In this note we consider two headline points in relation to Landsbanki Island hf: (1) the responsibility of the Icelandic Government in respect of its obligations to the Icesave depositors under Directive 94/19/EC (the “Directive”); and (2) the Landsbanki Freezing Order in place in relation to the London Branch Assets.
Schjødt represents the Ministry of Foreign Affairs of Iceland. Schjødt has asked us to review two loan agreements dated 5 June 2009 entered into by Iceland (as guarantor) and the Depositors’ and Investors’ Guarantee fund of Iceland as borrower (“TIF” or the “Guarantee Fund”). One loan agreement is with the UK and one with the Netherlands.
Several confidential documents have been discovered on the website of the Icelandic government providing insight into the bizarre legal tactics used by European governments during the recent financial crisis which led to the country’s economic collapse. Each document is a different analysis of the legal arguments behind the so-called “Icesave dispute”, in which the United Kingdom, the Netherlands, and other European governments attempted to force the Icelandic government to repay the debts created by private banking institutions outside their own country.
The Directive sets an obligation to pay depositors at least 20.000 EUR when deposits become unavailable, i.e. when the relevant national authority has determined that the credit institution concerned is unable to repay the deposits. The Directive does not preclude provisions which offer a higher or more comprehensive cover for deposits, provided that this cover is applied to aggregate deposits, irrespective of the location within the EEA.