The Icesave dispute: case study into crisis of diplomacy during the Credit Crunch

Abstract

The Icesave dispute Iceland fought with the UK and Dutch governments reviled inhered weakness of the European financial system. Bringing forward tension of legal division between public and private law and falling outside framework of traditional neatly compartmentalized law the ambiguity of responsibilities was testing understandings and interpretations of international relations. The paper explores how larger and more powerful countries were politically able to pressure a much smaller state in time of crisis into abiding to their own interpretation of law and in doing so rallying behind them support of international organizations like the EU and the IMF. In January 2013 the EFTA Court finally ruled on the issue, vindicating Iceland of wrongdoing and refusing the UK, Holland and the EU’s claim. Studying the Icesave dispute contributes to understandings of production of international legality trough practices and contested interpretations in the international realm.