Happy Ending to Iceland’s Icesave Story Skip to content

Happy Ending to Iceland’s Icesave Story

icesave-logoAfter years of negotiation, Iceland was able to declare a full victory in the Icesave dispute yesterday when the EFTA Court announced that the Icelandic state had won both cases filed against it by the EFTA Surveillance Authority (ESA).

Here is a list of important events in the dispute, based on coverage by Morgunblaðið, Fréttablaðið and RÚV:


The Icelandic bank Landsbanki opens the Icesave online savings accounts in the U.K. and The Netherlands, appeals to savers with promise of high yield and accumulates extensive deposits.

October 6, 2008:

The three largest Icelandic banks collapse, are taken over by the state and emergency law is passed at Alþingi, the Icelandic parliament. All deposits are secured in Iceland but deposits in Icelandic banks abroad are not covered. British and Dutch authorities demand that the minimum deposit insurance of the Icesave accounts be guaranteed.

October 8, 2008:

British authorities invoke anti-terrorism legislation against Iceland to freeze the assets of Landsbanki in the country, including related assets held by the Icelandic state.

Prime Minister Geir H. Haarde declares that the state treasury will provide the Depositors’ Guarantee Fund with money so that its obligations can be honored. The U.K. and The Netherlands decide to reimburse the entire Icesave deposits.

October 11, 2008:

Iceland is under pressure to negotiate. Minister of Finance Árni Mathiesen signs the ‘Memorandum of Understanding’ (negotiated by undersecretary of the Finance Ministry Baldur Guðlaugsson) with Dutch Finance Minister Wouter Bos. Iceland is to pay the minimum deposit insurance and be granted a ten-year loan with 6.7 percent interest. British authorities do not agree and the agreement does not take effect.

November 4, 2008:

Árni agrees to take the dispute to an arbitration court. Other Icelandic ministers disagree. The court rules that Iceland is to pay the minimum deposit insurance. Icelandic authorities do not accept the decision.

November 16, 2008:

Iceland reaches an outline agreement with the European Union, which acts on behalf of British and Dutch authorities. The Icelandic government is to guarantee the minimum deposit insurance.

PM Geir H. Haarde states an agreement will serve Iceland’s best interests long-term, for example so that the EEA agreement won’t be upset, and Foreign Minister Ingibjörg Sólrún Gísladóttir stresses the importance of resolving this difficult international dispute so that an agreement can be reached with the International Monetary Fund (IMF).

December 5, 2008:

A parliamentary resolution is accepted at Alþingi stating that an agreement is to be negotiated on the basis of terms to which all have agreed.

February 1, 2009:

The Independence Party-Social Democrat coalition collapses and a minority Social Democrat-Left-Green coalition takes over with support form the Progressive Party.

February 24, 2009:

Formal negotiations begin. Iceland’s negotiation committee is chaired by Svavar Gestsson, appointed by the new government.

June 5, 2009:

An agreement is reached. The U.K. and The Netherlands grant Iceland a 15-year loan with 5.55 percent interests to honor its Icesave obligations. Landsbanki’s bankruptcy estate is to be used to repay the debt.

Svavar states that the entire international community pressured Iceland into agreeing to pay the minimum deposit insurance of the Icesave deposits and honor the EU Deposit Guarantee Schemes Directive. There are no other options, he maintains.

June 15, 2009:

Finance Minister Steingrímur J. Sigfússon signs a state guarantee for the minimum deposit insurance. British authorities remove Landsbanki from the list of terrorist organizations and lift the controversial freezing of the bank’s assets in the U.K. as part of the agreement.

August 28, 2009:

After heated debate and protest from the public, the agreement, Icesave I, is passed at Alþingi, however with extensive disclaimers. A provision on renegotiation is to be included, the economic situation is to be taken into account and Iceland is to have absolute authority over its natural resources. Icelanders reserve the right to have the agreement’s legitimacy determined. State guarantee depends on the approval of Iceland’s negotiation partners.

September 2, 2008:

The president confirms the bill.

September 17, 2009:

British and Dutch authorities reject the disclaimers, new terms are negotiated and a new agreement is reached.

December 30, 2009:

Alþingi accepts the agreement, Icesave II, with narrow majority.

January 5, 2010:

The president vetoes the bill after receiving a petition signed by almost 60,000 members of the public, and sends the agreement to a national referendum.

February 16, 2011:

Negotiations resume. The new Icelandic negotiation committee is chaired by U.S. lawyer Lee Buchheit.

March 6, 2010:

Icesave II is rejected in a national referendum with 93 percent of votes.

December 8, 2010:

A new agreement is reached. The main difference is that the interest drops to 3.2 percent.

February 16, 2011:

Icesave III is accepted at Alþingi with a solid majority.

February 20, 2011:

In spite of disagreement about Icesave III not being as widespread as in the case of Icesave II, the president again vetoes the bill upon receiving a petition with almost 50,000 signatures encouraging him to refer it to a national referendum.

April 9, 2011:

Icesave III is rejected in a national referendum by 60 percent of voters.

December 14, 2011:

The EFTA Surveillance Authority (ESA) refers the Icesave dispute to the EFTA Court.

December 20, 2011:

Formal proceedings in the Icesave case begin before the EFTA Court when the Icelandic government is handed a subpoena.

March 28, 2012:

The EU Commission takes intercession in the case.

May 16, 2012:

Liechtenstein and Norway support Iceland’s cause. The U.K. and The Netherlands remain the only EU members to object Iceland’s arguments.

September 18, 2012:

Oral pleadings take place at the EFTA Court.

January 28, 2013:

The EFTA Court rules in Iceland’s favor. Landsbanki’s bankruptcy estate will cover the minimum deposit insurance. The verdict cannot be appealed and so the Icesave dispute is concluded.

Related stories:

January 28 | Reaction to Icesave Verdict

January 28 | Continued Coverage of Icesave Verdict

January 28 | BREAKING NEWS: Iceland Wins Icesave Cases


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