EFTA Court Hears Oral Arguments in Icesave Case Skip to content

EFTA Court Hears Oral Arguments in Icesave Case

Oral proceedings in the Icesave case were heard at the EFTA Court in Luxembourg today. The case was brought before the Court by the EFTA Surveillance Authority. EFTA claimed that Iceland had breached its obligations according to the EEA Deposit Guarantee Directive as Iceland’s guarantee scheme had not repaid depositors in Icesave, the London and Amsterdam branches of the Icelandic bank Landsbanki, after the banking collapse in 2008.

icesave_efta_luxembourg_fabrizio_pizzolanteFrom the EFTA Court hearings. Photo by Fabrizio Pizzolante.

Under the directive, the Icelandic state is obliged to repay depositors within a certain time limit in the case of the collapse of an Icelandic bank. In the meantime, the UK and the Netherlands compensated depositors from the respective countries but demand that Iceland repay the full amounts with interest.

As Iceland’s lead counsel in the case, UK Barrister Tim Ward QC, argued that the case was without merit, as set out in a statement from the Icelandic Ministry for Foreign Affairs released this afternoon.

“The Authority’s argument imposes huge financial obligations upon the Contracting States, obligations that may be triggered at times of economic crisis when the States can least afford it, and which serve to link the liabilities of banks to the liability of the State itself. There is nothing to suggest that the Contracting Parties intended to assume any such burden,” Ward said.

At this morning’s hearing, the EU Commission and EFTA were supported by the British and Dutch governments, arguing that the Icelandic state was obliged to ensure the Deposit Guarantee Scheme paid out, regardless of the extent of the financial crisis. Norway and Liechtenstein argued in Iceland’s favor.

Iceland argued that the measures it took after the crash ensured that depositors would receive their full deposits. Furthermore, Iceland states that the EFTA Court case is an infringement case, where the Authority seeks a general declaration from the court.

No claims, Iceland argues, are made against the country for immediate payment of any deposits or funding of its deposit insurance scheme.

The EFTA Court is expected to deliver its ruling before the end of the year.

Click here to read more about the Icesave case.

ZR

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