The Icelandic answer to ESA: the summary
Below is the summary of arguments from the Icelandic answer to ESA:
(i) The Government fully transposed the Directive into Icelandic law with the adoption of Act No. 98/1999 on Deposit Guarantees and an Investor Compensation Scheme, and following that, established a deposit-guarantee scheme (hereinafter also referred to as “TIF”) as stipulated in the Directive. That scheme is similar to that established by other EEA States and in accordance with the provisions of the Directive. Nothing in the Directive supports the Authority’s construction.
(ii) The Government rejects the contention that the Directive imposes an obligation of result upon the Member States. This would lead inter alia to a de facto state guarantee for all deposits amounting to EUR 20,887 for each account in each and every bank. Such an unlimited obligation would be contrary to the EEA’s key objective of promoting competition within the internal market. Nor would it conform to EEA state-aid rules which prevent Member States from interfering with markets unless specifically authorised to do so.
(iii) The so-called legal concept of obligation of result in EU law is unclear and does not suffice as legal basis for imposing a duty on Member States which would jeopardise their financial stability. Reference to the case law of the ECJ does not support the view that such unconditional principle of EEA law exists, nor that it would apply in this case. An obligation of result can only materialise – or deem to be breached – once it becomes clear that the actions of a Government did not suffice to ensure the minimum protection for deposits stipulated in the Directive. This is by no means evident.
(iv) The Government ensured – to the extent possible while dealing with a complete collapse of a banking system – that all retail depositors in the failed Icelandic banks would receive compensation in a form of payments from the estates of those banks. Deposit claims were granted priority ranking when the collapse became unavoidable, thus making up for the obvious shortcomings of any Deposit-guarantee scheme in the event of a total banking system collapse.[1] This compensation in many instances far exceeds the minimum deposit guarantee in case of all the collapsed banks. If any obligation of result exists it has been discharged by these actions of the Government.
(v) Should the Icelandic Government, contrary to expectations, be found to be in breach of the provisions of the said Directive, it maintains that such a breach should be considered justifiable in view of the fact that no deposit-guarantee scheme envisioned by the Directive could have dealt with a financial crisis of the magnitude experienced in Iceland in the autumn of 2008.
(vi) Should the Government, contrary to expectations, be found to be in breach of the provisions of the said Directive, it maintains that such a breach is justifiable in view of the various unilateral actions undertaken by the United Kingdom and the Netherlands governments in breach of the EEA Agreement against Landsbanki, the Icelandic state, and other Icelandic interests and their effect on the Government’s reaction to the crisis. These actions obstructed the Icelandic Government’s efforts to efficiently reorganise and wind-up Landsbanki to facilitate payments under the deposit guarantee scheme, which efficiency under normal circumstances is now historically evident by the swift resolution of the Kaupthing Edge internet depositor’s payment from the estate undisturbed by the German Government. These ill-advised and disproportionate actions justify any breach which the Government may have committed as a consequence.
[1] All retail depositors in Landsbanki branches have received payment in accordance with the minimum amount stipulated in the Directive. This minimum amount was paid out by the deposit-guarantee schemes in the United Kingdom and Netherlands. The remaining dispute is of a commercial and political nature and concerns, i.a. the pace of payments and ultimate liability for a possible shortfall in the settlement between the Icelandic deposit-guarantee scheme, on the one hand, and the schemes in the United Kingdom and the Netherlands, on the other hand. The Directive does not apply to this dispute. The first payments to the United Kingdom and the Netherlands schemes are expected to be substantial and to take place later this year. These payments are expected to continue in coming years and according to figures from Landsbanki’s estate should comprise at least 90% of the claims made by the United Kingdom and the Netherlands’ schemes – with accrued interest until 22 April 2009 – regardless of the EUR 20,887 minimum. Current market prices suggest a 100% recovery is not inconceivable. Market participants estimate the value of the assets to be higher than the conservative estimates by the resolution committee and have put money on recovery exceeding 100% of priority claims.
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nice spin..
However the legalities should kick in. As for the financial strorm that took Iceland’s finance systems was, to a degree, self inflicted through adminstrative arrogance and incompetence on behalf of the Icelandic govt / civil service / regulatory authorities at teh time. What price a mea culpa
andy
4 May 11 at 8:07 am
Yes, I’m afraid that the legalities have to kick in now. One observer said to me that the answer was schizophrenic: on one hand Icelanders said they they had no legal obligation, on the other that there was enough money to pay for Icesave.
Sigrún Davíðsdóttir
5 May 11 at 8:51 am
It’s only the government-related, or else EU-seeking, “friends of the UK and the Netherlands, and the unprincipled, “pragmatical” defeatists who have been asserting “that there was enough money to pay for Icesave.” Indeed they cannot maintain that they know what the final outcome would be by paying, it depends on so many unsure factors.
We are not liable to pay, and that’s it. The overwhelming NO-voters knew this, and withstood the pressure of the Europhiles, the law-breaking coalition parties in government, the majority of the media, incl. the State radio Ruv (where Ms. Davíðsdóttir seemed to me at least to speak more for British interests than Icelandic), the employers’ associations SA and SI, the Eurocrat-controlled trade unions’ leadership, and the self-appointed “pundits” in the main TV stations, even that owned by the State.
PS. What do you mean by “the legalities have to kick in now”?
Merriam-Webster Dictionary:
kick in: to make a donation as part of a group effort
Synonyms chip in, kick in, pitch in
Related Words bestow, donate, give, present; award, confer, dole (out), endow; afford, furnish, provide
slang: to stop living
Synonyms: check out, conk (out), croak [slang], decease, demise, depart, drop, end, exit, expire, fall, flatline, go, kick in [slang], kick off [slang], pass (on), pass away, part, peg out [chiefly British], perish, pop off, step out, succumb
PPS. And who’s that Andy?
Jón Valur Jensson
5 May 11 at 5:25 pm
>We are not liable to pay, and that’s it.
Not so. If that was the case, there wouldn’t be a court case.
>PS. What do you mean by “the legalities have to kick in now”?
She means that the Icelandic letter was (naturally) an entirely one-sided affair. Now it will be up to the court process to determine what the real situation is.
Bromley86
5 May 11 at 9:40 pm
Well said Jon Valur!
Your reasoning is impeccable! I am with you 100,000%!
As long as you’ve opened your large book of words, do also please research the following:
-Sophistry: n. A subtle, tricky, superficially plausible, but entirely false method of reasoning
-Specious: Having the appearance of truth but actually a lie
-Grifter: Slang. n. One who swindles through deception or fraud
-Deadbeat: Slang . n. One who does not pay one’s debts
BTW, ‘Andy’ is an affectionate term of endearment for the given name ‘Andrew’
At your service,
Gummi
Gummi
5 May 11 at 11:08 pm
>>Davíðsdóttir seemed to me at least to speak more for British interests than Icelandic
To cure your perplexity:
Journalism. n. the collection and editing of news for presentation through the media
Propaganda. n. A specific type of message aimed at serving an agenda.
Happy to be of service,
Afram!
Gummi
Gummi
5 May 11 at 11:19 pm
I’m reading this with interest. Re my job: right, Gummi, that’s what journalism is about. And it so happens that I live in the UK and my reporting is ia about representing views from abroad. They sometimes differ remarkably from opinions in Iceland.
And Bromley is right as to the legalities kicking in: the legal process, now via ESA, replaces the negotiations tried earlier, as Andy pointed out.
Sigrún Davíðsdóttir
6 May 11 at 7:48 am