European court rules in Iceland's favor over repayment of deposits in failed Icesave bank

A court has cleared Iceland of wrongdoing over its refusal to repay depositors' money lost in the country's banking collapse.

The Luxembourg-based European Free Trade Association Court said Monday that deposit-guarantee laws did not cover "a systemic bank failure of the magnitude experienced in Iceland."

Some 340,000 British and Dutch savers lost deposits when Icesave, an online subsidiary of Iceland's Landsbanki, collapsed along with the island nation's other banks in 2008.

The savers were repaid by the British and Dutch governments, who have been trying to get their money back.

The court case was brought by the European Free Trade Association Surveillance Authority, which makes sure that Iceland, Liechtenstein and Norway comply with European Union regulations. The countries are not EU members but belong to the European Economic Area.