Monckton silk seals victory for Iceland in Icesave compensation case

Monckton Chambers’ Tim Ward QC won the day for Iceland as the Court of the European Free Trade Association (EFTA) this week cleared the country’s government of breaking European banking laws by failing to guarantee minimum levels of compensation for UK and Dutch customers of defunct bank Icesave.


The Luxembourg-based EFTA court dismissed an application brought by the EFTA Surveillance Authority and European Commission, alleging that Iceland had broken the deposit guarantee directive by refusing to compensate foreign nationals in the wake of the collapse of one of its banks. The EFTA Surveillance Authority was ordered to pay its own costs, as well as the costs incurred by Iceland.

The case was brought in relation to Icesave, the online arm of Icelandic bank Landsbanki. The bank collapsed in the wake of the financial crisis in 2008, when the British and Dutch governments moved to guarantee their citizens’ retail deposits at the bank. There followed four years of legal wrangling between the UK, Dutch and Icelandic governments over who should foot the bill for the bailout.

Even though the EFTA court held that the Icelandic government had no responsibility to compensate foreign customers of Icesave, it is likely that savers will still be able to recoup their losses from Landsbanki’s estate, meaning that the parties were effectively fighting over who would pay the interest lost by the UK Government on the cash it used to bail out Icesave’s UK customers.

Monckton’s Ward QC, who took silk in 2011 (1 March 2011), was instructed directly by Icelandic Foreign Minister Össur Skarphéðinsson. News of the instruction broke earlier this month (12 January 2012). Iceland was also advised by agent Kristján Andri Stefánsson and co-counsel Karl Sveinsson.

Meanwhile, the EFTA Surveillance Authority was represented by its own director Xavier Lewis and legal officer Gjermund Mathisen. The European Commission, meanwhile, was represented by its agents Enrico Traversa, Albert Nijenhuis and Karl-Philipp Wojcik.

For more on Monckton Chambers, check out The Lawyer’s feature on the set, here.