State Liability in the EEA



In Sveinbjörnsdóttir v. Government of Iceland, the EFTA Court extended the principle of state liability from EU law to the European Economic Area. Consequently, EFTA States are obliged to compensate individuals for damage caused by breaches of EEA law for which they are responsible. The EFTA Court has affirmed that the same three conditions apply to state liability claims as in EU law, but with some possible modifications. Section 2 addresses the justifications for state liability in the EEA and Sect. 3 explores the criteria for establishing state liability. Section 4 looks at a contentious example of the lack of state liability—the Icesave I case before the EFTA Court.

In this landmark judgment, the EFTA Court affirmed that the State of Iceland was not liable for deposits in failed credit institutions, provided the state established a deposit insurance scheme in accordance with EU Law. Iceland was under no obligation to use taxpayer funds to recapitalise the Icelandic deposit insurance scheme that the collapse of the Icelandic banking system in October 2008 overwhelmed. Deposit insurance was a liability of the Icelandic banks, and not of the State of Iceland. Even though the Court affirmed the lack of Iceland’s liability under EEA law in the instant case, its obiter dictum does not detract from the principle of state liability in EEA law.


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© Springer International Publishing AG 2017

Authors and Affiliations

  1. 1.Faculty of LawUniversity of CambridgeCambridgeUK

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