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Jean-Franois Legrand

IES 09033

March, 14th 2009

Case concerning Barcelona Traction,


Light and Power Co. (second phase)
Belgium v. Spain
International Court of Justice, 1970.

Facts
The Barcelona Traction, Light and Power Co. was incorporated in 1911 under Canadian law in order
to meet the supply in electricity in Spain. It is a limited liability1 company whose capital is
represented by shares. In 1938, Spain declared the company bankrupt and took other actions
detrimental to it and its shareholders. As 88% of its shareholders were Belgians, Belgium (the
Plaintiff) brought a suit in front of the International Court of Justice against Spain (Defendant).
As a reaction to that, Spain argued that Belgium could not sponsor a complaint on behalf of
Barcelona Tractions owners because they only injured the corporation and the corporation was not
Belgian.
SPAIN

BELGIUM
88% shares

Investors - owners

Barcelona Co.
$

Canada inc.

Issue
Whether the legal entity is represented by the companys Board or shareholders.

Rule of law
Municipal law (= domestic law) determines the legal situation not only of such limited liability
companies but also of those persons who hold shares in them. Separated from the company by
numerous barriers, the shareholder cannot be identified with it.
1

As a clear example of a limited liability company, if you lend $1,000 to the company, at least you cannot loose
more than that if the company goes bankrupt or meet some other troubles.

Jean-Franois Legrand
IES 09033

March, 14th 2009

Apply
The Court concluded that the party which was injured was the company in itself and not its owners
e.g. its shareholders. Therefore, Belgium could not bring suit against Spain on behalf of the
companys Belgian owners. The issue here is related to the issue of separating the legal entity of the
company with its owners and investors. At the end, the Court helped us to conclude that the owners
(shareholders) cannot sue even if their part is 88% or 99%. Only the entity side is important as it
can sue (offensively) and be sued (defensively).
The Court noted that Spain had made no objection to Canada bringing a complaint if it shoes to do
so. The Canadian governments rights of protection in respect of the Barcelona Traction Company
remains unaffected by the present proceedings, the Court concluded. Canada chose not to
complaint.
As in this case the company is a limited liability company, the rights of shareholders are limited.
When these rights and shareholders interests are harmed by an act done by a state against the
company, it is the company that must seek juridical remedies. The shareholders do not have to
unless their specific rights could be infringed by the states action.

Conclusion
Belgium does not have the right to sue Spain. Spain shareholders can sue Spain. Canada can also sue
Spain.

Jean-Franois Legrand
IES 09033

March, 14th 2009

Dow Jones & Co. Inc. v Gutnick


High Court of Australia, December 2002

Facts
The October 28, 2000 article Unholy Gains severely contained some defamations regarding Mr. Joe
Gutnick, resident of Australia. This article was written in the Barrons Online, edition published by
Dow Jones. Only five versions were sent from New Jersey to Australia but the online version of this
article known a huge success. Over half a million subscribers and more than 1700 online subscribers
from Australia.
As the online network is an active place and not a passive location, Australia and New Jersey were
suddenly highly interconnected.
The trial and appellate courts had found that Australian courts had personal jurisdiction over US Dow
Jones which appealed to the High Court of Australia. And all the High Courts founded that Gutnick
could bring a suit in Victoria, the place where damage to the reputation of this businessman
occurred.

Issue
Whether the article was published in the United States in a way that did not provide Australian
courts with personal jurisdiction over Dow Jones.

Rule of law
If a defamatory note is published by a company incorporated in land A over a person resident in land
B, land B has the legal right and jurisdiction to intend a lawsuit in front of the land A Court.

Apply
After the conflict through the fact that article contained defamation, another important point is the
infliction of the damage, and that occurred in the places where defamation is comprehended.
Statements or articles made on the Internet cannot be localized like statement made in a newspaper
or magazine.
Furthermore, the fact that the publication might occur everywhere does not mean that publication
occurs nowhere. Multiple publications made by a publisher in different jurisdictions can be exposed
to the risk of liability in those jurisdictions, if the article is not lawful and inflicts damages.

Jean-Franois Legrand
IES 09033

March, 14th 2009

Conclusion
A US company that publishes articles on the Web using a server in a specific state may be held liable
in Australian Court if it contains some defamatory notes towards an Australian resident. The
Australian Court is likely to find personal jurisdiction even though the defendant is not physically
present in Australia as long as the defamatory notes could damage the reputation of the resident.