Iceland Comments on ESA’s Icesave Conclusion Skip to content

Iceland Comments on ESA’s Icesave Conclusion

EFTA Surveillance Authority delivers reasoned opinion on the Icesave dispute

– Statement by the Minister of Economic Affairs to the Parliament –

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The Government Offices of Iceland. Photo by Páll Stefánsson.

[Yesterday] morning the EFTA Surveillance Authority (ESA) sent the Icelandic government a reasoned opinion on the Icesave dispute. It reiterates ESA’s contention that Iceland is responsible for ensuring that Icesave depositors in the Netherlands and the UK receive a minimum of EUR 20,887, in accordance with the Deposit Guarantee Directive. The Authority does not accept the arguments of the Icelandic government, sent in a letter of 2 May this year.

In the letter I replied, on behalf of the Icelandic government, to ESA’s Letter of Formal Notice, which was sent in May the previous year. This reply rejected the contention that Iceland had failed to fulfill its obligations according to the Deposit Guarantee Directive and had violated provisions of the EEA Agreement. This reply was prepared with the extensive co-operation of the parliamentary Foreign Affairs Committee and the involvement of a variety of experts. In drafting the reply we enjoyed the assistance of non-governmental organizations which have concerned themselves with this case in both national referenda. Their collaboration was therefore of major significance.

Now as before, opinions differ on the legal interpretation of this dispute. Iceland’s position is that the obligation concerning the deposits does not involve a state guarantee, and there is nothing in ESA’s reasoned opinion to alter this position taken by the government. On the contrary, there is good reason to doubt that a state guarantee of the obligations of deposit guarantee funds would in fact conform to general principles of European law. Moreover, such a state guarantee could threaten financial stability in a number of European states.

The Icesave dispute is far from simple and its resolution has proven to be onerous for all involved. Despite doubts as to the legal obligation of result, the Icelandic government has repeatedly endeavored to resolve this dispute through negotiation. Depositors in the UK and the Netherlands whose deposits were guaranteed have already received payment for their claims from funds in their respective countries, a fact disregarded by ESA. The news of increased recovery expected from the estate of Landsbanki Íslands makes it clear that the lion’s share of claims of all depositors and deposit guarantee funds in the UK and the Netherlands will be paid from the estate of the collapsed bank. This applies both to depositors whose deposits were guaranteed and to others, including charities and local authorities in the UK, and those depositors in the Netherlands who had claims exceeding EUR 100,000.

In its reasoned opinion, ESA grants the Icelandic government three months to take suitable measures to comply with the opinion. Should it fail to do so, the dispute will in all likelihood be referred to the EFTA Court. This may, therefore, mean the case will have to be defended in court.

In the first time in the history of this dispute, all the political parties in the Althingi have now expressed their unanimous support for Iceland’s defense. The significance of this cannot be overestimated. This solidarity is the premise for a realistic assessment of the situation. While no one can state with certainty what the outcome of the court case will be, clearly Iceland does have an important cause to defend.

Click here to read more about Icesave.

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