyond reciprocal
relations among states based on consent.
Although the future of the concept and its further evolution is unclear due to its potential implications
for relations among states, there are strong arguments that the concept has established itself in
international law and that there exist prospects for its own future development as well as implications
for international law by doing so.