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Icesave – Norway Supports Iceland in Court Case

17/05/2012 | By | Reply More

Icesave – Norway Supports Iceland in Icesave Court Case

Icesave logo of Landsbanki, Iceland

Icesave logo of Landsbanki, Iceland

The Norwegian government supports many of Iceland’s Icesave arguments in the case of the EFTA Surveillance Authority (ESA) against Iceland in the Icesave dispute, which is currently before the EFTA Court, in their written remarks to the court.

The deadline for EEA countries to make remarks expired at midnight, Tuesday, May 15. 2012. According to Fréttablaðið’s sources, the court received remarks from at least three other countries, including the United Kingdom and the Netherlands, which support the ESA’s case (as they are party to the Icesave dispute) and Lichtenstein, which supports Iceland’s cause.

Norway states clearly in their remarks, published on the Norwegian government’s website, that in their view Iceland is right to maintain that the EU directive on deposit insurance does not assume that state treasuries take responsibility for deposit insurance funds in the Icesave case of an economic collapse.

Oral pleadings in the Icesave trial will likely begin in the latter part of this year.

The Icesave Story:

The Icesave dispute is a diplomatic dispute that began in 2008 between Iceland on one hand and the United Kingdom and the Netherlands on the other. The dispute is centred on the retail creditors of the privately owned (since 2003)

Icesave advertisement on a Taxi in UK before the bank collapsed

Icesave advertisement on a Taxi in UK before the bank collapsed

Icelandic bank Landsbanki, which offered online savings accounts under the “Icesave” brand. The bank was placed into receivership by the Icelandic Financial Supervisory Authority (FME) on 7 October 2008. As a result, more than 400,000 Icesave depositors with Icesave accounts in the UK and the Netherlands were unable to access their money for at least 6 to 8 weeks, while waiting for payout from the Deposit Guarantee Schemes in these countries. Much of the public controversy arose around the UK’s use of the “anti-terrorism legislation” against Iceland.

On 16 February 2011 the Icelandic parliament agreed to a repayment deal to pay back the full Icesave amount starting in 2016, finalising before 2046, with a fixed interest rate of 3 per cent. The Icelandic president once again refused to sign the new Icesave deal on 20 February, calling for a new referendum.  A referendum was held on April 9.

After preliminary results suggested that the Icesave deal was rejected, with 58 per cent of voters voting against it and 42 per cent voting in favor, both the Icelandic and the British government expressed their disappointment at the preliminary result. Iceland’s prime minister Jóhanna Sigurðardóttir stated that “the worst option had been chosen“;  UK treasury minister Danny Alexander described the decision as “obviously disappointing“, and further said that “we tried to get a negotiated settlement. We have an obligation to get that money back, and we will continue to pursue that until we do…  We have a difficult financial position as a country and this money would help“.

Alexander further stated that the matter would be referred to an international court, the EFTA Court. Dutch minister of finance Jan Kees de Jager announced legal actions against Iceland, stating that the time to negotiate had come to an end, while Iceland is still obligated to refund the Netherlands. Icelandic finance minister Steingrímur J. Sigfússon ruled out a third referendum, saying that “I think we’re getting a very clear sign from this referendum, that further negotiations are ruled out. No use in trying that again“.

The final result of the referendum was announced on April 11, 2011; 39.7 per cent of voters voted in favor of the agreement (69,462 votes), while 58.9 per cent voted against it (103,207 votes).  A further 1.4 per cent of the ballots cast were invalid, consisting of 2,039 empty ballots and 406 spoiled ballots. The voter turnout was 77.2 per cent.

The EFTA Surveillance Authority released the following statement after the result of the referendum became known:

The Authority has taken note of the outcome of the Icelandic referendum concerning the Icesave issue. We now expect a swift answer from the Icelandic government to our Letter of Formal Notice of May last year. We will assess the government’s reply before we take further steps in the case.

Unless the letter from the government contains arguments that alter our preliminary conclusions in the case, the next formal step would be to send Iceland a final warning, a Reasoned Opinion. This final warning will give Iceland two months to rectify their breach of the EEA Agreement. If Iceland continues to be in breach of the agreement, the case will be sent to the EFTA Court.—EFTA Surveillance Authority

On 2 May 2011, the Icelandic Ministry of Economic Affairs published a response to the EFTA Surveillance Authority’s letter of 20 May 2010, maintaining that Icelanddid not fail to comply with its obligations under Directive 94/19/EC.” On June 10, 2011, the EFTA Surveillance Authority ruled that Iceland should take steps towards paying the full amount to the UK and the Netherlands within 3 months after the ruling. The Icelandic Minister of Economic Affairs Árni Páll Árnason made a statement to the Icelandic Parliament on the same day rejecting this ruling.

On 14 December 2011, the EFTA Surveillance Authority lodged a formal application with the EFTA Court where the case is now.

See here the Icesave Intervention – Application by the European Commission)

See here the Icesave REJOINDER  from the Government of Iceland.

See here the Icesave written observations by the Government of Norway.

Please join this video below, where the Icelandic president has decided to give his population a vote on whether to compensate the UK and Dutch governments on the terms those countries want, in a interview with Jeremy Paxman from BBC Newsnight.

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Category: Iceland

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