UPDATED 21 December: Although European laws on sovereign responsibility for banking failures are to be changed, it will have no effect on the Icesave contract, which is unconnected to such changes. This is according to British law firm Ashurst, which the Icelandic parliament’s Finance Committee commissioned to answer legal questions surrounding Icesave in the UK. Another British law firm has advised that the rate of interest on the loans is too high.
Ashurst returned its report to Althingi last week and it was made public over the weekend and Michon de Reya answered later with details now released.
The Ashurst report says that the Icesave deal reached in October between Iceland and the UK and Netherlands is mostly fairly standard and comparable to other international loan agreements, RUV reports. The main points that make the contract unusual are the fact that payments can continue after 2024 if the loan is not yet paid, the review clause and other smaller details which are to Iceland’s advantage, the report states. It is still also possible for the Icelandic government to take this contentious issue before the British courts for clarification and possible changes.
The legal company was asked to help answer whether or not the changes to European law could change the Icesave deal to Iceland’s advantage. The answer, though, was no.
The legal team was also asked what effects it would have should Althingi not accept sovereign responsibility for Icesave. The answer was that political pressure on the Icelanders would increase dramatically and that the British and Dutch would almost certainly go to court to attempt to force Iceland into a binding contract. Should they succeed, the conditions of the loan would be less favourable and repayments could be called for immediately with no payment break during the first years.
Michon de Reya, on the other hand, say in their report that there is much to complain about in the Icesave contract, which is neither clear nor fair. The continue that the British and Dutch are asking for far-too-high an interest rate, RUV reports. The firm’s lawyers discussed the issue with British government advisers who implied that the British are more interested in providing a solution which is fair and workable for Iceland than some in Iceland seem to believe.
- Asking British law firm about UK-Iceland dispute is contentious by itself.
- Asking “international law firm” is as good as asking “international rating agencies”.
- Asking law firm about political consequences? Excuse me but this is either stupid or nothing more than an attempt to get a kind of “power of attorney” to avoid any personal responsibility i.e. to be able to say “We got legal advice – so it was not our fault”.
- Real law firm would never talk about such matters as “political pressure” or “almost certainly” matters. Fortune-teller costs less and gives more correct answers in such cases :-)
Absolute tosh Alexander. Your first point is xenophobic and irrational and it goes downhill from there.
Anyone got a link to a copy of the report?
Ashurst was involved in creating the icesave deal, so you can guess what they think about the matter before you read the report,
Michon de Reya on the other hand has not had any involvement in this matter that and is one of the most respected law firms in Britain, i am going to trust Michon de Reya.
Looks like it is nothing new to this one from what Ashhurt law firm did write June :
ww.island.is/media/frettir/24.pdf
>The answer was that political pressure on the Icelanders would increase
>dramatically and that the British and Dutch would almost certainly go to court
>to attempt to force Iceland into a binding contract.
I do not think that most Icelander would be upset to see this in court. But it would be in Icelandic court first, then up to EFTA Court as we have just seen with the law on discrimiation that EFTA Suirvelliance Authority did rule was valid according to EEA agreement.
>Should they succeed, the
>conditions of the loan would be less favourable and repayments could be >called for immediately with no payment break during the first years.
* Should * and * could * is the words here.
Earlier legal opinion from Ashurst was done in June 09 on behalf of Schjødt of Norway that law firm that Red-Green Icelandic govvernment did ask to get legal opinion.
( Why was this first chosen in first place if all they do is charge fees and then give work to other UK law firm to do donkeys work? Then charge Icelandic government the extra for being middle man.
Why do they not have they experise in house about this ? )
With impartial experts of the law ( such as at EFTA Court ) ruling on laws I am not sure that it would be as clear cut as EU would like it to be.
Both EFTA ( Iceland member of ) and EU ( UK and Holland ) are seperate sovereign peers in what does make the European Economic Area.
But at least at last more than this one opinion has properly being asked for by Icelandic parliameny.
Why in gods name this was not done 6 months before by Red Green government still make my blood boil.
But they have been concentrating clearly on that EU member ship bid and they pet projects.. Not this.
Good to see that after other opinion is published this article title does get change quickly from
british-lawyers-say-current-icesave-deal-as-good-as-it-gets/
to
british-lawyers-disagree-over-Icesave/
Mishcon de Reya does give their opinion with more details and under standing that this whole IceSave issue is about politics.
Which it is. Remember that this whole deposit liability is about a country deciding to take it on on behalf of its deposit guarantee fund.
And that if Ireland had not insured all its bank deposits causing all this capital flight from UK and other country to Ireland then there would not have been so much panic in UK — that is for sure.
But as I and others said many times.
IceSave need to be put in front of a court. It should be an Icelandic court first and then the EFTA Court.
Things move quickly from Icelandic judges upto EFTA Court.
Why does UK and Holland governments ( and EU commission ) fear that so much ?
“Michon de Reya on the other hand has not had any involvement in this matter”
Incorrect. Mishcon de Reya have been advising the Icelandic government on the Icesave dispute for quite a while (eg http://www.island.is/media/frettir/MB_290309.pdf). Their latest report was given to Athingi’s Budget Committee a week ago, so should be publicly available online by now. However, from the opinion summaries, it looks like Ashurst’s report will prove more authorative…
“Real law firm would never talk about such matters as “political pressure” or “almost certainly” matters”
I guess that, in your world, solicitors just perform property conveyancing…
Mishcon de Reya, an interesting choice.
>We like to solve problems quickly. To achieve this consistently, we employ a diverse collection of talented people, from varied backgrounds with differing perspectives, who are capable of addressing issues in a collaborative, non-hierarchical environment. By looking at a problem from every angle, we can then apply our expertise confidently and decisively.
http://www.mishcon.com/about_us/
Well ‘the solve problems quickly’ aspect can’t be bad, but perhaps otherwise, a ‘maverick’ option – but hey, ‘any port in a storm’.
Maybe Phil Shiner would have been more appropriate.
http://www.guardian.co.uk/profile/philshiner
Fishy said:
“Why in gods name this was not done 6 months before by Red Green government still make my blood boil.”
Well, maybe the fact that the Icelandic Government has already lost the arbitration and gave up any further right of legal redress, has something to do with it?
The Icesave deal is “as good as it gets”
or life long penal servitude but not lethal poisoning.
Haven’t found the Ashurst one yet, but the Grapevine links to Visir’s copy of the Mishcon one. I haven’t read it yet, but here it is:
http://visir.is/assets/pdf/XZ7761221.PDF
“STRICTLY CONFIDENTIAL AND LEGALLY PRIVILEGED” :D
“Careful consideration should be given to the adverse consequences of any disclosure of this document or its contents other than to those to whom it is directly addressed”
They forgot to include me as an addressee… But, at 86 pages in length, it may not have fitted through my letterbox.
There are quite a few interesting points. One that I wasn’t aware of was that “if on objective analysis, the Icesave Agreement is unaffordable, then it is arguable that from the very outset or at any point subsequently the Icesave Agreement could fall within the Doctrine of Impossibility in English law which could have again have highly
unpredictable consequences including the British and Dutch claiming fundamental breach and consequently seeking immediate repayment in full”. Which means the more that Iceland argues Icesave is unaffordable, the deeper it is digging at least one legal hole.
The LSE will soon be offering legal doctorates in Icesave Agreement studies…
The Icesave Agreement, in its current form, is DEAD.
There is no way that any Althingi member who reads and understands the Mishcon report can vote for the current agreement. The main problems are the “above 20k double claims”, the interest rate of 5.5%, the termination events, Iceland’s inability to pay, the waiver of sovereign immunity, and, generally, the large number of unclear points. The potential for Britain/UK to go after any Icelandic assets abroad is another deal-killer.
So it must be renegotiated. And while the Agreement is being rewritten to cover the most obvious problems, Iceland will obviously want to rewrite other portions of the contract too. So it is at least another year of boring Icesave discussion.
Mishcon says that it’s not clear whether paying out deposit insurance, or merely establishing a scheme to do that, is enough to satisfy EU directives, but that Iceland will probably lose that argument. The same for the “force majeure” argument — Iceland will lose that too.
So if Iceland gets the “neutral trial” that everybody wants, they will probably lose. Sorry, Icelanders.
I thought Mishcon generally did a pretty good analysis. The main weakness was that they did not discuss what happens if Iceland defaults on other debts (eg bond payments), if Iceland “changes its laws” (which could be any number of things), and the whole question of the Emergency Law and its treatment of Landsbanki creditors.
Well, better to have gotten the bad news before Althingi approved this stinker.
“Mishcon says that it’s not clear”
Remember that Mishcon isn’t the definitive legal firm on Icesave matters! Just check out their earlier opinion pieces explaining their lack of relevant knowledge. Others which much greater expert knowledge think it very clear that merely establishing a scheme is insufficient (and reference multiple case law examples to explain why). Be careful of relying on dodgy opinions to justify your wishes…
“Well, better to have gotten the bad news before Althingi approved this stinker.”
If Althingi fails then the president is obligated to refuse to sign the law granting state guarantee and refering this to a referendum, he signed the law granting state guarantee to the amended deal with a specific reference to the amendments, now those amendments have been removed,
if he suddely changes his mind and decides to sign the law anyway there is a barrel of tar and plenty of feathers waiting for him next to a one way plain ticket to the south arctic.
lets hope for once in his life he does the right thing.
“The potential for Britain/UK to go after any Icelandic assets abroad is another deal-killer.”
The EU countries can already seize Icelandic assets if it refuses to pay back the debt, I think the Icesave deal simply emphasises that this option is *not removed*.
I think this is what is driving the politicians, they know that refusing the icesave deal will mean losing overseas assets and a hammering of Iceland’s credibility that will outweigh the cost of the deal.
Declaring that Iceland doesn’t provide a sovereign guarantee is meaningless, the debt is already there and will have to be repaid.
“The EU countries can already seize Icelandic assets if it refuses to pay back the debt”
According to EEA-HT-4713.27B-2008, any EU country can kidnap Icelandic children as debt repayament in lieu.