Landsbanki depositors back legal action vs Iceland

The joint administrators of failed Landsbanki Guernsey have received the go-ahead to take legal action against Iceland, in a bid to recover as much money as possible for savers with money trapped in the bank.

Depositors with cash frozen in the collapsed bank voted by an overwhelming majority for the administrators to pursue a legal resolution, at a hearing of the Royal Court of Guernsey on 9 September.

The joint administrators are pushing for equitable treatment for depositors in the bank, as IceSave savers have been bailed out by the UK and Dutch Governments, which were prioritised over Guernsey.

The state's move follows the Icelandic Government's implementation of the "Emergency Laws" the day before Landsbanki went into administration on 7 October 2008, which gave priority for certain categories of depositors.

Should the administrators fail to obtain an equitable redress, the depositors have authorised them to pursue formal damages against the Icelandic Government.

While the joint administrators say they regret having to take action against the Icelandic Government, they believe it is not fair for some governments to enjoy priority over the bank's depositors and consequently reduce the recovery amount obtained by those savers.

Depositors have previously raised their desire to launch a legal claim, supported by the Joint Depositors and the chief minister of Guernsey, to the Icelandic Government, UK Government and Treasury, Justice Select Committees and International Monetary Fund.

The joint depositors say they are disappointed none of the bodies approached have been able to assist with challenging the Icelandic Government in court.