One Month To Pay Icesave Or Go To Court

Published August 2, 2011

Iceland has about one month to pay the UK and Holland on Icesave, or go to an international court to get a final ruling on the matter.
As many of our readers are no doubt aware, a public referendum last spring overwhelming voted against paying Britain and the Netherlands the billions of crowns both countries are demanding for losses incurred by depositors in their countries who put money in the Icesave online bank, which crashed in the fall of 2008.
Earlier this summer, the European Free Trade Association Supervisory Authority (ESA) ruled that Iceland must pay up on Icesave. A statement from the ESA said in no uncertain terms that Iceland “is obliged to ensure payment of the minimum compensation to Icesave depositors in the United Kingdom and the Netherlands, according to the Deposit Guarantee Directive.”
Well, the deadline looms ever closer, as now Iceland has until 10 September to either pay 670 billion ISK, or go to EFTA court.
Minister of Finance Steingrímur J. Sigfússon told Fréttablaðið that he expects most of the assets of Landsbanki – of which Icesave was essentially an “online branch” – to cover the money owed, although he contends there are still details that need to be worked out.
“It is interesting that when the ESA ruling came, no one blinked an eye over what it meant in real terms,” he said. “It naturally means that if we don’t intend to fight the ESA, then we have to pay this sum.”
Iceland’s chances in EFTA court are difficult to assess. The ESA cites the Deposit Guarantee Directive, an international finance treaty of which Iceland is a signatory. Whether the court sides with ESA’s or Iceland’s interpretation of this treaty is unclear.
But a victory in EFTA court might prove a mixed blessing – while avoiding paying billions of crowns, foreign investors might feel reluctant to put their money in a country that will go to court to avoid paying debts. On the other hand, it may also set a new precedent in international banking.
Whatever the outcome, the case is sure to attract global attention. Stay tuned.



News
Actavis Bought By Foreign Pharmaceutical Company

Actavis Bought By Foreign Pharmaceutical Company

by

Teva Pharmaceuticals Industries Ltd. has agreed to buy Allergan Plc, the parent company of Actavis, for $40.5 billion USD. In

News
Papers Will Continue After Acquisition

Papers Will Continue After Acquisition

by

The newspapers recently acquired by Vefpressan will keep coming, but one editor was very blunt about his feelings on working

News
Viking Festival: All The Great Things About The Dark Ages, Plus Access To Penicillin

Viking Festival: All The Great Things About The Dark Ages, Plus Access To Penicillin

by

Much to the disappointment of many holiday-goers, modern day Icelanders are pretty far removed from their Viking ancestors. Ceremonial sacrifices

News
Chief Icelandic Whaler Believes Australia Should Start Whaling, Too

Chief Icelandic Whaler Believes Australia Should Start Whaling, Too

by

Kristján Loftsson (pictured left), Iceland’s primary whaler, believes Australia should stop opposing whaling and start hunting humpback whales. In an

News
PHOTOS: Yesterday, Thousands Marched In Reykjavík SlutWalk 2015

PHOTOS: Yesterday, Thousands Marched In Reykjavík SlutWalk 2015

by

Spirits were high in downtown Reykjavík yesterday, as several thousand protestors took to the streets to march in the annual

News
Says Icelandic Products Need “Country Of Origin” Labels

Says Icelandic Products Need “Country Of Origin” Labels

by

The Federation of Icelandic Industries (SI) believes domestic production is damaged by a lack of “country of origin” labels on

Show Me More!