On September 30, the Icelandic Government answered the EFTA Surveillance Authority, ESA, reasoned opinion concerning alleged failure of Iceland to comply with Directive on deposit guarantee schemes and/or an article in the EEA agreement on non-discrimination.
Yet again, the Icelandic answer seems to consist of matters irrelevant to the ESA opinion, such as the state of the Landsbanki estate and its pay-out schedule. Regarding the deposit guarantee the answer reiterates earlier points, going against the ESA understanding of ‘obligation of results’ and denying that foreigners were left worse off than Icelanders.
The Icelandic government denies that a declaration of will, issued by the Icelandic and the Dutch Government October 8 2008, indicates an acceptance on behalf of Iceland of the EU deposit guarantee. Iceland also points out new aspects of the deposit guarantee put forward in a draft of a new EU deposit guarantee.
It is now up to ESA to ponder its next step. It could either accept the Icelandic arguments – which is, to say the very least, extraordinarily unlikely – or it will send the case to the EFTA Court, which is nigh certain.
The only thing that could possibly hinder a court case is if the Brits and the Dutch – satisfied that the Icelandic Deposit Guarantee Fund, with its priority claim in the Landsbanki estate, will soon start paying back its debt to the two countries – would drop their claims. That’s however not entirely plausible since the two countries aren’t only seeking a refund of the deposits but some interests on their pay-out.
Landsbanki is still hampered by ongoing law-suits and its pay-out schedule is consequently unclear. Ergo, it’s unclear when exactly the two countries can expect to recover the money they paid to their Icesave depositors. Landsbanki recovery will, according to the latest estimates, cover priority claims and possibly interests of the UK and Dutch payout. Bondholders will more or less be left with nothing, which might lead to further court cases as bondholders seek to cover their damages.
In an interview with Ruv, Lee Buchheit who led the third and last Icesave negotiations recently pointed out that in its answer to ESA Iceland should have underlined that all depositors had indeed been paid out and that it didn’t really matter who had paid them. The main thing was that no depositor was left unpaid. Further, Iceland should have made the case to ESA that the Icesave dispute was now solely a matter for the three countries to resolve and had nothing to do with ESA any longer.
In its first answer to ESA the Icelandic Government failed to make this point except in a footnote.
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