My instant reaction to today’s ruling from the Icelandic Supreme court would be that this ruling now unties the hands of the Icelandic government to repay UK and NL the £2.4bn owing from the collapse of Landsbanki in 2008.
After 2 referendums in Iceland which both rejected a plan to repay the Netherlands and UK between 2016 and 2045, this ruling from the highest court in Iceland means that Reykjavik is now legally bound to repay both countries under the teams which it rather than the Icelandic people see fit.
Iceland’s main banks collapsed at the height of the financial crisis 3 years ago, which meant that 300,000 British savers with one of those banks – Icesave- couldn’t access their deposits. The UK Treasury refunded them in full and the government in Reykjavik agreed to repay that £2.4bn with interest.
That refund did not cover dozens of British local authorities which had saved with Icesave because they were considered to be educated investors rather than depositors.
Today’s Icelandic Supreme court ruling sets out that Depositors (including councils’ money) have “priority creditor status” for the deposits they had in failed Icelandic banks.