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Lex Law Offices > The Legal 500 RankingsLex Law Offices counts domestic and international financial institutions among its key list of clients, including Landsbankinn and Síldarvinnslan; the team assisted the latter during its listing on the OMX Nasdaq market. The practice advises clients on derivatives, structured finance and refinancing matters, and acts for issuers of both debt and equity instruments. Team leader Ólafur Haraldsson specialises in corporate financing work, while Guðmundur Ingvi Sigurðsson focuses on debt restructuring mandates and the ‘meticulous’ Stefán Orri Ólafsson advises listed companies on the disclosure requirements for regulated securities markets.
‘Fanney Frímannsdóttir is extremely thorough and organised. Ólafur Haraldsson is probably one of the most experienced lawyers when it comes to Icelandic financings and taking Icelandic law governed security for loans.’
‘Guðmundur Ingvi Sigurðsson at LEX is an extremely capable lawyer in his field.’
‘Great team with superb knowledge in banking, finance and capital markets.’
‘Stefán Orri Ólafsson has been the partner working for us and has done an outstanding job. Very likeable and easy to work with, always made himself available when needed and very meticulous in all his work.’
Arion Bank hf.
Iceland Seafood International hf.
The Icelandic Depositors’ and Directors’ Guarantee Fund
Central Bank Asset Management Company
- Acting for Síldarvinnslan hf. during the listing and offering process of the company on the market of Nasdaq Iceland in May 2021.
- Represented Arnalax hf., Iceland’s largest salmon farm, in its €56m total refinancing of its syndicated loans with Arion bank and DNB Bank Norway.
- Provided general legal advice to Iceland Seafood International hf. regarding a €5.4m loan used to finance the client’s purchase of the remaining shares in Irish company Oceanpath Limited.
Guðmundur Invgi Sigurðsson; Örn Gunnarsson
Other key lawyers:
‘Guðmundur Ingvi Sigurðsson and his team are extremely responsive, quick and hands on. They understand their client’s needs and provide sustainable hands-on solutions.’
‘Guðmundur Ingvi Sigurðsson is very responsive, focused and provides hands-on solutions while also thinking outside the box.’
EKO Eignir ehf.
New Enterprise Associates
Iceland Seafood International hf.
Rapyd Financial Network (2016) Ltd.
Costco Wholesale Corporation
Nasdaq CSD Iceland
- Represented BAADER in its €43m acquisition of 60% of the equity of Icelandic tech company Skaginn 3X.
- Representing five pension funds in Iceland, including LIVE, Stapi, Birta, LSR and Gildi, in a corporate dispute with a fund/fund manager over the orderly wind down of an investment asset of the pension funds.
- Acted as local legal adviser in relation to Rapyd Financial Network (2016) Ltd.’s acquisition of the entire share capital of the Icelandic payment service provider KORTA hf.
Iceland > Dispute resolution Tier 1Lex Law Offices’ litigation, arbitration and dispute resolution practice demonstrates a ‘high level of expertise’, with several Supreme Court attorneys and a track record in high-end cases before the Supreme Court of Iceland. The team’s diverse client roster includes major commercial and investment banks, including Arion Bank and Landsbankinn, and other financial institutions, as well as government departments and domestic companies. Kristín Edwald, who specialises in insurance disputes, leads the practice alongside Arnar Þór Stefánsson, who acted as lead adviser to Samherji in an investigation by the Namibian and Icelandic authorities into alleged bribes and money laundering.
Kristín Edwald; Arnar Þór Stefánsson
Other key lawyers:
‘High level of expertise and good service orientation.’
Arion Bank hf.
EFLA Consulting Engineers
Nýr Landspítali ohf. (NLSH)
Frigus II ehf.
HS Orka ehf.
Sjóva-Almennar tryggingar hf.
- Representing the Ministry of Education, Science and Culture in a case challenging a decision of the Complaints Committee on Equality (Kærunefnd jafnréttismála).
- Acting for Samherji hf. in the investigation by the Icelandic and Namibian authorities into the company‘s subsidiaries in Namibia and their activities there.
- Representing Sjóvá-Almennar Insurance in a dispute where Arev NII, an investment fund, has made a £3.5m claim to the Directors and Officers Liability Insurance of Sjóvá.
Víðir Smári Petersen
Other key lawyers:
Lára Herborg Ólafsdóttir
MS Iceland Dairies (Mjólkursamsalan ehf.)
Reykjavik Energy (Orkuveita Reykjavíkur)
Alfa Framtak hf.
Arion Bank hf.
Olíuverzlun Íslands hf. (Iceland Oil Ltd.)
The National Power Company of Iceland
- Advised Íslandsbanki hf. on the successful notification to the Icelandic Competition Authority of the merger between Norðlenska matborðið ehf., Kjarnafæði hf. and SAH afurðir hf.
- Assisting the Icelandic Ministry of Foreign Affairs with defending the Icelandic state against a Reasoned Opinion issued by the European Surveillance Authority (ESA) regarding the implementation of Protocol 35 to the EEA Agreement and Article 3 of the EEA Agreement.
- Advised AU5 ehf., a subsidiary of Alfa Framtak hf., on its purchase of shares in construction company Grafa and Grjót ehf.
Iceland > Employment Tier 1Counting Landsbankinn, Guide to Iceland and Arnarlax among its key clients, Lex Law Offices handles a broad spectrum of mandates from compensation schemes and drafted employment agreements to terminations of employment and cases of harassment. Experienced litigator Arnar Þór Stefánsson leads the practice and has demonstrable experience in representing public entities, leading companies and employees in disputes. The team also acts for foreign clients which are looking to expand their presence in the Icelandic market.
Arnar Þór Stefánsson
Wise Lausnir ehf.
Iceland Seafood International hf.
HS Orka ehf.
Stapi Pension Fund
Guide to Iceland ehf.
- Represented Landsbankinn hf. before the District Courts and the Court of Appeals in two separate litigation proceedings brought by two former employees of the bank, where they claimed compensation for an alleged unlawful dismissal.
- Advised Guide to Iceland ehf. on its employment strategy during Covid-19 and implemented necessary protocols with regards to the government’s action plan.
- Advising Arnarlax ehf. on employment matters, such as various collective agreements, various employment contracts, employee’s rights, wages and shifts.
‘Exceptional knowledge of the acquisition of vessels.’
‘In my opinion Lex is the best law firm in Iceland especially for maritime claims handling.’
Jonar Transport ehf.
- Representing Samherji hf. in the investigation by the Icelandic and Namibian authorities into the company‘s subsidiaries in Namibia and their activities there.
- Assisting Síldarvinnslan hf. regarding the shipbuilding of a new Ice Trawler, built by Karstensen in Skagen, Denmark.
- Representing Samskip in collecting damages from port authorities in Sweden, related to an injury suffered by an employee during docking in Sweden.
Óskar Sigurðsson; Arnar Þór Stefánsson
Other key lawyers:
‘Ease of access, response time and of course, quality of work.’
‘The group stands out for the ability to communicate the situation as it is and how possibilities will play out.’
Nýr Landspítali ohf. (NLSH)
EFLA Consulting Engineers
EKO Eignir ehf.
The Icelandic State
Grímsnes- and Grafningshreppur (municipality)
- Acting as lead counsel to public entity NLSH, regarding the construction of a new university hospital in Reykjavik, Iceland.
- Representing Kópavogur municipality in an ISK75bn court case regarding land real estate.
- Appointed as a member of the government ‘s working group for the improvement of the country‘s infrastructure due to a heavy storm in Iceland in late 2019.
Þórhallur Bergmann; Guðmundur Ingvi Sigurðsson; Birgir Már Björnsson
Other key lawyers:
‘Deep understanding and experience in the matter.’
‘We have been working with Guðmundur Ingvi Sigurðsson. Very experienced, sharp and pleasant to work with.’
Bankruptcy Estate of Jötunn Vélar ehf.
Central Bank of Iceland Asset Holding ehf.
Bondholder Group of WOW Air hf.
Bankruptcy Estate of B230 ehf. (Previously Helicopter Services of Iceland hf.)
Bankruptcy Estate of Stólpavík ehf.
Bankruptcy Estate of B230 ehf. (Previously Helicopter Service of Iceland hf.)
Bankruptcy Estate of Hafnarskeid 6 ehf. (previously Frostfiskur ehf.)
Bankruptcy Estate of GS Gluggar ehf. (previously Gluggasmiðjan ehf.)
Bankruptcy Estate of Betonorte ehf.
Bankruptcy Estate of Hjá Jóa Fel – brauð og kökulist ehf.
- Acting as the liquidator of Jötunn Vélar ehf., a commercial distributor of agricultural machines.
- Acting as outside counsel for a group of 40 bondholders against the airline WOW Air hf. in its €50m insolvency proceedings.
- Acting as liquidator of GS Gluggar ehf., one of Iceland’s oldest retailer of windows and window installations in Iceland.
Iceland > TMT and IP Tier 1Lex Law Offices‘ standout client roster includes domestic and international brands including Coca-Cola European Partners Ísland and Vodafone Iceland, and handles a broad spectrum of IP mandates, from registration of trade marks and designs to patent protection issues, opposition procedures and infringement cases. In the field of IT, the team advises software companies, financial institutions and telecoms companies on data protection compliance and cybersecurity issues. Erla Árnadóttir, who is an expert in advising on copyright matters, jointly leads the practice group alongside technology specialist Lára Herborg Ólafsdóttir, following the departure of Hulda Árnadóttir in early 2021. Recently promoted senior associate María Kristjánsdóttir is another key member of the team.
Erla Árnadóttir; Lára Herborg Ólafsdóttir
Other key lawyers:
‘The TMT and IP has been working for our company since 2000 and during this time, at all stages of our cooperation, has provided excellent legal service in the area of TMT and IP, and others. Through our cooperation, mainly with Erla Árnadóttir, our company has been able to achieve quite positive results in TMT and IP, today supporting core values and intangible assets of the company.’
‘Erla Árnadóttir has extensive knowledge of TMT and IP, smooth and efficient communication and profound case preparation and court performance.’
Coca-Cola European Partners Ísland ehf.
Guide to Iceland ehf.
Oliuverzlun Islands hf.
Kvika Bank ehf.
Sýn hf. (Vodafone Iceland)
Reykjavik Energy (Orkuveita Reykjavíkur)
Kara Connect ehf.
- Represented an Icelandic film production company in a case before the district court claiming a 50% share in revenues deriving from an exploitation of a documentary on the eruption in Eyjafjallajökull in 2010.
- Served as Guide to Iceland’s legal counsel regarding two online copyright infringement cases.
- Represented Oliuverzlun Islands ehf. in a trade mark dispute matter against the clothing manufacturer Sjóklæðagerðin ehf.
Lex Law Offices > Firm Profile
The firm: Lex is one of Iceland’s leading law firms, providing clients with a comprehensive, range of services on a wide spectrum of financial, corporate and commercial issues, as well as other aspects of the law.
It is the firm’s policy to meet the legal requirements of its clients in the context of ever-changing local and international markets.
Over the past decades, Lex has successfully acted on behalf of a large number of internationally respected corporations, organisations and private individuals both in Iceland and abroad.
Among Lex’s clients are major local and international banks, financial institutions, merchants and ship owners, along with a large number of municipalities, government organisations, insurance companies, manufacturers, businesses, media outlets, utilities and private individuals.
Lex is a member of World Services Group (www.worldservicesgroup.com) and Energy Law Group (ELG) (www.energylawgroup.com).
Areas of practice: Corporate law, banking law, investments and finance, real estate, European law, international transactions, mergers and takeovers, taxation, IT, bankruptcy law, competition law, commercial law, energy and natural resources law, intellectual property, trade marks, public and administrative law, employment law, civil litigation, arbitration.
|Banking, securities and finance||Guðmundur Ingvi Sigurðssonfirstname.lastname@example.org||+354 590 2600|
|Banking, securities and finance||Stefán Orri Ólafssonemail@example.com||+354 590 2600|
|Corporate and commercial law/ due diligence||Fanney Frímannsdóttirfirstname.lastname@example.org||+354 590 2600|
|Corporate and commercial law/ due diligence||Kristín Edwaldemail@example.com||+354 590 2600|
|Mergers and acquisitions||Ólafur Haraldssonfirstname.lastname@example.org||+354 590 2600|
|Mergers and acquisitions||Örn Gunnarssonemail@example.com||+354 590 2600|
|Investment||Guðmundur Ingvi Sigurðssonfirstname.lastname@example.org||+354 590 2600|
|Investment||Ólafur Haraldssonemail@example.com||+354 590 2600|
|EU/EEA||Lára Herborg Ólafsdóttirfirstname.lastname@example.org||+354 590 2600|
|Restructuring, insolvency||Þórhallur Bergmannemail@example.com||+354 590 2600|
|Restructuring, insolvency||Guðmundur I Sigurðssonfirstname.lastname@example.org||+354 590 2600|
|Public procurement, construction||Arnar Þór Stefánssonemail@example.com||+354 590 2600|
|Public procurement, construction||Óskar Sigurðssonfirstname.lastname@example.org||+354 590 2600|
|Public procurement, construction||Lára Herborg Ólafsdóttiremail@example.com||+354 590 2600|
|Property||Óskar Sigurðssonfirstname.lastname@example.org||+354 590 2600|
|Property||Guðjón Ármannssonemail@example.com||+354 590 2600|
|Maritime and transport law||Lilja Jónasdóttirfirstname.lastname@example.org||+354 590 2600|
|Maritime and transport law||Jónas A Aðalsteinssonemail@example.com||+354 590 2600|
|Intellectual property, trade marks and IT law||Erla S Árnadóttirfirstname.lastname@example.org||+354 590 2600|
|Tax||Garðar V Gunnarssonemail@example.com||+354 590 2600|
|Employment and labour law||Arnar Þór Stefánssonfirstname.lastname@example.org||+354 590 2600|
|Employment and labour law||Erla S. Árnadóttiremail@example.com||+354 590 2600|
|Energy, natural resources and environmental law||Garðar Víðir Gunnarssonfirstname.lastname@example.org||+354 590 2600|
|Environment, Social, Governance (ESG)||Eva Margrét Ævarsdóttiremail@example.com||+354 590 2600|
|Competition and antitrust||Lára Herborg Ólafsdóttirfirstname.lastname@example.org||+354 590 2600|
|Competition and antitrust||Eyvindur Sólnesemail@example.com||+354 590 2600|
|Litigation and dispute resolution||Kristín Edwaldfirstname.lastname@example.org||+354 590 2600|
|Litigation and dispute resolution||Arnar Þór Stefánssonemail@example.com||+354 590 2600|
Staff FiguresNumber of partners : 16 Number of associates : 19
LanguagesIcelandic English German French Scandinavian languages
MembershipsWorld Services Group (WSG) Energy Law Group (ELG)
OtherContact : Orn Gunnarsson (managing partner, firstname.lastname@example.org)
CLIENT: US Retail Conglomerate
TESTIMONIAL: LEX has assisted us in the past few years in establishing our business in Iceland. This is a new market for us and LEX has advised us on all aspects of entering the market–from corporate formation and registration through real estate acquisition through obtaining necessary licenses and permits. They have wonderful contacts in Iceland and have been extremely helpful in all aspects of establishing our business. LEX is very knowledgeable of the intricacies of Icelandic law and has been very responsive to our issues in a timely and thorough fashion. We would recommend them highly.
CLIENT: PCC SE
TESTIMONIAL: “LEX provides ongoing legal services for our company group in connection with the realization of a major investment project and various business matters connected therewith. We appreciate the broad professional expertise of their lawyers, their short-term availability in case of urgent enquiries and their commitment to support our business with practical and solution-orientated advice.“
CLIENT: Bjarni Ármannsson
TESTIMONIAL: I’ve worked with LEX on various matters for a number of years, mostly related to acquisitions of companies. I have always been impressed by the consistently high level of service right across the practice: responsive, conscious of business reality, whilst being enjoyable people to work with.
TESTIMONIAL:Eyvindur Sólnes at LEX has been our legal advisor for many years. Recently, Eyvindur and LEX have been advising us on an upcoming merger. LEX has demonstrated the ability to attain all set goals, thanks to the firms extensive work experience and full devotion, the team is exceptionally responsive in an efficient and timely manner. We appreciate the quality and timeliness of LEXs services. The firm handles all work in a professional manner.
CLIENT: Arion Bank hf.
TESTIMONIAL: We have worked with LEX for many years on a number of projects, from project financing and competition matters to ongoing general advisory services. LEX knows our business and we trust them to work with us to achieve the outcome we need. For a financial corporation, it is vitally important to build long term relationships with trusted advisers.
CLIENT: Reginn hf.
TESTIMONIAL: LEX has been our go-to law firm for many years for sound legal advice on real estate matters. They are accessible, knowledgeable, responsive, and professional in the handling of all our legal matters.
For several years, LEX has worked in accordance with an Equality Plan. On 17 August 2021 an updated Equality Plan was approved by the Icelandic Directorate of Equality and is in accordance with the Act on Equal Status and Rights Irrespective of Gender no. 150/2020.
Following are the highlights of LEX’s Equality Plan:
LEX’s equality plan aims to maintain general job satisfaction and good morale, to ensure equality between women and men, that each employee is valued on their own terms and that full equality and respect is maintained between all the company’s employees. In this way, the company intends to promote loyalty, a good morale, and a positive attitude among employees for their benefit as well as the company’s operations.
LEX emphasizes everyone’s wellbeing, regardless of gender, race, religion, age or place of residence.
Women and men and people with a neutral gender registration in the National Registry shall be paid equal wages and enjoy the same terms for work of equal or comparable value.
Equality considerations shall be assessed in employment and care shall be taken to equalize the share of men and women in different occupations.
LEX shall take the necessary measures to enable employees to align their job responsibilities and responsibilities towards their family. Both the family circumstances of the employees and the needs of the company must be taken into account.
Bullying, gender-based harassment, sexual harassment and other forms of violence will not be tolerated under any circumstances at the workplace.
In order to fulfil the Equality Plan, a Project Execution Plan is in place to ensure regular reviewing, training, and action.
Furthermore, LEX is currently working on getting an Equal Pay Certification and aims to have received such certification by end of year 2022.
LEX is a premium full-service law firm servicing the Icelandic legal market. International co-operation is though a very important aspect in LEX’s operation. In the year 2021, of 13 noteworthy cross boarder M&A deals LEX was the advisor of choice in 8 of them servicing international clients in close co-operation with other international law firms.
Other noteworthy sectors where LEX has a strong foothold are the IP sector (including but not limited to Trademark, Patent, Pharmaceutical, IT and GDPR), Capital Markets, Public Procurement, Banking and Finance. The ESG sector is also becoming ever more present in LEX’s operation as it touches upon most fields of law and in international transactions of any kind no transaction is completed without some sort of an ESG review.
A part of LEX’s international competence is the workforce at LEX. Many of its lawyers have both international education, from US, Asia and Europe and some of them also have international work experience. This gives LEX’s clients a unique proposition as LEX’s lawyers do not only have the know-how from different parts of the world but are also familiar with the culture in many places of the world which is as important as the legal know-how.
LEX is in a premium position with regards to global reach. Representing Iceland at the Nextlaw Referral Network gives LEX unrivalled position in Iceland with regards to global reach. Furthermore, LEX is a member of World Services Group and Energy Law Group, both of which are premium legal networks.
LEX also serves most of the world’s largest independent law firms across the world and many of recent cross border M&A transaction that LEX has advised on in recent years originate from those law firms including but not limited with the magic circle firms.
Doing Business In
THE BUSINESS ENVIRONMENT
The Icelandic business environment can be described as a modern western environment. Iceland is a member of the EEA Agreement and as such enjoys the benefits of the European Single Market. In a recent survey Iceland was ranked 12th in Europe in a country ranking measuring the ease of doing business. Furthermore, Iceland ranked 12th in the world on labour market efficiency.
Traditionally, Iceland´s main and most important export has been fishing and fishing products. Iceland is rich of natural green energy harvesting both hydro power and geothermal resources. Energy extensive industries such as, aluminium smelters and ferrosilicon production have benefitted from those rich energy resources as well as data centres benefitting from the natural cooling the Icelandic weather provides.
In recent years tourism has become one of Iceland’s most important industries and more recently aquaculture has caught the eye of many foreign players in that industry, investing heavily in many of the remote parts of the country.
Iceland has a well-educated and innovation driven workforce. Information and communication technology and engineering are the most popular subjects in Icelandic universities.
Iceland’s economy is an open high-income economy combining a free market economy with a welfare state which is sometimes referred to as the Nordic model. It is the smallest economy within the OECD, with last year’s annual gross domestic production (GDP) of USD 21.7 billion (ISK 2.888 billion). The size of the Icelandic economy is approximately 0.65% of the German economy and 0.12% of the United States economy. Although the size of the Icelandic economy is comparatively small, with only around 376 thousand inhabitants, the aforementioned domestic production places Iceland among the top ranked countries in GDP per capita, 58.890 USD (PPP). Iceland, which in the first half of the 20th century was one of the least affluent countries in Western Europe, has over the last few decades consistently ranked among countries with the highest standard of living worldwide. Iceland GDP per capita rank fell in the aftermath of the financial crisis in 2008 but has climbed above its pre-crisis position ranking. In terms of GDP per capita, Iceland currently sits in 8th place globally.
Iceland’s success in building a prosperous and globally competitive economy can be attributed to factors such as a strong institutional framework, skilled workforce, high degree of economic freedom, sound democracy and low levels of corruption. Various competitive indices reflect these qualities. Iceland ranks number one in terms of gender equality and peace. Female labour force participation is at 75%, which is significantly higher than elsewhere in Europe. High labour force participation rate, the country’s openness and the economy’s flexibility are key strong-points of the Icelandic economy. For the peace index, Iceland has held its place as the most peaceful country in the world since 2008.
Small open economies are by nature often more volatile than larger economies. This is mainly caused by a lack of diversification and relatively large external influences. This has caused significant business cycle fluctuations. In the years leading up to the Covid-pandemic the Icelandic economy had experienced a robust economic growth, greater than neighbouring countries, as well as other high-income OECD countries. In fact, 2016 GDP growth in Iceland was highest among OECD countries and seventh highest globally. The export sector, particularly the fast-growing tourist industry, had been the main growth driver , along with strong contributions from business investment and private consumption. After a deep contraction following the Covid-19 pandemic the economy is recovering on the back of robust export growth. Following a 6.6% contraction in 2020, the economy is expected to grow by 2.8% in 2021 and 4.5% in 2022 driven by a rebound of tourism, a successful vaccination programme and the lifting of restrictions.
The unemployment rate, which had been declining since the peak in 2010 rose significantly during the pandemic, being at it heights in 2021, but is expected to edge down to around 7% in 2022.
In 2020, government debt was approximately 80% of GDP, increasing rapidly due to the Covid-19 pandemic. In the years leading up to the pandemic the GDP had significantly improved from the peak of 2011 when it amounted to approximately 95% of GDP. The budget deficit widened to 7.3% of GDP in 2020. Parliament suspended the fiscal rule and the rolling five-year fiscal plan it approved in late 2020 as well as the one it endorsed in Spring 2021 with the aim to support the economy in the short term and to reach a positive primary balance by 2025, when gross public debt according to the National Accounts is set to stabilize at 100% of GDP.
High inflation has long been a concern in Iceland. In March 2001, the CBI converted from an exchange rate targeting monetary policy and adopted an inflation-targeting policy with a 2.5% inflation target. Since the adoption of the policy, inflation has exceeded this target, averaging 5%, but after 2014 inflation has been close to or below its target. One of the characteristics of the Icelandic economy is the small and volatile currency, the Icelandic Króna, and the large impact of exchange rate fluctuations on inflation. Currently, imported goods account for roughly 30% of the consumer price index (CPI). Furthermore, the housing component, which includes housing prices, contributes 25% to the index. Inflation is expected to be over 5% in 2022, the rise in house prices weighs heavily but other domestic cost items have also risen. In addition, global oil and commodity prices are increasing. The Central Bank lowered interest rates incrementally, from early 2019 from 6.25% to November 2020 to 2,5%. In May 2021 interested rates were increased again, and are now in March 2022 at 4,5%.
The small size of the domestic economy makes Iceland highly dependent on international trade. Since various goods and services are not produced domestically, they need to be imported. To fund these imports, a strong export sector is required. Thus, international trade plays an important role when examining Iceland’s economic performance. Iceland’s balance of trade has seen drastic changes this century. Historically, Iceland had a significant trade deficit with a corresponding current account deficit, which contributed to a build-up of record high levels of external debt. That has turned around over the last decade, with Iceland running a consistent current account surplus, largely due to a strong trade surplus. This shift is largely explained by the Króna exchange rate. The Króna depreciated fast at the onset of the crisis in 2008 as investors pulled out of Iceland, reducing imports and boosting exports. Iceland’s economic recovery, led by export growth (particularly in tourism), helped the Króna to retain its value. Since late 2016, Iceland’s real exchange rate was back at similar levels as in the years before the financial crisis. After a good period of running a trade surplus, instead of large deficits, the country ran a trade deficit in the last quarter of 2021. In 2017, exports of goods and services amounted to around 47% of Iceland’s GDP and the trade surplus was 4.1%. The accumulated trade surplus in the past seven years following the financial crisis is equivalent to 49% of 2017 GDP, which is almost unprecedented in the country’s economic history. This large trade surplus has contributed to a current account surplus, although not as significant as the trade surplus. The underlying current account surplus has averaged about 5.6% of GDP since the crisis. Recent economical indicators however indicate that the period of trade surplus has halted and a trade deficit can be expected in the near future.
A key challenge for Iceland is to increase its exports and maintain a healthy current account to support an ongoing and sustainable growth. Two decades ago the country was heavily dependent on fisheries with more than half of exports originating from the fishing industry. Since then, fish-related exports have remained relatively stable, as the industry is limited by the quantity it can harvest, to preserve the size and sustainability of the fishing stock. In the past couple of decades, three additional export foundations have emerged: the aluminium industry, tourism and the international sector. Around the new millennium, the international sector grew rapidly. The sector engages in international competition but is not reliant on natural resources. Between 2005 and 2008, exports of aluminum took off following the construction of one new aluminium smelter and the expansion of another. In the years pre Covid-19 pandemic, Iceland did witness a rapid growth in the tourism industry, although the industry was hit hard on account of the pandemic. In 2022 the tourism is expected to rebound. Overall, Iceland’s exports of goods and services have grown rapidly and become more diversified over the last two decades. Intellectual property services now account for around 15% of service exports. Data processing and storage are growing rapidly, attracted by low energy prices and a cool and windy climate.
Current opportunities & future prospects
As the world is entering out of the uncertainty associated with the covid pandemic another uncertainty has arrived with the war in Ukraine. The end of the covid period will be welcomed by the tourism industry. During the covid period substantial restructuring has taken place and the growing pains the industry was dealing with prior to the covid period have to a large extend been dealt with and the country is better prepared to deal with the large influx of visitors. Plans have been put in place for significant investment in infrastructure and consolidation in the industry along with foreign investment is expected to have a very positive impact. The uncertainty associated to the war in Ukraine however is expected to have significant effect on the cost side, with increasing oil prices and other raw materials. At this time, it is difficult to assess what effect this will have on the tourism in Iceland in the near future.
Although the supply of electricity for new ventures is not as favourable as it has been in the past and major power companies in Iceland have kind of pulled back from the strategy of providing power to non-green industries. Furthermore, it is uncertain if the power companies will be able to support the data centre industry and new investment opportunities.
Even though there has been some political and judicial unrest associated with the aquaculture industry there has been a significant growth there, fish farming production has increased eightfold in the last decade. The amount produced in 2020 was 40.6 thousand tonnes. The most growth has been in salmon farming where the yield has gone from 1,068 tonnes in 2010 to 34,000 tonnes in 2020. , The export value of farmed salmon was 22.6 billion ISK in 2020 which was a 22% increase from 2019. The export of trout fish, arctic char and rainbow trout has been around 3-5 thousand tonnes in recent years and on average 70% of the production has been exported. The export value of trout in 2020 was 5.5 billion ISK, 9.6% increase from the previous year. In recent years foreign industry players have invested heavily in the Icelandic aquaculture, and it would not be surprising if further investments in this area would materialize.
One of the positive effects of the financial crisis that swept the world in 2008, is the vibrant start-up environment it created. Iceland was no different, and for the first time in this young country’s history it can be said that Iceland has an attractive start-up community. In recent years global investor have acquired tech companies such as the Black Desert Online developer Pearl Abyss acquisition of CCP Games, the creators of popular spaceship MMORPG EVE Online and the Fortune 500 company NetApp acquisition of Greenqloud. Several other smaller acquisitions have taken place in the technology sector in recent years, and that trend is expected to continue.
More effective support for business R&D would unlock private investment and improve the ability of smaller firms to innovate. Encouraging firms to adopt digital technologies would help Iceland to make the most of innovation niches, with productivity gains. The public sector too could become more digitalised with positive societal impact. Skills for the digital era and strong knowledge exchange through closer business-research collaboration on innovation and international cooperation in research are essential for stronger innovation.
Despite the Covid-19 pandemic hitting the Icelandic economy hard, it is recovering. The government has set up a five-year programme to invest in infrastructure, digitalisation and research and innovation accounting for 0.5% of GDP per year. The long-term outlook is of positive note. Iceland is rich of natural resources and Iceland is known for running them in a very sustainable manner as our fishery resources are a good example of.
A new court level was introduced in Iceland on 1 January 2018, replacing the former two tiers with a three-tier system. The new court is called the Court of Appeal (Icel. Landsréttur) and is a court of second instance, situated between the District Courts and the Supreme Court. The introduction of the Court of Appeal is part of a major restructuring of the Icelandic justice system.
All court actions in Iceland commence in the District Courts (Icel. Héraðsdómstólar), which are eight in number and located around the country. The conclusion of a District Court can be appealed to the Court of Appeal, provided specific conditions for appeal are satisfied. In special cases, and after receiving the permission of the Supreme Court, it will be possible to refer the conclusion of the Court of Appeal to the Supreme Court, which will continue to be the country’s court of highest instance. In most instances, the judgement of the Court of Appeal will be the final resolution in the case. These changes to the judicial system will reinforce the role of the Supreme Court of Iceland in setting precedents in jurisprudence. There is a total of 64 judges in Iceland, 42 of whom preside over the eight District Courts. The Court of Appeal has fifteen judges and the Supreme Court has seven.
Iceland has a civil law legal system and thus Icelandic law is characterized by written law. Major sources of law in Iceland include the Constitution, statutory legislation, and regulatory statutes. Other legal resources are precedent, customary law and tradition of culture.
The Constitutional Act no. 33/1944 represents the highest national legal authority and is composed of seven Chapters and 79 provisions. Fundamental changes were made to the human rights chapter with Constitutional Act No. 97/1995. The bill accompanying the Act made several references to the European Convention on Human Rights as well as to other Council of Europe and United Nations human rights instruments to which Iceland is a party.
Statutory and Regulatory Law
Except with respect to constitutional issues, legislation enjoys primacy as a source of law. The area of private law is dominated by a range of individual statutory acts and the area of general criminal law is governed by the General Penal Code No. 19, February 12, 1940. In the last few years, numerous pieces of legislation have been adopted in certain fields of law, such as in banking, communications and corporations.
Frequently, statutory acts give the administration the authority to issue regulations. As sources of law, statutory acts prevail over regulations.
Precedents, Customary Law and Tradition of Culture
Court practice in Iceland does not have the same authoritative role as in Common Law countries. However, in matters of legal uncertainty, the decisions of the Supreme Court have considerable authority for the disposition of future cases. In certain areas of law, the decisions of the Supreme Court are a source of law of central importance, e.g. tort law.
In Iceland, a custom can become a source of law. For instance, customary law has been an important source of law in Constitutional matters.
Tradition of culture refers to considerations of fairness, justice and feasibility. Iceland courts have in some cases relied on Tradition of Culture when other sources of law have not been able to establish a rule of law.
Statements and Decisions by Administrative Authorities
Statements by an administrative organ can carry considerable authority in some areas. For instance, in the area of administrative law, the statements of the parliament´s Ombudsman carry considerable authority. Similarly, in the area of tax law, the decisions of the Internal Revenue Board can carry considerable weight.
The EEA and its Effect on Icelandic Legislation
Iceland is a member of the European Economic Area (EEA). The Agreement on the EEA, which came into force in 1994, extends the Single Market of the European Union (EU) to Iceland, Norway and Liechtenstein.
Membership of the EEA has affected Icelandic legislation considerably. To achieve homogeneity between the EEA and EU, the agreement incorporates hundreds of acts, largely identical to the relevant parts of the EC legislation, and these acts are made part of the internal legal order of the contracting parties. Each month a number of pieces of EC legislation, relevant for the EEA, are incorporated in the agreement by decision of EEA Joint Committee.
With respect to the relation between municipal law and international law, Iceland adheres to the principle of dualism. Therefore, ratified international treaties do not assume the force of domestic law, but rather are only binding according to international law. The Supreme Court of Iceland has sought to interpret Icelandic law, as far as possible, in conformity with Iceland’s international obligations.
The European Convention on Human Rights was incorporated into Icelandic law by Act No. 62/1994. Following its incorporation, its provisions can be directly invoked in court as domestic legislation.
Foreign investment restriction
In principle, foreign parties are permitted to invest in Iceland within the limitations imposed by law. The limitations are mostly laid out in Act. No. 34/1991, which addresses investments by non-residents in business enterprises, and in specific legislation. The limitations mostly stipulate that certain conditions must be met or that a specific license has to be obtained.
Because Iceland is a part of the European Economic Area, investment in Iceland by EEA residents is in principle unrestricted. All residents and entities within the European Union and EFTA, enjoy in most cases the same rights to invest as Icelanders do. However, there are some sector-based restrictions that apply to all non-residents, including EEA residents, and some requirements are made regarding investments of residents outside the EEA. These sector-based restrictions were mostly negotiated as they were considered to be of national political importance. The main sectors where restrictions apply in are in the field of real estate ownership, in the fishing industry and in the field of energy affairs. However, in the foreign exchange sector there have been major changes recently and a lot of restrictions have been abolished.
Foreign exchange transactions were subject to restrictions following the collapse of the banks in 2008. In October 2016 a major step was taken to amend the restrictions on financial transactions with legislation and on 14 March 2017 capital controls were almost entirely abolished with new rules on foreign currency matters. With the new rules, most restrictions on cross-border movement of domestic and foreign currency were lifted.
When it comes to ownership of real estate in Iceland, all Icelandic citizens and foreign citizens domiciled in Iceland are permitted to own real estate. The right to own real estate in Iceland is provided for in Act. no. 19/1966 on Ownership Rights and Utilization Rights. Special rules apply to those who enjoy rights based on the EEA agreement, EFTA agreement and Hoyvík Agreement between Iceland and the Faroe Islands. They are not required to apply for a special permission from the Minister of Justice to own property in Iceland. However, parties outside the EEA are required to have permission from the Minister. Large scale investment projects are generally exempt from the restrictions via a standard clause in an investment agreement with the Ministry of Industries and Innovation. The Minister of Justice can also grant exemptions to those that are permitted to run a business in Iceland when the property is to be used as business premises or a permanent residence, or when other reasons apply.
In the Icelandic fishing industry only those who fulfil certain requirements and conditions are allowed to conduct fishing operations within the Icelandic fisheries jurisdiction or own or run enterprises engaged in fish processing. Those requirements and conditions are laid out in Article 4 in Act. no. 34/1991. In short, the party must be an Icelandic citizen or an Icelandic entity. Icelandic legal entities must be wholly owned by Icelandic persons or Icelandic legal entities, and fulfil the following conditions: i) be controlled by Icelandic entities, ii) not under more than 25% ownership of foreign entities, 33% in certain circumstances, and iii) be in other respects under the ownership of Icelandic citizens or Icelandic legal entities controlled by Icelandic entities.
Lastly, when it comes to ownership of energy exploitation rights relating to waterfalls and geothermal energy for other than domestic use, only Icelandic citizens and other Icelandic entities, as well as individuals and legal entities domiciled in another member state of the EEA, are permitted to own such rights. The same applies to enterprises which produce and distribute energy.