High Court considers Icelandic bank's challenge to HM Treasury's use of emergency powers during 2008
| Pages | 178-185 |
| DOI | https://doi.org/10.1108/13581981011034023 |
| Date | 11 May 2010 |
| Published date | 11 May 2010 |
| Author | Joanna Gray |
| Subject Matter | Accounting & finance |
LEGAL COMMENTARY
High Court considers Icelandic
bank’s challenge to HM
Treasury’s use of emergency
powers during 2008
Joanna Gray
University of Newcastle upon Tyne, Newcastle upon Tyne, UK
Abstract
Purpose – The purpose of this paper is to report and comment on the High Court ruling on Icelandic
bank’s challenge to HM Treasury’s use of emergency powers during 2008.
Design/methodology/approach – The paper outlines the facts surrounding the cas e and
comments on the decision.
Findings – The High Court disagreed that the claimant’s view of events accorded with the way
the treasury in fact acted.
Originality/value – This appeal shows how two very differently motivated, yet equally well-
intentioned, regulatory regimes can come into conflict.
Keywords Legal decisions,Banks, United Kingdom, Iceland
Paper type Research paper
(Rv. HM Treasury ex parte Kaupthing Bank HF (High Court: Queens Bench Division:
Administrative Court: Lord Justice Richards and Mr Justice Maddison)).
Date of Judgment: 10 July 2009
Facts
The background to this decision lay in the UK Government’s use of the emergency
powers it had assumed in February 2008 under the Banking (Special Prov isions) Act
2008. Those powers were used to transfer the assets and liabilities of Northern Rock to
government ownership and were used again later in the year as the financial crisis
deepened and more banks were beset by liquidity and problems. On 8 October 2008,
the UK Government exercised its powers under the 2008 legislation and made the
Kaupthing Singer & Friedlander Ltd (Transfer of Certain Rights and Lia bilities) Order
2008 (SI 2008/2674), hereafter referred to as “the Transfer Order”, which had the effect
of transferring to a third party the liabilities of Kaupthing Singer & Friedlander
(“KSF”) to UK depositors. The Financial Services Authority then placed KSF into
administration. Lord Justice Richards summarised the relevant facts leading up to
these steps being taken. His description of the background and selection from various
official’s witness statements and other evidence give a real sense of the extreme
urgency of the action taken, the speed at which critical regulatory and supervisory
decisions had to be taken in the face of mounting uncertainty as to KSF’s liquidity
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1358-1988.htm
JFRC
18,2
178
Journal of Financial Regulation and
Compliance
Vol. 18 No. 2, 2010
pp. 178-185
qEmerald Group Publishing Limited
1358-1988
DOI 10.1108/13581981011034023
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