Foreign Investors Sue Icelandic Authorities Skip to content

Foreign Investors Sue Icelandic Authorities

By Iceland Review

Icelandic lawyer Baldvin Björn Haraldsson has filed a lawsuit against the Central Bank of Iceland on behalf of 25 foreign investment companies due to the takeover of SPRON savings bank. A series of lawsuits against Icelandic authorities is expected.

The now defunct SPRON branch on Borgartún in Reykjavík. Photo by Eygló Svala Arnarsdóttir.

“They want to find out whether the state became liable for compensation by taking over SPRON when it wasn’t necessary,” Haraldsson told Morgunbladid. The lawyer stated that the Central Bank had been involved in the takeover. “It is being investigated whether it was undertaken in compliance with law.”

SPRON was nationalized in March.

Among banks involved in the lawsuit are Banque et Caisse d’Epargne, Bayerische Landesbank, Cathay United Bank, Commerzbank International, Dresdner Bank, DZ Bank AD, Deutsche Zentralbank, HSH Nordbank, Hypo Alpe-Adria Bank, Landesbank Baden-Württemberg, Landesbank Saar, National Bank of Egypt, Norddeutsche Landesbank, Oberbank, Raiffeisenlandesbank, Salzburger Landes-Hypothekenbank and Sparebanken Öst.

Joseph Tirado, one of the owners of the law firm Norton Rose in London, said that some foreign investment companies that have interests to protect in Iceland have already launched lawsuits against Icelandic authorities.

Tirado said that the executives of these companies believe that they did not receive fair treatment in accordance with international law, the regulations of the EEA and Icelandic law.

Claims have been submitted in some jurisdictions, but Tirado wouldn’t reveal where. The claims refer to decisions made by the Icelandic government, actions undertaken by the Icelandic Financial Supervisory Authority and legislation made by the Icelandic parliament, Althingi.

Minister of Finance Steingrímur J. Sigfússon said the government has emphasized solving disputes with agreements instead of court cases. However, it had been expected that some parties would sue because of the government’s actions after the banks collapsed.

“We have held meetings so that we can be as well prepared for the defense as possible,” Sigfússon said, adding that a team of lawyers will probably be appointed to take care of such matters with participation from the state attorney.

Minister of Business Affairs Gylfi Magnússon said the news of the lawsuits is certainly not good and that he, like Sigfússon, prefers solving matters with agreements. However, he had been aware that some parties were considering suing so it had not come as a surprise.

“Sometimes people use threats of lawsuits to improve their negotiation position so we have to breathe through our noses. It is out of the question to give into all forces directed towards the state just because someone is threatening to sue,” Magnússon said.

Click here to read about another potential lawsuit against the Icelandic government.

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