The European Free Trade Association (EFTA) has released an English-language version of its case against Iceland.
As reported, while the old Landsbanki is paying back the Icesave debt to depositors in the UK and Holland, the three-year delay in returning the deposits to foreign depositors may have violated Iceland’s treaty with EFTA. The matter will now be decided in court.
The English-language version of EFTA’s case against Iceland was made available through the Ministry of Foreign Affairs yesterday. The language of their case is fairly straight-forward:
An important principle is at stake. A main objective of the Directive is to enhance depositor protection. That objective would be compromised if the Directive were interpreted as only obliging Member States to set up a deposit guarantee scheme without any obligation actually to ensure that the aggrieved depositors are provided with compensation. Depositors need to be able to place trust in the national deposit guarantee schemes established to protect them effectively as required by the Directive in order for the financial sector in the internal market to function properly and to increase the stability of the banking system within the EEA.
The directive referred to here is Directive 94/19/EC of the European Parliament and of the Council of 30 May 1994, which requires governments to ensure that depositors are able to withdraw the money that they put into banks.
In fact, the case points out, Iceland not immediately paying deposits back to foreign depositors violated the country’s own law, too, through legislation which made the directive into domestic law.
Minister of Foreign Affairs Össur Skarphéðinsson will be representing Iceland in EFTA court over the matter. Proceedings could take as long as a year.