Vanderbilt Journal of Transnational Law


Journal Staff

First Page



The Barcelona Traction, Light and Power Company, Ltd.,(hereinafter referred to as Barcelona Traction) was incorporated under Canadian law in 1911 with its main office in Toronto. Several subsidiaries were formed, all under Canadian law, to develop, produce, and distribute electric power in the vicinity of Catalonia, Spain. To finance these operations, the company issued both peseta and sterling bonds, the shares in some of the subsidiaries providing security to a Canadian bank for the sterling bonds. Revenue produced by the subsidiaries from their operations in Spain was used to service the bond interest. Servicing was suspended for the duration of the Spanish Civil War (1936-1940) but was resumed on the peseta bonds after the war. Barcelona Traction was unable to resume payments on the sterling bonds because the Spanish government would not permit the subsidiaries to convert their domestic revenue into foreign exchange. The reason offered by the Spanish government was that it could not be shown that this foreign currency was needed to repay a debt arising out of an importation of foreign capital into Spain. Complaints were tendered and negotiations initiated by Canada, the parent nation of Barcelona Traction, and Belgium, whose nationals owned approximately 88% of the shares of Barcelona Traction. These efforts were of no avail, and in 1948 three Spanish holders of sterling bonds petitioned a Spanish court to declare Barcelona Traction bankrupt for failure to make its interest payments. The court, without providing notice of its proceedings to any party outside Spain, appointed a receiver and seized the assets of the company and its subsidiaries in Spain. In 1949 the creditors elected trustees in bankruptcy who reorganized the company with a new headquarters located in Spain. New shares were printed and sold in 1952 at public auction to FECSA, a Spanish corporation.