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Iceland wins Dutch compensation battle over Icesave guarantees

Monday 28 January 2013

Iceland has won its legal battle to avoid paying back the Dutch and British governments for money paid to savers who lost out when internet bank Icesave went bankrupt.

The European free trade association (Efta) court on Monday dismissed all claims against Iceland, saying the directive did not apply to a 'systemic
crisis of the magnitude experienced in Iceland'.

The court also said Iceland had not discriminated between Icelandic savers and those from the Netherlands or Britain.

High interest rates

The case arose following the 2008 bankruptcy of Landsbanki, which attracted thousands of savers from the Netherlands and Britain by offering high interest rates.

After the bank collapsed, the Dutch and British governments effectively paid back savers under the banking deposit guarantee scheme and then asked for the money back.

Although the Icelandic government first agreed, the demand was rejected in two referendums.

Landsbanki's estate has now paid back some 90% of the money and is expected to repay the remainder, Icelandic officials say. Iceland owed €1.3bn to the Netherlands and €2.5bn to Britain.

Cross border banking

According to the Financial Times, the case has been closely watched in Europe because of its implications for cross-border banking.

'It is of considerable satisfaction that Iceland's defence has won the day in the Icesave case; the Efta Court ruling brings to a close an important stage in a long saga,' the Icelandic Foreign Ministry said in a statement.


© DutchNews.nl


Readers' Comments

Where is the victory if Iceland has already paid back 90% and expects to pay the rest. This must be a win on principle. Or am I missing something?

By Roland | 28 January 2013 3:20 PM

Iceland won the Icesave battle and from the very start the legal issues of the case were clear. However the political meddling of the European colonial powers caused great uncertainties. The EU Commission did its utmost to force Iceland to its knees.

By Loftur Altice Þorsteinsson | 28 January 2013 4:40 PM

Britain and the Netherlands infringed the jurisdiction of Iceland and thus breached the EES Agreement, regarding »free movement of capital« and »the freedom to provide services«. It is remarkable that the breach by Britain of the jurisdiction of Iceland is still in existence and has not been amended.


By Loftur Altice Þorsteinsson | 28 January 2013 4:42 PM

The Icesave case is certainly not finished. Now that the defence has been secured, Iceland will demand just compensations from Britain and the Netherlands. Because of the grievances caused by EU, Iceland will never consider joining this customs union. Also Iceland will consider leaving the European Economic Area.

By Loftur Altice Þorsteinsson | 28 January 2013 4:43 PM

Roland, Iceland did not pay anything directly. The 90% payments were made by the bankrupt estate of Landsbanki. However, the Central Bank of Iceland and many pension funds in Iceland lost considerable amounts. Most pensioners in Iceland have probably lost 25%-30% of their pension. Only government employees survive intact.

By Loftur Altice Þorsteinsson | 28 January 2013 6:18 PM

Icelandic officials have said from the get go that Iceland plans to pay back the deposit insurance as assets freed and capital to perform said payback emerged. What the UK and Netherlands wanted was repayment on all deposits, not just up to the insurance limit and wanted interest on top of it all because of the trouble it all caused. The UK also decided when the collapse occurred that it would be a neat idea to declare Iceland a terrorist state and to freeze all assets in the UK.

By Dnalor | 28 January 2013 6:21 PM

Just want to correct this sentence "Iceland owed €1.3bn to the Netherlands and €2.5bn to Britain."

Iceland did not owe Britain and Netherlands anything and that was confirmed today. Landsbankinn owed this money and it has already paid 93,5% of the amount and will pay 100%. This is simply a case where arrogant politicians think they can just push a small country to it's knees, well they surely did not succeed!

By Carl | 28 January 2013 7:29 PM

I find the reasoning of the Court unfathomable. That 95% has already been repaid out of the Landsbanki estate is irrelevant. The Icelandic government were trying to evade their international duty as surely the directive should apply whatever the magnitude of the crisis.

By Dr Clive Sims | 28 January 2013 8:05 PM

Dr Sims,

What you're saying is that the Icelandic government (and by extension its people) are economically responsible for the rapacious greed of its (private) banks and the ineptitude of its government regulators.

By orville | 29 January 2013 11:19 AM

Clive, what do you mean by "international duty" ? Anyway, there was no such thing in the Icesave case.

By Loftur Altice orsteinsson | 29 January 2013 5:00 PM

To be fair some of those Icelandic surnames could easily be mistaken for a terrorist organisation.

By Dr Ponzi | 30 January 2013 3:25 PM

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