Too small to fold so badly – a huge win for Iceland and President Grimsson
ICESAVE. Iceland wins an important court ruling in the EFTA court. The people of Iceland rejected a plan to repay a £3bn owed to Britain and the Netherlands in a referendum 2010. The court has now giving the people right when claiming that Iceland did not breach the deposit guarantee directive.
The EFTA (European Free Trade Association) court on Monday dismissed all claims against Iceland, ruling that it had not breached the deposit guarantee directive because Iceland’s financial crisis was so big. It also held that Iceland had not discriminated between depositors in its own country and those in the UK or Netherlands.
Whilst the case ruling is surprising to most, and worrying to some, as fears grow that a ruling in Iceland’s favour could undermine cross-border banking in general, Iceland seams saved by the small print in the deposit guarantee scheme that was in place before 2009. In this, there was no minimum level of deposit protection States should guarantee. Today, EU member states are required to insure that coverage is to protect deposits of up to €100,000 for each and every depositor.
President Grimsson’s 2010 sudden and controversial move to ask the Icelandic voters for their view on the Icesave compensation package caused many a diplomatic crisis between Iceland and especially Holland and the UK. His daring move seems though three years later to have paved the way for a more favourable pay-back plan, thus enabling a stronger and faster financial and economic recovery for Iceland as a whole.
Read more here:
On the 2010 voting: http://www.guardian.co.uk/business/2010/jan/06/iceland-icesave-analysis
Icelandic response 2013: http://www.mfa.is/news-and-publications/nr/7515
Full legal ruling: http://www.utanrikisraduneyti.is/media/icesave-2011-12/16_11_Judgment-Icesave-Case.pdf