The European Commission is to get involved in the legal proceedings the EFTA Surveillance Authority (ESA) is taking against the Icelandic government because of the Icesave dispute with British and Dutch authorities, as reported yesterday.

This would be the first time that the European Commission would be given direct access to a case before the EFTA Court, ruv.is reports.

The ESA referred the Icesave dispute to the EFTA Court in mid-December 2011 after determining that Icelandic authorities violated the EEA agreement by not paying Icesave depositors in the UK and the Netherlands the minimum deposit insurance when Landsbanki, its parent company, collapsed in 2008.

The move was taken after the majority of Icelandic voters rejected debt repayment agreements the government had made with British and Dutch authorities for the second time in a national referendum.

Since the dispute was taken to court, Iceland’s legal representatives have submitted a statement and the ESA’s deadline to respond expired yesterday, to which Iceland will have the opportunity to rejoinder.

All European Union and European Free Trade Association (EFTA) member states, in addition to the European Commission, have the authority to participate in the court case, which the European Commission often does by requesting intercession.

However, in this instance the European Commission has requested direct involvement, to support the ESA in the legal proceedings against Iceland. This must be authorized by the EFTA Court and Icelandic authorities have just a few days to present their view.

If the request is greenlighted by the EFTA Court, it would be the first time that the European Commission gains direct involvement in a case before the EFTA Court.

The move has provoked harsh reactions among politicians in Iceland; members of the Progressive Party, the second-largest opposition party in the Icelandic parliament, have requested a meeting with the parliament’s Foreign Affairs Committee and the EU ambassador in Iceland to express their objections.

MP Gunnar Bragi Sveinsson, the Progressive Party’s representative on the Foreign Affairs Committee told ruv.is that he couldn’t believe the European Commission would make such a move while the EU-Iceland accession talks are ongoing.

The Progressive Party states that it would be incredible if the Icelandic government planned to continue accession talks with the EU as if nothing happened.

Magnús Orri Schram, chairman of the parliamentary party of the Social Democrats, one of the two coalition parties, stated that the EU membership application and the Icesave case before the EFTA Court are two separate matters that shouldn’t be mixed up, visir.is reports.

Click here to read more about the Icesave dispute and here to read more about Iceland’s membership negotiations with the EU.

ESA