Barcelona Traction, shareholder protection, diplomatic protection, ICJ International Court of Justice, international investment agreements, bilateral investment treaties, EU european union, foreign investment, national law
The Barcelona Traction judgment of the International Court of Justice (ICJ) of February 5th 1970, considerably shaped the protection of foreign investors. Indeed, this judgment which introduced an innovative distinction, but ultimately in conformity with existing legal concepts, between the rights of the company and the interests of the shareholders, and this, despite their financial links, came to specify that the nationality of a company depends essentially on the country where it is legally constituted and where its registered office is established. Thus, in the event of harm suffered by a foreign company in a third country, the request for diplomatic protection must generally come from the country of origin of the company. However, the Court rejected the criterion of control as a basis for defining the nationality of the company, thus dissociating the nationality of the majority shareholders. In addition, It should also be noted that this case also ultimately led to a strengthening of the legal security of international investments and prompted States to adopt other measures aimed at promoting the protection of foreign investors. These developments have thus enabled foreign investors to circumvent the traditional mechanisms of diplomatic protection by resorting to more appropriate instruments to preserve their rights independently. However, these new mechanisms are not without criticism.
[...] The massive withdrawal of foreign investment runs the risk of causing fluctuations in the financial markets, disrupting economic stability and investor confidence. In short, the withdrawal of foreign investment can have serious consequences for the global economy, affecting growth, employment, innovation and the competitiveness of host countries. This is why many countries are seeking to create a favourable environment for attracting and retaining foreign investment. The impact of diplomatic protection on the protection of foreign investors Diplomatic protection of companies can have an indirect influence on the protection of foreign investors, as these two aspects are often closely linked in the field of international investment law. [...]
[...] This could contribute to a concentration of economic power. IIA and BIT negotiations often involve a lack of meaningful participation by domestic stakeholders, including civil society groups and indigenous peoples. To summarise, criticisms of IIAs and BITs reflect concerns about the impact on state sovereignty, the balance between the interests of investors and those of host states, as well as issues of transparency, accountability and sustainable development. Debates around these agreements continue to evolve to balance the potential benefits of foreign investment with the legitimate concerns of governments and society. [...]
[...] Revista Española de Derecho Internacional, 437-471. Ruiz-Funes Monzón, P. (1975). El caso Barcelona Traction ante la Corte Internacional de Justicia. Revista Española de Derecho Internacional, 349-384. O'Keefe, R. (2005). El desarrollo de la jurisprudencia en materia de protección diplomática de inversiones extranjeras. Anuario mexicano de derecho internacional 371-396. [...]
[...] (1970). Arrêt de la Cour internationale de Justice du 5 février 1970, Affaire des actions de la Barcelona Traction, Light and Power Company, Limited (Belgique c. Espagne). Récupéré de https://www.icj-cij.org/files/case-related/50/50-19700205-JUD-01-00-FR.pdf Wirth, J. (2012). Protection diplomatique et investissements étrangers : L'affaire Barcelona Traction. Annuaire Français de Droit International, 263-293. François-Gény, E. (2020). [...]
[...] Some critics believe that IIAs and BITs often grant too many protections to foreign investors at the expense of host states' ability to regulate and legislate in the public interest. Provisions for fair treatment, protection against expropriation and dispute settlement can limit the scope for states to adopt public health policies, environmental protection or other necessary regulations. Some criticise IIAs and BITs for their impact on state sovereignty. The dispute settlement mechanisms provided for in these agreements allow foreign investors to bring claims directly against states before international arbitration tribunals, thereby bypassing national judicial systems. [...]
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