222

SEPARATE OPINION OF JUDGE MORELLI
[Translation]

I

SUBJECT OF THE DISPUTE AND OBJECT OF THE CLAIM

1, It will be advisable to begin by defining, on the one hand, the subject
of the dispute between the Belgian State and the Spanish State and, on
the other, the object of the claim submitted to the Court by Belgium in
its Application of 19 June 1962. This Application has been compared,
particularly from the Spanish side, with the other Application submitted
by Belgium on 23 September 1958, and the question has been raised as to
whether what is involved is the same claim or two different claims.

Having regard to the circumstances of the case, comparison of the
two Applications is useful only for the purpose of a precise determina-
tion of the object of the claim submitted by the 1962 Application, the
only one on which the Court had to give a decision in the present Judg-
ment. The proceedings instituted by the 1958 Application having been
closed pursuant to the discontinuance, there was no litispendance ob-
stacle to prevent Belgium from again submitting the same claim to the
Court. On the other hand there can be no doubt that Belgium was com-
pletely free to refer a different claim to the Court.

2. As regards the subject of the dispute between Belgium and Spain,
that dispute has from the outset been characterized, in the first place, by
the complaint put forward by Belgium on account of the measures taken
by the Spanish authorities in respect of Barcelona Traction and, in the
second place, by Belgium’s claim to reparation of some kind for the
damage sustained as a result of those measures, regarded as contrary to
international law. Now these elements (and the resulting dispute) re-
mained unchanged even after the discontinuance, which did not affect the
dispute in any way. It may also be said that the subject of the dispute
remained unchanged, for that subject can only be the product of the
component elements of the dispute.

3. Is it possible, despite the continuance of the same dispute, to con-
sider that in its 1962 Application Belgium referred to the Court a claim
having a different object from that submitted to the Court in 1958? I am
of the opinion that this question must be answered in the negative.

When a State is said to be exercising, as against another State, diplo-
matic protection of a particular person, to be protecting that person, to be

223
BARCELONA TRACTION (SEP. OP. MORELLI) 223

taking up his case, what is meant by these expressions is that a State is
exercising as against another State a right of its own conferred on it by
the international legal order, concerning a particular treatment due to the
person concerned. The national State of the person is entitled to demand
that that person be accorded the treatment required by the relevant rules
of international law and, should such treatment not be accorded, may
claim reparation in the form of either restitutio in integrum or compensa-
tion. International reparation is always owed to the State and not to the
private person, even in the case of compensation and despite the fact that
the amount of compensation must be determined on the basis of the
damage suffered by the private person.

These very elementary notions explain quite simply why in the present
case the two claims successively referred to the Court by Belgium, that
of 1958 and that of 1962, must be regarded as completely identical.

4. In the first as in the second Application Belgium asked the Court
to adjudge and declare that the Spanish State was under an obligation
towards Belgium to make a certain form of reparation for an alleged
international wrong. Naturally the international wrong, as such, could
have been done by the Spanish State only to the Belgian State and not to
the injured persons.

The wrong complained of by Belgium is described in the same way in
both Applications: according to both it consists of the same conduct on
the part of the Spanish authorities. The principal claim for reparation as
expressed in both Applications has restitutio in integrum as its object and
seeks the annulment by the Spanish State of the measures complained of
against it in the same way in both Applications. As regards the alternative
claim for compensation, it is perfectly true that in the 1962 Application
the amount of compensation was reduced to 88 per cent. of Barcelona
Traction’s net assets and that, in conformity with the new presentation of
the case, the justification for this alternative claim was changed, so that
reference is no longer made to the damage suffered by Barcelona Traction,
but to the damage suffered by the company’s Belgian shareholders.
However, neither the reduction of the amount claimed nor the alteration
of the argument in support of the claim for compensation in any way
changes the object of that claim as to its substance.

5. Between the two claims there is identity not only of petitum but also
of causa petendi.

In this case the causa petendi is the allegedly unlawful character where
Belgium is concerned of a particular course of conduct on the part of the
Spanish authorities composed, according to both Applications, of the
same acts and omissions. Thus the identical nature of the causa petendi is
not affected by the fact that there is, as between the two Applications, a
difference in the way in which they set out to prove that a right of

224
BARCELONA TRACTION (SEP. OP. MORELLI) 224

Belgium’s was indeed infringed by the measures complained of. The fact
that in the first Application Belgium complained of the damage suffered,
as a result of those measures, by a company in which there was asserted
to be a preponderance of Belgian interests, whereas in the second Appli-
cation Belgium complained of the damage indirectly suffered as a result
of the same measures by Belgian nationals in their capacity as share-
holders in the company, is merely a change of argument which has noth-
ing to do with the object of the claim.

Whenever, as in the present case, there is a claim for reparation on
account of the breach, through a particular course of conduct, of the
rules of international law concerning the treatment of foreigners, the
specifying of such and such a person as the one in respect of whom
diplomatic protection is exercised is not a matter which is at all relevant
to the object of the claim, for the claim has no other object than the
reparation sought by the State for itself. This is so of course only if the
description of the allegedly unlawful conduct of the other State remains
unchanged throughout, otherwise there would be a change of claim
because of a change in the causa petendi.

Matters are otherwise when diplomatic protection is exercised not in
the form of a claim for reparation on account of a wrong asserted to
have been done but, on the contrary, in the form of a claim to a particular
sort of treatment due by the other State to a private person. In this case
the specifying of the private person in respect of whom diplomatic pro-
tection is exercised is an integral part of the specification of the conduct
which the State exercising diplomatic protection calls for on the part of
the other State. Consequently, in the case of such a claim submitted in
judicial proceedings, the substitution of one protected person for another
entails a change in the object of the claim. In such a case there is indeed a
change of petitum.

6. The reasons why I am of the opinion that both claims submitted by
Belgium to the Court must be regarded as objectively identical are not the
same as those advanced by the Spanish Government in reaching the
same conclusion.

The Spanish Government appears to start from the idea that in order
to determine the object of the claim (or of the case, as it sometimes puts
it) regard must be had to the identity of the protected person. In the
argument and submissions of the Counter-Memorial it reaches, by the
use of a perhaps elliptic form of words, the point. of envisaging either
the Barcelona Traction Company or the Belgian shareholders as them-
selves constituting the possible ‘‘objer” of the Belgian “claim”. Thus in
that pleading a case involving company protection is contrasted with a
case involving shareholder protection.

Now if the idea is accepted that the protected person himself con-
stitutes the objet of the claim, or at least the decisive element for deter-
mining the object of the claim, it would have to be inferred as a logical
conclusion that the claim submitted by Belgium in 1962 is different from

225
BARCELONA TRACTION (SEP. OP. MORELLI) 225

that submitted to the Court in 1958, because Belgium now states that it
is protecting not Barcelona Traction but its Belgian shareholders.

However, according to the Spanish Government, this conclusion must
be rejected, because, it alleges, Belgium sought in its 1962 Application to
disguise, under the appearance of a case concerning Belgian shareholders
in Barcelona Traction, a case which really concerns the company as such.
This is purported to be proved by, on the one hand, the complaints
advanced (relating to the measures taken by the Spanish authorities in
respect of the company) and, on the other, the form of reparation
claimed (in the first place restitutio in integrum of the undertaking).

7. Iam of the opinion that, in submitting its new claim in the way it
considered most suitable, Belgium was only exercising a freedom which
—as the Court has observed in the Judgment—it undoubtedly possessed.
The claim had therefore to be examined and judged in accordance with
the content which Belgium had imparted to it. It would have been quite
arbitrary, on the pretext of bringing to light what was alleged to be hidden
behind a disguise, to substitute for the actual claim as formulated by
Belgium a different, purely hypothetical claim.

If, then, the 1962 claim is to be compared with that submitted to the
Court in 1958 (the only useful purpose to be served thereby, as already
said, being the better to define the content of the new claim), both claims
must be regarded as objectively identical. But the reason for this is not,
as alleged by the Spanish Government, that the new claim also concerns,
despite its outward appearance, diplomatic protection of the Barcelona
Traction Company as such, but rather that in both claims there is identity
of petitum (the reparation sought) and of causa petendi (the allegedly un-
lawful conduct of the Spanish authorities).

This having been established, it must however be observed that as
between the two claims there is a difference in respect of the way in which
Belgium seeks to prove that the measures complained of constitute a
wrong done by Spain to Belgium. .In its endeavour to prove this (and
hence its right to reparation) Belgium ceased relying on the contention of
damage suffered by a company in which there were allegedly prepon-
derant Belgian interests and, on the contrary, based its claim on the
purported fact that the measures complained of, although taken in
respect of the company, indirectly injured the Belgian shareholders in it.
But this new argument could not be rejected out of hand on the ground
that it was only a means of disguising a different claim. It was the actual
argument put forward by Belgium in its 1962 Application which had to be
considered on its own merits in order to judge whether or not it was well-
founded.

226
BARCELONA TRACTION (SEP. OP. MORELLI) 226
i

THE ORDER OF THE QUESTIONS

1. Belgium claims reparation from Spain for the measures taken by
the Spanish authorities in respect of Barcelona Traction, which are con-
sidered by Belgium as internationally unlawful. The unlawfulness here
concerned must naturally be unlawfulness vis-à-vis Belgium resulting
from the infringement of a right pertaining to Belgium, or in other words
from the breach by Spain of an obligation it owed to Belgium. For the
international rules concerning the treatment of foreigners, although they
are rules of general international law and, as such, are binding on every
State with regard to every other State, take concrete form in the shape of
bilateral legal relationships, so that a State’s obligation to accord the
required treatment to a particular person exists solely towards the national
State of that person and not towards other States.

In order to prove that it was indeed a right pertaining to Belgium which
was infringed by the measures complained of, the Belgian Government
contends that those measures, although taken in respect of a Canadian
company, indirectly injured Belgian nationals as shareholders in the
company. The Spanish Government challenges this argument from several
standpoints, thus posing, inter alia, a problem as to Belgium’s capacity.

2. It is necessary to be clear as to the sense in which it is possible in
this connection properly to speak of capacity; in particular because the
Parties have used terms which are open to misunderstanding: “qualité
pour agir” or ‘‘jus standi”. These terms would appear to indicate a form
of procedural capacity relating to the right to apply to court. But that
right is not now in issue, since the 1964 Judgment upheld the Court’s
jurisdiction in the present case and thereby Belgium’s corresponding
power to seise the Court, that is to say, Belgium’s power to institute
proceedings.

At the present stage it is possible to speak of capacity only in the sense
of substantive and not procedural capacity, that is to say in the sense of
the vesting in one State rather than in another of the substantive right
invoked in the case. The hypothesis of the existence of a certain obligation
on the part of a given State (the respondent State).is assumed, and the
question is which State possesses the corresponding hypothetical right;
in particular whether or not that right pertains to the applicant State.

As I said in my dissenting opinion attached to the Judgment on the
Preliminary Objections (/.C./. Reports 1964, pp. 111 f.), the question of
capacity, understood in this way, is one concerning a substantive right
with regard to the actual merits of the case. A judgment declaring that
the applicant State is devoid of capacity in respect of the right of diplo-

227
BARCELONA TRACTION (SEP. OP. MORELLI) 227

matic protection which it invokes is not a judgment declaring the claim
inadmissible, but one dismissing the claim on the merits. A judgment of
this kind has the effect of res judicata in the material sense.

3. In my dissenting opinion (pp. 112 ff.; see also pp. 98 ff.) I also ex-
plained that the question of capacity, as a question concerning the pos-
session by the applicant State of the substantive right invoked by it as
the basis for its claim, does not have any preliminary character, in the
sense that there is no logical necessity to resolve the question of capacity
before going on to examine the other questions that likewise concern the
merits.

It follows that it rests with the judge to determine the most suitable
order, taking convenience and economy as his criteria. It is open to him
to begin with an examination of the question of capacity, assuming as a
hypothesis the existence of the obligation relied on as the basis for the
claim. But he may also find it simpler, without going into the question of
capacity at all, to find that the claim should be dismissed on the ground
that the obligation asserted by the Applicant is not one which exists on
the part of the Respondent vis-a-vis any State at all. For this it might be
sufficient to resolve a question of pure law, either by showing the non-
existence of the legal rule invoked as the basis for the claim, or by ascer-
taining its true content !.

4. Now the Spanish Government opposes the Belgian claim by raising,
among others, questions which are undoubtedly questions of capacity.
For it denies the existence of major Belgian shareholdings in Barcelona
Traction by disputing the possibility of regarding certain persons, in re-
spect of whom Belgium claims to exercise diplomatic protection, as
Belgian shareholders in the company; and it does this from two different
standpoints. In the first place the Spanish Government denies that certain
persons described by Belgium as Belgian nationals can really be regarded
and treated as Belgian. In the second place the Spanish Government
denies that certain persons protected by Belgium can be regarded as
shareholders in Barcelona Traction.

There is thus raised from two different standpoints a problem which is
undoubtedly one of capacity, relating as such to the direction of the
obligation assumed to exist on the part of Spain. In the first instance the
question is whether the right corresponding to the hypothetical obligation
pertains to Belgium or to some other State which must be considered to
be the national State of the person concerned. Similarly, in the second

1 See, in my separate opinion on the cases concerning South West Africa, Second
Phase, I.C.J. Reports 1966, pp. 65 f., the observations as to the relationship between
the question of capacity (standing) and that of the existence of obligation, and as to
the hypothetical nature of the former question when raised before the obligation
has been shown to exist.

228
BARCELONA TRACTION (SEP. OP. MORELLI) 228

instance, the question is whether the right of diplomatic protection per-
tains to Belgium or to some other State as the putative national State of
the real shareholder. In short, it is what is known as the nationality of
the claim which is the issue in both instances.

5. As will have been noted, all this assumes the existence with regard to
the treatment of Barcelona Traction of an obligation on the part of
Spain toward the national State or States of the shareholders. But the
existence of any such obligation is denied in another argument put
forward by the Spanish Government. That argument does not raise a
problem of capacity at all; it raises no problem concerning the nationality
of the claim. It raises on the contrary a problem concerning the very
existence of the rule of law invoked by Belgium as the basis for its claim;
and it is possible to pose this problem even if it is assumed that the pro-
tected persons really are Barcelona Traction shareholders and also
Belgian nationals.

It is not possible to maintain that this issue is none the less one
concerning the direction of the obligation (hence one of capacity
in relation to the corresponding right) on the ground that regard
must also be had to the right of diplomatic protection pertaining
to Canada as the national State of the company, and therefore seek
to resolve the question of whether it is not Canada rather than
Belgium which has the capacity to claim reparation. This is so because
Canada’s right is derived from a rule different from that invoked by
Belgium, the latter concerning not diplomatic protection of the company
as such, but diplomatic protection of the shareholders in connection with
measures taken in respect of the company. If it is decided that no such rule
exists, no problem of capacity arises at all.

6. The point is that any question of capacity can only be raised in rela-
tion to a rule of law which is either undisputed or assumed to exist. The
question is then as follows: which is the entity, as between the various
entities to which that rule is directed, on which, in the actual case, that
rule confers the right invoked? More particularly, is it in fact on the Ap-
plicant that such a right is conferred? If the very existence of the rule is
negated, any possibility of raising a problem of capacity is excluded.

Consequently, to say that there is no rule which authorizes diplomatic
protection of shareholders on account of measures taken in respect of the
company is to exclude the existence of any obligation of Spain in this con-
nection, vis-a-vis any other States. Belgium’s right is thereby denied, not
because such a right might hypothetically belong to a State other than
Belgium (in other words, not for lack of capacity on the part of Belgium),
but rather because no such right can be invoked by any State, since no
rule exists from which it could derive.

229
BARCELONA TRACTION (SEP. OP. MORELLI) 229

On the other hand, the other question, that of the nationality of the
claim, does concern capacity. The possible existence is postulated of a
rule authorizing each State to exercise diplomatic protection of its nation-
als holding shares in a company, in respect of the treatment given to the
company by another State; and the question is whether, on the basis of
this hypothetical rule, it is to Belgium that the right to protect certain
private persons would belong, on the ground of their being, according to
Belgium’s assertion, both Belgian nationals and shareholders in Barcelona
Traction. Thus, as will be seen, a true problem of capacity is raised, the
problem, in other words, of the attribution of the right deriving from a
certain rule which is assumed to exist. A negative answer to this question
would also have brought about the dismissal of the Belgian claim on the
merits.

7. Nevertheless, the fact that this problem is one of capacity does not
mean that it ought to have been examined and settled in the affirmative
before the Court had any possibility of going on to examine the other
problem, that of the existence of an obligation owed by Spain to the
national States of the shareholders in Barcelona Traction with regard to
the treatment of that company. I said above that the problem of capacity
also concerned the merits and that there was, on that account, no logical
necessity to solve it before the others likewise concerning the merits. The
order to be followed could only be dictated by considerations of economy.

As it happens, the Court gave priority to examining the problem of pure
international law relative to the diplomatic protection of shareholders in
a company by their national State, in respect of measures taken vis-a-vis
the company. This choice appeared in itself the most apt; that it was so
was subsequently borne out by the result to which it led.

For, having settled that problem in the negative—having, in other
words, denied the existence, as regards the treatment accorded by a State
to a given company, of any obligation owed by that State to the national
States of the shareholders—, the Court was thereby enabled to leave aside
any problem of capacity, that is to say, the problem as to whether the
persons that Belgium claims to protect are or are not shareholders in the
company and at the same time Belgian nationals. In that way many very
delicate problems of fact and of municipal law, the solution of which was
not necessary for the disposal of the case, have been avoided.

8. And so the Court has been able to bestow a very simple logical
structure on its decision, which in substance consists in negating the
major premise of the syllogism or, in other words, in denying the existence
of the rule relied upon by Belgium. In this way the Court has given a
final, concrete solution to the fundamental problem at issue between the
Parties, which lay in the very question whether the rule of international
law invoked by Belgium existed or not. The negative answer to this
question implies that none of the national States of the shareholders,

230
BARCELONA TRACTION (SEP. OP. MORELLI) 230

irrespective of the quantity of shares possessed by its nationals, could
exercise diplomatic protection. In consequence, the Belgian claim had to
be dismissed on that basis, even if it had been proved that the whole or
nearly the whole of the shares in Barcelona Traction were in the hands of
Belgian nationals.

If, on the other hand, the Court had begun by examining the problem
of capacity, its reasoning and the logical structure of its decision would
have been, at all events, much more complex. As I have already said, any
question of capacity can only be raised in relation to a given rule, which,
if it is disputed, as in the present case, must be supposed to exist for the
purposes of the argument. Thus the Court would have set out from the
hypothesis that a certain rule, constituting the major premise of the
syllogism, existed ; assuming that premise to be true, the Court would have
examined and settled the various questions of fact which went to make up
the minor premise (it being borne in mind that, in the eyes of an inter-
national tribunal, questions of municipal law also are questions of fact).

Now the problem of capacity raised in this hypothetical way would have
had to be settled either in the affirmative or in the negative.

In the first event, once the Court had decided that Belgium would have
capacity on the basis of a rule of law supposed for the sake of argument to
exist, it would have been obliged to examine and solve the problem as to
whether that rule really existed or not: that is to say, the very problem to
which the Court did in fact give priority and the negative solution of
which has been sufficient in itself to dispose of the case without there
being any need to tackle the highly complex question of capacity.

It was only in the event of replying in the negative to the question of
capacity that the Court could, on that basis, have dismissed the Belgian
claim without troubling to see whether the hypothesis on which it had
been based corresponded or not to the real state of affairs in international
law. But the hypothetical character of the reasoning would have ap-
peared somewhat strange. Faced with a very important problem of inter-
national law, one basic to the respective arguments of the Parties, the
Court would have evaded the task of solving it because, instead of setting
about that problem, it had started from a mere hypothesis, that of the
solution of the same problem in the affirmative.

9. It must further be observed that the solution either way of a prob-
lem of capacity is dependent on the particular rule in relation to which the
problem is raised. If for example the postulate consisted of a hypothetical
rule whereby each State had the right to protect its nationals holding
shares in a company, irrespective of the quantity of shares possessed by
those nationals, there would be no difficulty in the present case in finding
that Belgium had capacity, considering that Spain does not dispute the
existence in the hands of Belgian nationals of a certain number of shares
in Barcelona Traction, whether that number be large or small. The

231
BARCELONA TRACTION (SEP. OP. MORELLI) 231

question of capacity would, on the other hand, appear very delicate if, in
accordance with the Belgian position, one were to posit the existence of a
different and, in a sense, more restricted rule, one bestowing a monopoly
of the diplomatic protection of the shareholders in a company affected by
a certain measure on the State whose nationals possessed the largest pro-
portion of the shares, or of a rule confining diplomatic protection to the
various States whose nationals possessed a substantial quantity of shares.

Furthermore, the very usefulness of any preliminary, hypothetical
solution of the capacity problem depends on the choice of the assumed
rule in relation to which the problem is raised. It need only in this con-
nection be pointed out, for example, that an affirmative solution of the
capacity problem would be absolutely useless unless the rule whose
existence was assumed for the sake of argument coincided with a rule
subsequently shown to exist.

III
THE PROBLEM OF THE DIPLOMATIC PROTECTION OF SHAREHOLDERS

1. I shall now turn to the problem of whether a State has the right to
exercise diplomatic protection over those of its nationals who, as share-
holders in a company of a different nationality, have suffered damage on
account of measures taken with regard to the company by a foreign
State. To solve this problem correctly it is in my opinion necessary to
begin with a few very general observations on the rules of international
law governing the treatment of foreigners.

These rules are invariably concerned to ensure the protection of certain
interests proper to individuals or collective entities. These interests,
although contemplated by rules of international law, remain simple
interests for the purposes of the international legal order. For it would be
contrary to the present structure of the international community and of
the international legal order to consider that the latter might either bestow
or simply predicate rights upon individuals or upon any collective
entities other than those, such as States, which qualify as subjects of inter-
national law. It is only within the State legal order that the interests of
foreign nationals may acquire protection by means of the attribution to
the latter either of rights or of other personal legal situations in their
favour (faculties, legal powers or expectations).

However, the fact that this possibility is open to the legal order of the
State may in one way or another be taken into account in such rules of
international law as are framed with a view to imposing certain obli-
gations upon States in the treatment of foreigners.

232
BARCELONA TRACTION (SEP. OP. MORELLI) 232

The rules of international law in this matter, although they all seek
to protect interests, as such, of individuals or collective entities, may
employ different means to attain their ends and refer in different ways to
the systems of municipal law.

2. In the first place there are rules of international law concerning the
treatment of foreigners which directly specify the interests they seek to
protect, regardless of the prevailing attitude of the municipal legal order in
that respect. The interests contemplated by the rules in this category are
always interests personal to individuals and never interests of collective
entities. Moreover, the rules in question always concern those interests of
individual foreign nationals which are of fundamental importance, such
as their interest in life or liberty, and never interests of a purely economic
nature.

In such cases the international rule refers to the legal order of the
State solely in the sense that it is addressed to the State with a view to
laying upon it an obligation to observe a given line of conduct in its own
internal legal order; which conduct may consist in conferring, within that
legal order, certain rights or other personal legal situations on foreign
nationals.

The international rules in this category are somewhat analogous to the
rules of international law concerning the protection of human rights. For
the latter rules also are concerned not with the protection of such rights as
may already have been conferred by the internal legal system but with the
actual predication, binding upon States, of rights within the municipal
order. While it is true that, in this context, it is to human “‘rights’’ that
reference is made as being the subject of the protection sought by the rule
of international law, the term is here employed in the sense of natural
rights. In this case also international law envisages the protection of
certain individual interests and not of rights already resulting from any
positive legal order.

3. Those international rules regarding the treatment of foreigners
which belong to the category I have just described may be contrasted,
having regard to their structure, with the rules in a second category.
These have a much wider area of applicability, because, on the one hand
they concern not only foreign individuals but also foreign collective,
entities, while they are, on the other hand, for that very reason, designed
not to protect a small number of interests of fundamental importance to
the human person but rather to protect other, more numerous interests
which more often than not possess a purely economic character.

Like the rules in the first category, those in the second are also intended
for the protection of interests, to which end they enjoin upon the States
to which they are directed a certain line of conduct which they place those
States under an obligation to observe in their municipal legal orders. But

233
BARCELONA TRACTION (SEP. OP. MORELLI) 233

before referring in this way to the internal legal order, the international
rules of which I now speak refer to that same legal order for the purpose
of performing a preliminary task, that of determining what interests are
to be the subject of the protection envisaged. This is so in that the inter-
national rule postulates a certain attitude on the part of the State legal
order, inasmuch as it has regard solely to interests which, within that
legal order, have already received some degree of protection through the
attribution of rights or other advantageous personal legal situations
(faculties, legal powers or expectations): an attitude on the part of the
State legal order which in itself is not obligatory in international law.

It is on the hypothesis that this state of affairs has arisen in the municipal
legal order that the international rule lays upon the State the obligation
to observe a certain line of conduct with regard to the interests in ques-
tion: with regard, one might thenceforward say, to the rights whereby the
interests in question stand protected in the municipal legal order. I should
explain that it is only for the sake of brevity that in this connection I speak
of rights, because instead of a right some other advantageous legal
situation may be involved: a faculty, legal power or expectation.

The conduct which international law renders incumbent upon a State
with regard to the rights which the same State confers on foreign nationals
within its own municipal order consists, in the first place, in the judicial
protection of those rights. Any State which, having attributed certain
rights to foreign nationals, prevents them from gaining access to the
courts for the purpose of asserting those rights is guilty, in international
law, of a denial of justice. In addition, international law lays upon a
State, within certain limits and on certain conditions, the obligation to
respect, in the conduct of its administrative or even legislative organs, the
rights which the municipal legal order of the same State confers on foreign
nationals. This is what is known as respecting the acquired rights of
foreigners.

As will be observed, the fact that the rules of international law in
question envisage solely such interests of foreigners as already constitute
rights in the municipal order is but the necessary consequence of the very
content of the obligations imposed by those rules; obligations which,
precisely, presuppose rights conferred on foreigners by the legal order
of the State in question.

Both the obligation to afford rights judicial protection and the obliga-
tion to respect them apply, then, to rights as conferred by the municipal
legal order. This provides an indirect way of determining what interests
the international rule is intended to protect, given that this rule only
protects the interests of foreign individuals or foreign collective entities if
those interests already enjoy a certain degree of protection within the
municipal legal system. This means that the international rule refers to
the municipal legal order in that, to impose upon a State a particular

234
BARCELONA TRACTION (SEP. OP. MORELLI) 234

obligation, it presupposes a certain freely adopted attitude on the part of
the legal order of that State.

4, There is nothing abnormal in this reference of an international rule
to the law of a given State. It is wholly untenable to object, as the Belgian
Government has done, that in this way the international responsibility of
the State is made to depend upon categories of municipal law, thus
enabling a State to set up the provisions of its own legal order as a
means of evading the international consequences of its acts. In reality,
no subordination of international responsibility, as such, to the provisions
of municipal law is involved; the point is rather that the very existence of
the international obligation depends on a state of affairs created in
municipal law, though this is so not by virtue of municipal law but, on the
contrary, by virtue of the international rule itself, which to that end refers
to the law of the State.

Nor is it possible to invoke against this, as has also been done, the
alleged basic principle of the supremacy of international law. Despite
what the Belgian Government has asserted to the contrary, this principle
has never been affirmed, as such, by the International Court and, so far
as the Permanent Court is concerned, it stands in clear contradiction to
the idea, by which that Court was always guided, of the separateness of
international and municipal law.

Quite another principle underlay the Permanent Court’s statement to
the effect that municipal laws were simply facts from the standpoint of
international law (P.C.I.J., Series À, No. 7, p. 19). This was a reference
not to any supposed principle of the supremacy of international law but
rather to the exclusive character of the international legal order, as of
any non-derivative legal system. But this principle does not by any means
rule out the possibility that a rule of international law may refer to
‘municipal law in some way or another: for example, for the very purpose
of rendering an obligation laid upon a State subject to a certain point of
fact within the province of that State’s municipal law. Very clear illus-
trations of that possibility are to be found in treaties dealing with extradi-
tion or with the recognition of foreign judgments.

5. In the present instance, the interests concerned are either interests
of collective entities, or more precisely companies, such as Barcelona
Traction and the companies holding shares in it, or interests of individ-
uals, such as the individual shareholders in Barcelona Traction. But,
either way, we are dealing with interests of a purely economic nature.

It follows that the international rules which may be invoked for the
sake of protecting those interests are exclusively rules entering into the
second of the two categories I have described. But, as has been seen, these
rules postulate that, if those same interests are to be protected, certain
rights must already have been bestowed by the municipal legal order. It is
on the hypothesis that the municipal order has adopted this attitude, op-

235
BARCELONA TRACTION (SEP. OP. MORELLI) 235

tional in international law, that the international rule imposes certain
obligations on the State.

From the considerations I have set forth it needs must follow that, in
terms of general international law at least, a State is free even to deny
companies—or certain companies—legal personality. For it is only in
respect of individuals that the State is under an obligation in international
law to recognize personality, or in other words to confer a set of rights.
The rights in question are precisely those which the State, by virtue of the
rules of international law entering into the first category, has an obliga-
tion to confer upon individuals so as to protect certain of their interests
which are fundamental in nature. It is only in the event that certain rights
and, consequently, legal personality are conferred on a company within
the municipal order that the State is bound by certain international
obligations with regard to the judicial protection of those rights and
respect for the same.

Where the municipal legal order denies a company legal personality,
this signifies that the municipal order in question considers the corporate
property as the subject-matter of rights pertaining to the members. In
that event it is in relation to these rights, freely conferred on the members
by the municipal order, that there is incumbent upon the State an inter-
national obligation of protection and respect.

If, on the other hand, the municipal legal order allows the company
legal personality, it can but treat the members’ rights accordingly. Con-
sistently with the attribution of the corporate property to the company,
considered as a juristic person, the members will in this case enjoy no more
than limited rights, the subject-matter of which will not be the corporate
property. Needless to say, in this case too, the rights accorded to the
members, whatever they may be, enjoy the international protection which
is appropriate to them.

In other words, there is on the one hand a set of rights conferred by the
municipal order on the company and, on the other hand, within the same
legal order, another, quite distinct set of rights conferred on the members.
Each set of rights is entitled to its own, distinct international protection.

As has been seen, both these protections afforded by the international
legal order presuppose a certain attitude on the part of municipal law,
namely a certain manner in which it deals with the rights of the company,
on the one hand, and those of the members on the other. In the present
case, the State legal order to be considered is the Spanish legal system,
that is to say the legal order of the State whose international obligations
have to be determined.

So far as the members of the company are concerned, to say that the
international legal order affords protection only to their rights, such as
recognized by the municipal order of the State whose international obliga-
tion is in question, is not in any way to deny that the subject of inter-
national protection is, in the upshot, in this case as always, interests.

236
BARCELONA TRACTION (SEP. OP. MORELLI) 236

The reference to the legal order of the State and to the rights which it
confers constitutes merely the means whereby international law estab-
lishes what interests it is concerned to protect. International law protects,
by laying certain obligations upon a State, solely such interests of the
members as already enjoy protection within the municipal legal order of
that State on account of the attribution to those members of rights or
other personal legal situations.

If that condition is not satisfied or if, in other words, what is at stake
is interests which do not, within the municipal order, constitute rights
conferred on the members, those interests are not subject to any specific
protection in international law. They may however be interests of the
members which coincide with interests of the company. In that event, if
the interests of the company are legally protected within the municipal
order, it is to these interests (constituting rights of the company) that the
international obligations apply.

6. The application to the present case of the principles I have just
mentioned does not occasion any difficulty.

There is no disagreement between the Parties with regard to the attitude
of the Spanish municipal order so far as concerns the way in which it
deals with the legal situation of a limited-liability company, on the one
hand, and the rights of its shareholders on the other. No-one denies that
Barcelona Traction, like any such company, enjoyed legal personality in
the legal order of Spain and that it had consequently to be regarded as
the owner of the rights over the corporate property. Accordingly, the
shareholders in Barcelona Traction were not recognized to possess any
rights over the corporate property; they enjoyed only those rights proper
to shareholders in a limited-liability company, such as the right to divi-
dend and certain rights relating to the conduct of the company’s business.

However, Belgium does not complain of any damage that might have
been suffered by Barcelona Traction shareholders in respect of their own
rights as shareholders on account of the measures taken by the Spanish
authorities. On the contrary, Belgium complains of the fact that those
measures, although (or rather, precisely because) they were taken vis-a-vis
the company, were detrimental to the interests of the shareholders. But
these were simple interests, not interests constituting rights in the Spanish
legal order. |

It follows, in accordance with the principles I have stated, that, so far
as such shareholders’ interests are concerned, Spain was under no obliga-
tion in international law; which rules out any international responsibility
on the part of Spain for such damage as the measures taken by its
authorities may have caused to the interests of foreign shareholders. If
simple interests are (as they must be) disregarded, and only rights con-
sidered, such as they arise out of the Spanish legal order, it is only to the
rights of the company that the measures of which complaint is made
could have caused harm. But damage caused in respect of the rights of
Barcelona Traction, a Canadian company, could, if internationally un-

237
BARCELONA TRACTION (SEP. OP. MORELLI) 237

lawful, have constituted an international wrong only vis-a-vis Canada,
not vis-a-vis Belgium or any other State. In this connection it can properly
be said that it is the Canadian State alone which, on account of the
nationality of the injured private party, has capacity to claim reparation.

7. Mention must now be made of another way in which the Parties put
the question of whether the measures taken by the Spanish authorities
were of an unlawful nature vis-4-vis Belgium. In place of reference to the
distinction between rights and simple interests, a distinction was drawn
between direct damage and indirect damage, and it was asked whether
the measures complained of, although taken with respect to Barcelona
Traction and, as such, causing it direct damage, constituted an inter-
nationally unlawful act vis-a-vis Belgium because they also, albeit in-
directly, caused damage to the Belgian shareholders in Barcelona Traction.

On the basis of what I have said with regard to the different attitudes
evinced by the international rules on the treatment of foreigners with
respect to simple interests on the one hand and rights on the other, I find
that the distinction between direct damage and indirect damage serves no
useful purpose.

For, to consider that very limited category of international rules on the
treatment of foreigners which is concerned to protect certain interests
independently of whether or not they constitute rights in the municipal
legal order, an injury to such an interest is, of itself, an internationally
unlawful act. No importance could be attached in this connection to the
relationship in which such an injury might stand towards an injury to
another interest, more especially in the sense of its having to be regarded
as the latter’s indirect consequence.

Similarly, to consider the other category of international rules, con-
cerned to protect, solely rights recognized by the municipal legal order,
what matters in a given instance is of course to establish whether or not
there was an injury in infringement of such a right. If this is not the case
or if, that is to say, there was only an injury to a simple interest, such
injury will not constitute an international wrong even if it stands in some
relationship to an injury in respect of a right which might, as such, con-
stitute an unlawful act vis-a-vis the national State of the injured party.

It would appear, moreover, that the distinction between direct damage
and indirect damage is, in substance, merely a different way of stating the
distinction between injury in respect of a right and injury to a simple
interest. For, supposing a measure to have been taken with respect to a
private party who, as a result of that measure, has directly suffered
damage, if it be enquired, in a concrete case, who is the private party with
respect to whom the measure can be regarded as having been taken, the
only way of answering this question is to consider the legal effects of the
measure. A measure can only be regarded as having been taken with
respect to a particular party if it produces legal effects for that party; if,

238
BARCELONA TRACTION (SEP. OP. MORELLI) 238

in other words, it involves the rights of that party. All that other parties
could suffer from such a measure would be consequences affecting their
simple interests. To term such consequences indirect is in fact merely an
imprecise way of describing the injury of a particular party’s simple
interest, an injury standing in a certain relationship to the injury suffered
by another party in respect of his right.

8. From this I conclude that an international obligation on the part of
Spain with respect to the treatment of Barcelona Traction and, in con-
sequence, international responsibility on the part of Spain for any
breach of that obligation, could only be held to exist vis-à-vis Canada,
the company’s national State. Neither an obligation nor responsibility on
the part of Spain could be held to exist vis-à-vis Belgium, or vis-à-vis any
other State of which Barcelona Traction shareholders might be nationals.

The absence of any responsibility on the part of Spain vis-a-vis Belgium
in respect of the measures taken by the Spanish authorities with regard
to Barcelona Traction is simply a consequence of the absence of any
obligation owed in this respect by Spain to Belgium; this, in its turn,
results from the fact that there is no rule of international law from which
such an obligation might be derived.

In sum, therefore, Belgium has no possibility of exercising diplomatic
protection with respect to the Belgian shareholders in Barcelona Traction,
since, as has already been said, a State which exercises diplomatic pro-
tection with respect to one of its nationals is merely demanding for such
national the treatment required by the international rules governing the
matter or else claiming reparation for the violation of those rules.

9. No importance can be attached in this connection to the facts that
the Belgian shareholders in Barcelona Traction might have benefited
indirectly, so far as their own interests were concerned, from the exercise
by Canada of diplomatic protection of the company and that such pro-
tection was not pursued.

We have seen that the interests of shareholders, as simple interests not
constituting rights within the municipal legal order, enjoy no protection
under the international rules governing the treatment of foreigners. This
obviously does not rule out the possibility that those interests might
benefit indirectly from the protection which those same rules afford the
company’s interests in so far as these constitute rights under the municipal
legal order. It is therefore possible that the exercise of diplomatic pro-
tection of the company by its national State may eventually lead, through
the retrieval of the interests of the company, to the indirect retrieval of
the shareholders’ interests too.

But this in no way influences the attitude evinced toward the interests
of shareholders by the international rules governing the treatment of
foreigners. The mere possibility of an indirect protection of shareholders’
interests, in the sense indicated above, does not warrant any inference

239
BARCELONA TRACTION (SEP. OP. MORELLI) 239

that whenever such indirect protection is lacking it must be replaced by
direct protection. There could be no question of such direct protection
unless a State owed an obligation and happened to have incurred respon-
sibility toward the national State of the shareholders. And I cannot see
where any basis for such an obligation or such responsibility is to be
found.

Actually the very idea of the diplomatic protection of shareholders
by their national State, it being conceived as a second line of protection
that may be brought into play if protection of the company by its own
national State should be lacking, is strictly bound up with a way of
thinking that misconceives the very basis of diplomatic protection in
general, regarding it not as a State’s mere exercise of a right bestowed
upon it by the rules of international law concerning the treatment of
foreigners, but rather as a procedure entirely independent of the existence
of a right.

Only by taking such a standpoint could it be possible, where the
treatment afforded a company is concerned, to envisage diplomatic pro-
tection of the shareholders by their national State as a second line of
protection, that is to say as a protection subordinated to the condition
that diplomatic protection is not exercised, or not pursued, by the national
State of the company. This view, on the contrary, would be utterly in-
conceivable on the correct premise that an act of diplomatic protection is
simply the exercise of an international right, and is consequently con-
ditional on the existence of such a right.

10. Neither is it possible, with a view to demonstrating the admissi-
bility of a second-line diplomatic protection of shareholders in the event
that diplomatic protection of the company is lacking, to rely on a sup-
posed analogy or rather parallel between that alleged second-line diplo-
matic protection and such possibility as may be afforded shareholders in
municipal law of taking action against the organs of the company, or in
their stead, should they remain inactive.

It is the very idea behind such reasoning which, in my opinion, is
unacceptable: the idea that international law must necessarily offer some
kind of protection to shareholders’ interests. There is nothing necessary
about such protection; it exists only within the limits and on the con-
ditions which are fixed by international law itself. Furthermore the
requirements which municipal law is concerned to satisfy are not neces-
sarily requirements that ought also to be the concern of international law.

Needless to say, if the municipal legal order does, in the event of the
inactivity of the organs of a company, confer certain rights on the share-
holders, those rights, like any other rights peculiar to shareholders, will
as such enjoy the protection which international law affords in general
to rights conferred on individuals by a municipal legal order.

240
BARCELONA TRACTION (SEP. OP. MORELLI) 240

11. The lack, in a given case, of any exercise of diplomatic protection
in respect of the company might result from the actual impossibility, in
that case, of exercising such protection.

As an example of a case where it would be impossible for the national
State of the company to exercise diplomatic protection in its respect, the
hypothesis has been adduced of the company’s being dissolved, or being
in a state of legal or simply material incapacity to act.

With regard to the extreme case, that of dissolution, this must naturally
be taken to mean a dissolution which took place after the measure com-
plained of, whether as a result or independently of that measure. For if
the company were already dissolved at the time when the measure com-
plained of was taken, it would obviously be impossible to speak of a
measure taken with regard to the company; one would on the contrary
have to speak of a measure taken directly with regard to the members of
the company, which would ipso facto authorize the national States of the
members to exercise diplomatic protection of them.

Furthermore the logic of the argument implies that the dissolution in
question must be an extinction which is effective from the standpoint of
the legal order of the company’s national State. Such an extinction is not
necessarily the automatic consequence of an extinction occurring in the
legal order of the State that had taken the measure complained of.

Now it is quite obvious that if a company is dissolved from the stand-
point of the legal order of its national State, there is no possibility of its
applying to that State for diplomatic protection. However, the ability of
persons to request diplomatic protection of their national State is one
thing, and entirely depends on the internal legal system of the State in
question; but the exercise of diplomatic protection on the international
plane is quite another matter. Diplomatic protection, as the exercise of
a right arising out of the international legal order, belongs exclusively to
the State, which has entire discretion in its respect. A State is free not to
exercise diplomatic protection even if the national concerned requests it.
Conversely, a State may exercise diplomatic protection even if there is
no request from its national. It follows that the dissolution of a company
does not prevent its national State from exercising diplomatic protection
in its respect and that, consequently, the hypothesis envisaged cannot
arise at all.

12. On the other hand it must be recognized that diplomatic protection
of a company really may be impossible when there is no foreign State to
exercise it. This would be so in the case of a company which had the
nationality of the very State whose international obligation was in ques-
tion.

Nevertheless, ‘to say that in such a case the national States of the
shareholders are entitled to protect the latter’s interests because there is
no possibility of their benefiting indirectly from any protection afforded
the company would be to make havoc with the system of international

241
BARCELONA TRACTION (SEP. OP. MORELLI) 241

rules regarding the treatment of foreigners. It would, furthermore, be a
wholly illogical and arbitrary deduction.

For to envisage the possibility of indirect protection in certain even-
tualities is tantamount to recognizing the absence, so far as shareholders
are concerned, of any direct protection on the part of international law—
to recognizing, in other words, that international law does not consider
the interests of shareholders, as simple interests, worthy of its protection
and that it consequently refrains from imposing upon a State, in this con-
nection, any obligations toward shareholders’ national States. This neg-
ative attitude-on the part of international law cannot be reversed on the
ground that the interests of shareholders might, in other circumstances,
benefit from a purely indirect protection. Such artificial and illogical
reasoning would lead to the creation, for the interests of shareholders, of
a direct protection such as their national States might take up: the very
protection which is refused by international law.

13. A fortiori, the diplomatic protection of shareholders by their
national States must be ruled out where, as in the present case, the
diplomatic protection of the company by its national State is possible
but, for some reason or other, is not exercised or not pursued.

To my general remarks on the notion of a second line of diplomatic
protection for shareholders, and to those I have just made regarding the
hypothesis of the impossibility of the company’s receiving diplomatic
protection, remarks which remain no less valid for the hypothesis now
under consideration, I would add certain other observations of specific
application to the latter.

According to this latter hypothesis, the possibility of a State’s exercising
diplomatic protection of those shareholders in a company who are its
nationals would not be absolute, but contingent on a certain attitude
which a third State, i-e., the national State of the company, is free to
adopt or not: an attitude consisting either in refraining from exercising
diplomatic protection of the company or in not pursuing diplomatic pro-
tection once exercised. It would not be easy to establish at what moment
the requisite condition might be regarded as fulfilled. In any event, there
would be a point in time before which the diplomatic protection of the
shareholders would not be admitted; as from that moment, on the other
hand, the possibility of exercising such protection would exist.

But any diplomatic protection presupposes that the State approached
by the protector owes an obligation or, it may be, has incurred a debt of
responsibility, because it is precisely such obligation or responsibility
that diplomatic protection relies on and asserts. Consequently, to say
that the national State of the shareholders cannot exercise diplomatic
protection for so Jong as it is not possible to affirm that the national State
of the company is refraining from exercising diplomatic protection of the

242
BARCELONA TRACTION (SEP. OP. MORELLI) 242

latter amounts to excluding the existence, until then, of any obligation or
responsibility vis-à-vis the national State of the shareholders. It is only
later that such an obligation and, it may be, such responsibility (indeed
the very unlawfulness of the measure taken vis-à-vis the company) would
arise, necessarily with retroactive effect, owing to the conduct of a third
State, the national State of the company, in abstaining—for some motive
the appraisal of which would be a matter for its own discretion—from
the exercise of diplomatic protection in respect of the company.

Simply to propound such a theory is to expose its absurdity. Generally
speaking, it is hard to see how a State’s non-exercise of its right could
have any influence on the possibility of exercising, let alone the very
existence of, another State’s right. I have already pointed out that the
international rules governing the treatment of foreigners take concrete
shape in bilateral relationships. Now each of these relationships, between
clearly circumscribed subjects, is absolutely independent of any other
relationship which, though deriving from those same rules, might exist
between other, or partly other, subjects. Hence no such relationship
could, through its own existence or merely through its activation, exert
any influence on the very existence of another. Consequently, if the view
be taken that a State is not, vis-à-vis the national State of shareholders
in a limited company, under any obligation whatever concerning the
treatment of that company, it is impossible to see how such an obligation
could arise retroactively out of the fact that the national State of the
company does not, for whatever reason, exercise its own right.

(Signed) Gaetano MORELLI.

243


10

DÉCLARATION DE M. ODA
[Traduction]

Quoique ayant voté pour l’ordonnance, j’estime qu’il eût fallu y indiquer
que la Cour, pour des raisons qui lui sont propres, approuvait une com-
position de la chambre correspondant entièrement aux vues les plus
récentes des Parties, telles qu’elles leur avaient été demandées conformé-
ment à l’article 26, paragraphe 2, du Statut et à l’article 17, paragraphe 2,
du Règlement.

(Signé) Shigeru ODA.

Il