“Complete victory,” headlines Frettabladid following the ruling of the European Free Trade Association (EFTA) in favour of Reykjavik in the case it brought against the European Commission. The Commission had been pursuing Iceland, arguing that when the Landsbanki, Iceland's biggest private bank, went bankrupt in 2008, the government should not have refused to cover the losses of Dutch and British customers of Icesave, a subsidiary of the Landsbanki set up in the Netherlands and the United Kingdom. That refusal was endorsed by a referendum in which Icelanders rejected the loan guarantees repayment negotiated by their governments with The Hague and with London.

“The court has ruled that Iceland has not violated European directives concerning the obligation to guarantee bank deposits, as those directives do not apply to a systemic crisis,” writes the newspaper. That crisis had hit the entire Icelandic banking sector, which collapsed in 2008.

In addition, explains lawyer Michael Waibel in the Financial Times

The Court has sided with Iceland on a legal and political issue that resonates well beyond Iceland: whether the state is and should be responsible for liabilities of a national deposit insurance scheme.”

As for the European Commission, it “appears to be quite the sore loser,” notes Les Echos in Paris, which says that Brussels

is claiming that depositors must be insured whatever happens, even in a systemic crisis. It should address that question now, while negotiations on the harmonisation of European deposit guarantees are still going on.