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 (1936–1939), the Spanish government refused to allow BTLP to transfer currency to pay bondholders the interest that they were due. In 1948, a group of bondholders sued in Spain to declare that BTLP had defaulted on the ground that it had failed to pay the interest. The Spanish court allowed the 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 to declare BTLP bankrupt. Of the shares, 88% were owned by Belgians. The Belgian government complained, insisting the Spanish government had not acted properly. It 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
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 have been direct shareholder rights only (such as to dividends) that were affected, and 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 do so, that 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 decided that a state is bound to give the same legal protection to foreign investments and nationals for natural or legal persons when it admits them to its territory.
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.
"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 modern 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.
The International Court of Justice, sometimes known as the World Court, is one of the six principal organs of the United Nations (UN). It settles disputes between states in accordance with international law and gives advisory opinions on international legal issues. The ICJ is the only international court that adjudicates general disputes between countries, with its rulings and opinions serving as primary sources of international law.
Sovereign immunity, or crown immunity, is a legal doctrine whereby a sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution, strictly speaking in modern texts in its own courts. A similar, stronger rule as regards foreign courts is named state immunity.
Universal jurisdiction is a legal principle that allows states or international organizations to claim criminal jurisdiction over an accused person regardless of where the alleged crime was committed, and regardless of the accused's nationality, country of residence, or any other relation to the prosecuting entity. Crimes prosecuted under universal jurisdiction are considered crimes against all, too serious to tolerate jurisdictional arbitrage.
United States v. Schooner Amistad, 40 U.S. 518 (1841), was a United States Supreme Court case resulting from the rebellion of Africans on board the Spanish schooner La Amistad in 1839. It was an unusual freedom suit that involved international diplomacy as well as United States law. The historian Samuel Eliot Morison described it in 1969 as the most important court case involving slavery before being eclipsed by that of Dred Scott in 1857.
In international law, extraterritoriality is the state of being exempted from the jurisdiction of local law, usually as the result of diplomatic negotiations.
Extraterritorial jurisdiction (ETJ) is the legal ability of a government to exercise authority beyond its normal boundaries.
Incorporation is the formation of a new corporation. The corporation may be a business, a nonprofit organization, sports club, or a local government of a new city or town.
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 can here be distinguished from a right based on contract, unenforceable except against the contracting party.
Barcelona Traction, Light and Power Company (BTLP) was a Canadian utility company that operated light and power utilities in Catalonia, Spain. It was incorporated on September 12, 1911 in Toronto, Ontario, Canada by Frederick Stark Pearson. The company was developed by Belgian-American engineer Dannie Heineman.
Immunity from prosecution is a doctrine of international law that allows an accused to avoid prosecution for criminal offences. Immunities are of two types. The first is functional immunity, or immunity ratione materiae. This is an immunity granted to people who perform certain functions of state. The second is personal immunity, or immunity ratione personae. This is an immunity granted to certain officials because of the office they hold, rather than in relation to the act they have committed.
Arbitration is a form of alternative dispute resolution (ADR) that resolves disputes outside the judiciary courts. The dispute will be decided by one or more persons, which renders the 'arbitration award'. An arbitration decision or award is legally binding on both sides and enforceable in the courts, unless all parties stipulate that the arbitration process and decision are non-binding.
International law, is the set of rules, norms, and standards generally recognized as binding between states. It establishes normative guidelines and a common conceptual framework for states across a broad range of domains, including war, diplomacy, economic relations, and human rights. Scholars distinguish between international legal institutions on the basis of their obligations, precision, and delegation.
In international law, diplomatic protection is a means for a state to take diplomatic and other action against another state on behalf of its national whose rights and interests have been injured by that state. Diplomatic protection, which has been confirmed in different cases of the Permanent Court of International Justice and the International Court of Justice, is a discretionary right of a state and may take any form that is not prohibited by international law. It can include consular action, negotiations with the other state, political and economic pressure, judicial or arbitral proceedings or other forms of peaceful dispute settlement.
In United States law, habeas corpus is a recourse challenging the reasons or conditions of a person's detention under color of law. The Guantanamo Bay detention camp is a United States military prison located within Guantanamo Bay Naval Base. A persistent standard of indefinite detention without trial and incidents of torture led the operations of the Guantanamo Bay detention camp to be challenged internationally as an affront to international human rights, and challenged domestically as a violation of the Due Process Clause of the Fifth and Fourteenth amendments of the United States Constitution, including the right of petition for habeas corpus. In 19 February 2002, Guantanamo detainees petitioned in federal court for a writ of habeas corpus to review the legality of their detention.
The Comprehensive Economic and Trade Agreement (CETA) is a free-trade agreement between Canada and the European Union and its member states. It has been provisionally applied, thus removing 98% of the preexisting tariffs between the two parts.
Investor-state dispute settlement (ISDS) or investment court system (ICS) is a system through which countries can be sued by foreign investors for certain state actions affecting foreign direct investment (FDI). This system most often takes the form of international arbitration between a foreign investor and the nation receiving the FDI.
Mauritius v. United Kingdom was an arbitration case concerning the status of the Chagos Archipelago and the attempts of the United Kingdom government to create a Marine Protected Area in British Indian Ocean Territory. The dispute was arbitrated by a arbitral tribunal constituted under Annex VII of the 1982 United Nations Convention on Law of the Sea. The Permanent Court of Arbitration was asked on the 31st of March 2011 to function as registry in the proceedings.
Philippines v. China, also known as the South China Sea Arbitration, was an arbitration case brought by the Republic of the Philippines against the People's Republic of China (PRC) under Annex VII of the United Nations Convention on the Law of the Sea concerning certain issues in the South China Sea, including the nine-dash line introduced by the Republic of China (Taiwan) since as early as 1947. A tribunal of arbitrators appointed the Permanent Court of Arbitration (PCA) as the registry for the proceedings.
Mónica Feria Tinta is a British and Peruvian leading barrister, a specialist in public international law, at the Bar of England & Wales. She practises from Twenty Essex, London. "The Lawyer" magazine featured her in its "Hot 100" 2020 list, as amongst “the most daring, innovative and creative lawyers” in the United Kingdom. She has also been shortlisted as "Barrister of the Year" by the Lawyer's Awards 2020, alongside Lord Pannick QC, one of the UK's highly regarded advocates. In 2000 Monica Feria-Tinta became the first and only Peruvian-born lawyer to receive the prestigious Diploma of The Hague Academy of International Law in history, the year Professor Pierre-Marie Dupuy delivered the General Course. Her litigation work led to the first international human rights court decision ordering the prosecution of a former Head of State for crimes under international law. In 2006 she was awarded the Inge Genefke International Award for her work as an international lawyer and in 2007 she became the youngest lawyer to be awarded the Gruber Justice Prize, for her contributions advancing the cause of justice as delivered through the legal system; an honour she received at a ceremony chaired by US Supreme Court Justice Ruth Bader Ginsburg in Washington DC.
Yukos shareholders v. Russia are several international court and arbitral cases seeking compensation from the government of Russia to the former shareholders of Yukos based on the claim that Russian courts were not acting in good faith in launching tax evasion criminal proceedings against Yukos, which led to the bankruptcy of the company.
References
This page is based on this Wikipedia article Text is available under the CC BY-SA 4.0 license; additional terms may apply. Images, videos and audio are available under their respective licenses.
