Please use this identifier to cite or link to this item: http://hdl.handle.net/1946/5787
The Icesave dispute : Iceland's obligation under European law
This dissertation discusses the so-called Icesave dispute between Iceland on the one hand and the Netherlands and the United Kingdom on the other hand. Since the collapse of Iceland’s economy in 2008 and the nationalisation of Iceland’s three major banks, including Landsbanki, which operated the Icesave accounts, the dispute has been ongoing. The question this dissertation addresses is: What, if any, is Iceland’s obligation under European Law for the funds lost in Landsbanki foreign branches? It is clear that the Icelandic State was at fault for failing in its supervisory and regulatory obligations. Warnings were ignored and the State should have used the measures available under the 2000/12 Directive to prevent Landsbanki from establishing foreign branches at the time and in the manner that it did. The minor fault of the United Kingdom and the Netherlands was their failure to utilise the much weaker measures available to them under the 2000/12 Directive to affect the operation of Landsbanki. But the United Kingdom and the Netherlands maintain that according to the 94/19 Directive, under which Landsbanki was operating, the Icelandic State had the obligation to ensure that the Depositors’ and Investors’ Guarantee Fund (DIGF) could guarantee the minimum compensation amount, 20.887 Euros, per deposit. The Icelandic State has emphasised the legal uncertainty of the obligation under the 94/19 Directive and requested that an independent adjudicator resolve this uncertainty, a request that has been rejected by the other two States. It seems that disputes between EEA States and EU States were not foreseen since no court has compulsory jurisdiction in such cases. The conclusion of this dissertation is that the Directive did not envisage that the DIGF would cope with major banking crises, but the flaw in the Directive – and by implication the culpability of the European Union – lies in the fact that deposit owners nevertheless had legitimate expectations to be covered at all times. Ultimately, Iceland’s obligation cannot be precisely ascertained in the abstract and independent adjudication would in fact be the best and fairest method of resolving the dispute.
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