The Supreme Court of Iceland today ruled in a case concerning the Emergency Act of October 6th 2008. The ruling entails that the law and associated acts stands undisputed. Since the Supreme Court is a court of last instance no legal uncertainty remains.
The Government of Iceland welcomes this crucial stepping stone towards stable economic recovery.
As regards the Icesave-dispute, the ruling of the Supreme Court is in full accordance with the expectations of the Government as it now seems certain that all depositor claims towards the estate of Landsbanki will eventually be fully covered. The ruling eliminates uncertainty regarding distributions from the estate, which has been in an orderly winding-up process in accordance with Icelandic and European legal requirements. According to the Winding-up Board of Landsbanki, disbursements are expected to commence within weeks.
(This article is a press release from the Icelandic Prime Minister’s office. It appears unedited and in whole.)
I have been reading this morning the Icelandic Supreme Court judgements, regarding the priority order of the FSCS/DNB claims in the bankruptcy proceedings of Landsbanki:
http://www.haestirettur.is/domar?nr=7618 (DNB)
http://www.haestirettur.is/domar?nr=7619 (FSCS)
This legal case has taken a long time, but the final judgement that the emergency laws 125/2008 were in fact valid, and those claims should therefore be classified priority claims.
The supreme court also reached decision in several cases regarding wholesale deposits of Councils and other organizations in UK/Netherlands. In short, Icelandic laws do not make any distinction between deposits by sophisticated investors and regular depositors, and therefore those deposits will receive priority status along with other ordinary deposits.
Overall I am impressed with the judgements and the legal reasoning given. The decision seems well supported and made in accordance with Icelandic laws and previous rulings.
Now that the legal cases have run their course and priority status of all the claimants has been established, there is really no impediments left for the winding-up board of old Landsbanki to start processing payments from the bankruptcy proceedings.
http://www.lbi.is/library/Opin-gogn/skyrslan/Financial%20Information%20Q2%202011%20-%20eng_open%20site.pdf
According to their last report, the recoveries have been rising steadily since 2009 and are now estimated at 1290B ISK (8B Euros). The total priority claims by FSCS and DNB have now been confirmed as 852B ISK (5.3B Euros) for FSCS and 282B ISK (1.8B Euros) for DNB. The Supreme Court rulings now also allow the other priority claims (Councils and other wholesale depositors) to be correctly estimated by the winding-up board.
If we assume the other priority claims to be somewhere around 200B ISK (1.3B Euros), the total priority claims are therefore likely to be somewhere close to 1350B. This means the final recovery rate for priority claims is likely be somewhere around 95%. If the recoveries by LBI continue to rise, like they have in the past, it is quite possible that the full 100% of the priority claims will be paid out in the end.
P.S. Congratulations to the Dutch for a well deserved win today, at the Bridge World Championship in Veldhoven.
The only sensible verdict, had the emergency laws not been deemed valid by the court it would have meant that sovereign states don’t have the right to issue their own laws.
That would have been a statement that the unwritten laws of the international bankers outweighs the decisions of governments of sovereign states.
This verdict draws a clear line that tells us that the power to change laws or write new laws lies with the people, not the world of banking.