Weil Gotshal & Manges has scored a High Court victory in the first step towards forcing the UK Government to revisit its decision to put the UK arm of Icelandic bank Kaupthing into administration.
The High Court agreed to the request for a judicial review from the state-controlled Icelandic bank last week.
Weil litigation partner Matthew Shankland was instructed to represent the bank in its action against the Government in January after weeks of threats. The action includes claims that the decision contributed to the bank’s downfall.
Kaupthing Bank also contends that the actions of the UK authorities were unjust and illegal.
The Government seized control of the UK arm, Kaupthing Singer & Friedlander (KSF), in October 2008 following a recommendation by the Financial Services Authority that argued that KSF was unable to honour its obligations to customers.
The Treasury invoked new banking powers to transfer KSF’s £2.5bn of retail deposits for 160,000 customers to Dutch bank ING Direct.
In October, Iceland’s government was told by Lovells that taking direct action against the UK Government had little chance of success. It decided instead to support Kaupthing’s action.
In a statement the bank said it “hopes that promised financial support will be forthcoming from the Icelandic government to ensure that legal proceedings can be continued”.