Norway and Liechtenstein have both submitted letters of defence of Iceland in the Icesave case set to go to European Free Trade Association (EFTA) court.
As reported, when the banks collapsed in October 2008, Landsbanki made a fateful decision: Icelanders were able to withdraw from their deposits, but many – if not most – foreigners could not. This decision may have been a violation of Iceland’s treaty with EFTA, and as such, the Icelandic government will have to appear in EFTA court to answer for it.
Every country in EFTA is allowed to participate in the trial to some extent. The deadline for said participation ran out at midnight last night, and RÚV now reports that four countries have submitted statements to the court: Britain, Holland, Norway and Liechtenstein – the latter two defending Iceland.
The two countries argue that Iceland could not possibly bear responsibility for deposits made into Icesave, a private bank. Although the law is fairly clear about governments in EFTA bearing the ultimate responsibility for the deposits in their banks, Norway and Liechtenstein argue that the debt acquired by Icesave – and by extension, Landsbanki – had grown so large that it would be virtually impossible for the government to cover the deposits without going bankrupt. Britain and Holland, as might be expected, argue that on the contrary; the law is the law, and Iceland is responsible.
The trial is set to begin some time this year.
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