Sigrún Davíðsdóttir's Icelog

Waiting for the EFTA Court judgement on Icesave – the essentials

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On Monday January 28, at 11.30am, the EFTA Court will deliver its judgement in the Icesave case brought by the EFTA Surveillance Authority, ESA, against Iceland.

The ESA summary of its case against Iceland is:

The EFTA Surveillance Authority submits that by failing to ensure payment of the minimum amount of compensation to Icesave depositors in the Netherlands and in the United Kingdom within the time limits laid down in Directive 94/19/EC, Iceland has failed to comply with its obligations arising under Articles 3(1), 4(1), 7(1) and 10(1) of Directive 94/19/EC. Additionally or in the alternative, the EFTA Surveillance Authority submits that Iceland has breached the prohibition on discrimination on grounds of nationality under Article 4 EEA. 

Here are some of the key issues to bear in mind once the judgement has been read: 

1 EFTA Court judgements are only yes/no rulings – a yes / no as to X having failed/not failed to comply with certain EU directives / European Economic Area Agreement.

2 The Court does not meet out sanctions, only answers “yes” or “no” as mentioned above. Consequently, the fact that no sanctions will be mentioned in the judgement can’t be seen as a partial victory for those the Court finds against.

3 A judgement from the EFTA Court is a proper judgement, not only “advisory” – and there is no instance of appeal. This is the final instance in deciding a failure or not when it comes to an EU/EEA directive/agreement. (According to a Sky report the president of Iceland Olafur Ragnar Grimsson has stated that the judgement is only “advisory.” That is not correct.*)

4 In cases where ESA is the applicant ESA is also a guardian of the judgement in the sense that ESA will keep an eye on if the judgement is fulfilled or not. – However, it is not necessarily crystal clear right away, from the judgement, what action needs to be taken.

5 In one case ESA has brought a country twice to the EFTA Court for the same reason. This happened in a case against Norway, related to public service pension payment, which ESA deemed to fail to comply with a EU directive on gender equality.

Three years after the original judgment ESA concluded that Norway, having had ample time, had fail to make the necessary changes to comply with the directive. Although Norway had started taking action ESA waited no longer and brought another case:

,,More than three years after the EFTA Court required Norway to recalculate the survivor pension of approximately 4000 pensioners, less than half of them has received the payment they are entitled to. The EFTA Surveillance Authority has therefore brought Norway to the EFTA Court for not complying with the judgment.

This is the first time that the Authority has had to take an EFTA State to the EFTA Court for failure to comply with a Court judgment.” – Full text here.

The interesting parallel here is that Norway was supposed to fulfil the judgement by a financial compensation, ie paying 4000 pensioners an extra sum – but yes, three years later they hadn’t yet done so. This case is still in the consultative process, not yet at the Court.

6 The only authority with constitutional rights to speak on behalf of Iceland is the Icelandic Government. Anyone else, ia the president of Iceland, can of course have his or her opinion but these opinions carry no authority as to what action Iceland will take on the issue, but are, in this context, purely personal opinions.

7 In case the judgement goes against Iceland (on one or both issues), the Dutch and the British Governments will most likely wait until after the Icelandic election to take Icesave again up with the Icelandic Government.

8 The Icesave case – if and how the British and Dutch demands for Iceland reimbursing the European minimum guarantee for Icesave depositors in respective countries – was a bone of contention in Iceland for several years following the collapse of the Icelandic banks in October 2008. From those opposing an agreement, it seemed as if the financial future of Iceland could only be assured by not paying.

It is interesting to note that although Iceland did not save its three largest banks, financial bailouts of smaller institutions have indeed not come cheap, probably costing Iceland 20-25% of its GDP and still counting. (Comparable cost in Ireland is 40%, in the UK 5%). This cost has hardly been mentioned at all in Iceland and has only recently become clear.

An ESA overview of all relevant actions re its case is here.

*When a national court seeks the opinion of the EFTA Court, a so called Note for Guidance, this opinion is for guidance only. An EFTA Court judgement is, like a High Court ruling, not only advisory. As is stated in the Agreement between the EFTA States on the Establishment of a Surveillance Authority and a Court of Justice  (ESA/Court Agreement) (main part), article 33: “The EFTA States concerned shall take the necessary measures to comply with the judgments of the EFTA Court.” In other words, an EFTA State has to comply with the judgements of the EFTA Court.

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Written by Sigrún Davídsdóttir

January 26th, 2013 at 10:34 pm

Posted in Iceland

4 Responses to 'Waiting for the EFTA Court judgement on Icesave – the essentials'

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  1. Sigrún,
    You should change your link to the ESA’s case to point to http://www.eftacourt.int/index.php/cases/case_e_16_11_efta_surveillance_authority_v_the_republic_of_iceland . This is the ESA’s and
    EC’s revised version of the Application, the latest offered to the EFTA Court, and so the operative one. It is considerably cleaned up, with some of the worst silliness removed, but it retains the basic problems, to wit, that the first allegation is based on an unstated assertion that TIF should have done what it did do, borrow to reimburse the British and Dutch Icesave depositors, but not from its British and Dutch insurer counterparts, as it did do, but from the Icelandic government/people, with the concomitant logic failure that for TIF borrowing from the ESA disapproved sources the payments using those sources’ funds were not payments… And in the second allegation, failure to recognize that any discrimination that existed was necessarily by TIF, perhaps caused by Iceland’s refusal to provide funds (if so found — the allegation is a dependent one). You might be able to see that the caused by assertion would, logically, be TIF’s to make, to the ESA, in what would have, had it been done, been a within ESA responsibilities allegation of discrimination (which should have been put forward in 2008 or 2009, if it was to be).

    Regarding the powers of the ESA Court, and the advisory nature of its findings (whatever anyone may say, or have said), re-read Part VII of the EEA Agreement, especially Section 3, keeping in mind as you read that the EFTA is a Treaty and the EFTA States, Iceland, Norway, Switzerland and Leichtenstein, are independent states who all retain their individual sovereignties, and that sovereign states cannot be ordered, but must be negotiated to agreements. If the EFTA Court makes a foolish ruling on Monday Iceland will have right to assert its sovereignty and, per the EEA Agreement, even flatly refuse to accept or abide. The matter will go to the EEA Joint Committee, who has negotiating powers. You may read on from here in the Agreement, what ultimate resolutions may be available.

    R.L.Dogh

    27 Jan 13 at 1:52 am

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  3. Well said Foreigner Dogh!!!
    I could not agree more!!
    I am with you 10,000%!!
    Allow me to expand on your excellent thesis:

    “If the EFTA Court makes a foolish ruling on Monday”
    e.g., Declare, Pay what you owe

    “Iceland will have right to assert its sovereignty”
    e.g., turf huts and fish-head stew

    “And, per the EEA Agreement, even flatly refuse to accept or abide”

    e.g., commit suicide

    I am stunned as ever. The Dough’s impeccabe logic is as sane as always!!!!

    Afram Island!
    Gummi

    Gummi

    28 Jan 13 at 4:16 am

  4. […] some earlier Icelogs on this topic: the EFTA Court decision; the ESA case, after the oral hearing; key issues regarding the ESA Icesave case; some reactions to the EFTA Court […]

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