Iceland government wins initial EFTA backing in U.S. fund feud

The European Free Trade Association has given initial backing to Iceland’s government in a stand off with a U.S. investment fund over bonds Reykjavik froze as it moved towards lifting the country’s eight-year-old capital controls.

EFTA was responding to a complaint by U.S. fund Eaton Vance that Iceland had discriminated against foreign funds with its actions which were not “reasonable and proportionate”.

“Having taken account of the information on the facts of this case and the applicable EEA (European Economic Area) law, the Directorate cannot conclude that the Icelandic Government has erred in its application of Article 43 EEA,” the EFTA surveillance authority said in a published document.

“The Directorate intends to propose that the Authority close the case. The Authority may, however, revert to the matter should any relevant developments occur in EEA or EU law.”

(Reporting by Marc Jones and Daniel Dickson in Stockholm; Editing by Claire Milhench)

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