Committee to Evaluate Legality of Magma Acquisition Skip to content

Committee to Evaluate Legality of Magma Acquisition

Prime Minister of Iceland Jóhanna Sigurdardóttir has appointed a committee to reevaluate the legality of Canadian Magma Energy’s acquisition of Icelandic energy company HS Orka and the work environment of the energy industry in Iceland.

Prime Minister of Iceland Jóhanna Sigurdardóttir. Photo by Geir Ólafsson.

According to ruv.is, the committee will compile an independent report on Magma’s acquisition of HS through a subsidiary in Sweden and determine its legality.

The committee will also provide a legal evaluation of whether the acquisition is in compliance with the Icelandic law and EEA regulations.

In the process, the committee will estimate whether or not it is important in this context if the Swedish subsidiary is involved in any actual operations, whether the buyer is Canadian or Swedish and what part the Canadian parent company plays in taking care of or being responsible for payments because of its trade and operations in Iceland.

Furthermore, the committee is to investigate whether Magma’s acquisition of HS is in compliance with the main regulations and goals of the Icelandic law on natural resources and energy harnessing and especially in regard to the EEA agreement.

On the basis of the investigation, the committee is then to express its opinion on whether there is reason for the Icelandic government to seek ways to interfere with the acquisition.

If so, the committee is to find out which methods can be undertaken in that regard, list the pros and cons of each method and estimate the related costs.

Finally, the committee is to estimate what other ways are possible to guarantee that the harnessing of the energy resources in question are for the benefit of the public and in compliance with the government’s policy on environmental issues.

During its work, the committee is to reference more extensive research on the privatization of the energy sector and its work environment.

The overall purpose is to produce a universal evaluation on privatization in the energy sector, correlation of interests, the relations between parties of interest and the development of the legal framework so that the work environment of the energy sector in Iceland can be improved for the future.

Managing director of Magma in Iceland Ásgeir Margeirsson told Fréttabladid it is difficult to see how the government intends to prevent Magma’s subsidiary in Sweden from acquiring HS Orka.

He said there are three options at hand: to complete the acquisition process, postpone it or cancel it completely. These options must be reviewed considering that Magma is in fact obligated to complete the acquisition.

When asked what happens if the government prevents Magma from acquiring HS, Margeirsson said Magma’s executives are obviously considering legal solutions. However, it is too early to discuss potential demand for compensation.

The committee comprises of Hjördís Hákonardóttir, former advocate to the Supreme Court, Bjarnveig Eiríksdóttir, advocate to the Supreme Court, who specializes in European law and the law on international trade, Sveinn Margeirsson, who holds a doctorate in industrial engineering, Ólafur Páll Jónsson, an associate professor in philosophy at the University of Iceland, and lawyer Aagot Óskarsdóttir.

The committee will be consulted by Trausti Fannar Valsson, a lecturer in administrative law at the University of Iceland and the committee will also seek the opinions of other experts during their work on certain aspects.

Click here to read more about Magma Energy.

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