Britain set to fight for Iceland cash in court

10th April 2011, Comments 0 comments

Britain is prepared to drag Iceland through the international courts to recoup its money used to bail out savers in collapsed Icelandic banks, the finance ministry said Sunday.

Chief Secretary to the Treasury Danny Alexander told BBC television the Iceland referendum result on the repayment deal agreed between the governments was "disappointing".

"It now looks like this process will end up in the courts," said Alexander, the number two to finance minister George Osborne.

Icelandic voters gave a resounding "no" in a referendum on whether to approve a renegotiated deal to compensate Britain and the Netherlands over the 2008 collapse of Icesave bank, near-complete results out Sunday showed.

"It is obviously disappointing that it seems the people of Iceland have rejected what was a negotiated settlement and of course we respect the will of the Icelandic people in this matter," Alexander said.

"We're going to have to now go and talk to the international partners with whom we work, not least the government of the Netherlands.

"It now looks like this process will end up in the courts. There's a legal process going on and we will carry on through those processes to try and make sure that we do get back the money that the British government laid out in past years."

Britain and the Netherlands spent 3.9 billion euros ($5.6 billion) compensating 340,000 of their citizens who lost money when Icesave, an online bank, went under at the height of the global financial crisis.

"It's a very substantial sum of money. It's several billion pounds and that's something that was laid out under the previous government to bail out people in the UK who'd saved with Icesave and other banks," Alexander said.

"We've tried to get a negotiated settlement with Iceland and we reached an agreement with the Netherlands, ourselves, Iceland.

"That's now been rejected (in the referendum). That of course is disappointing. It would have been preferable to have a negotiated outcome."

After the "no" bloc win, Iceland could face up to two years of litigation before the European Free Trade Association (EFTA) court, which plays the role of the European Court of Justice for European Economic Area members Iceland, Liechtenstein and Norway.

"There is already a legal process going on through the EEA court and that's something that we will be looking at joining with and once that process is completed we will seek to recover our money in the normal way," Alexander said.

"We had an obligation to people in this country who'd saved with those banks. We have an obligation now to get that money back, and we will continue to pursue that until we do."

He added: "We have a very, very difficult financial position as a country... This money, of course, would help."

© 2011 AFP

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