Litigation in Iceland
Iceland is one of my favorite places in the world. Beautiful land, fun people, great food, plentiful swimming pools. It’s a paradise. But even in such an amazing country, there are commercial disputes. And while I have visited many times, I have not had the chance to learn more about its judicial system until now. Thankfully, Hafsteinn Viðar Hafsteinsson, a lawyer at Pacta in Reykjavik, was kind enough to talk with me about Icelandic litigation.
Why should you continue reading this post about litigation in Iceland?
Hafsteinn Viðar Hafsteinsson is a lawyer at Pacta in Reykjavik.
Can you tell me about the kinds of disputes you handle in your legal practice?
I primarily handle collection and enforcement cases, while other lawyers at the firm take on a variety of matters, including contract disputes, property law, and acting as defense attorneys or legal representatives in criminal cases.
The great thing about collection cases is their diversity, as they touch on many areas of law—from traditional invoice transactions to more complex loan agreements and cases related to construction and tort law.
What type of clients do you generally represent in disputes?
We represent a wide range of clients, from large banks and corporations to smaller businesses and individuals. Naturally, larger entities tend to have a higher volume of cases, but disputes involving smaller clients are often more time-consuming.
Besides Microsoft Office, what software do you use in your practice?
Most of our work is done in Outlook and Word, to be honest. However, we also use an Icelandic debt collection system to calculate claims when needed. Additionally, AI is starting to play a role in assisting us with certain tasks.
What books and websites do you use for legal research?
Fortunately, several legal textbooks have been published in Icelandic in recent years, particularly in the fields of claims and property law, which are highly useful in my work.
Of course, the sources I consult always depend on the nature of the case at hand. Additionally, I have access to www.fonsjuris.is, a legal database that provides a valuable collection of academic writings and case law, making it an excellent resource for finding precedents and interpretations of specific legal provisions.
Do litigators ever cite the laws of other countries in disputes?
Yes, this happens regularly. Icelandic law often has its roots in the legal systems of other Nordic countries, particularly Denmark and Norway. Additionally, cases sometimes involve regulations derived from European law, in which case references to EU law and its interpretation are also made.
I understand that, in addition to applying statutes, judges in Iceland apply a form of equity called Eðli máls. Can you tell me how that works?
Certainly. "Eðli máls" (the nature of the case) is a recognized source of law in Icelandic legal practice. It is used when there is no explicit statutory provision, precedent, custom, or other clear legal source that directly applies to a particular legal issue. When courts or legal professionals rely on "eðli máls," they base their decisions on reason, fairness, and general legal principles to determine a just and reasonable outcome.
This source of law is particularly relevant in novel or unusual cases where no specific legal rule exists. In such instances, the appropriate rule is derived from the nature of the situation and what is considered fair and reasonable within society.
It is considered the lowest-ranking legal source and is therefore only relied upon when necessary. It requires well-founded reasoning to be considered valid and justified. This legal source is often used as a guideline when no other legal sources, such as laws or regulations, are available to resolve a dispute.
Image credit: https://en.wikipedia.org/wiki/Supreme_Court_of_Iceland#/media/File:Hæstiréttur_Íslands_2018.jpg
Do you electronically file pleadings with the court? Or must you send paper copies of them to the courthouse?
For now, most court pleadings are still submitted in paper form. However, efforts are underway to transition to a more digital system, and parts of the communication process have already become electronic—which is clearly the way forward.
Currently, procedural information is often sent electronically, either via email or through the online portal: https://vefgatt.domstolar.is/web/login.html.
Additionally, documents for the Court of Appeal (Landsréttur) and the Supreme Court (Hæstiréttur) can be submitted through a digital document portal managed by the courts, though in many cases, paper copies are still required afterward.
Does Iceland have specialized courts that only hear commercial cases?
Iceland has a general court system, but there are also two specialized courts.
Félagsdómur (Labour Court) – Handles disputes related to labor market agreements.
Arbitration Tribunals – For example, the Iceland Chamber of Commerce operates an arbitration court for commercial disputes.
However, the overwhelming majority of cases, including commercial disputes, are heard within the general court system, where the same judges handle both commercial and other types of cases.
Who decides the facts in a commercial case? Is it a judge or a jury?
Iceland does not have a jury system, so the facts in a commercial case are always determined by a judge or a panel of judges.
Generally speaking, how many pages are the complaints or initial pleadings you see in your work?
Complaints (stefnur) are usually quite brief, rarely exceeding 5–6 pages, as written legal arguments are generally not permitted in traditional civil cases. Statements of defense (greinargerðir) tend to be slightly longer, typically up to 8 pages. However, there are exceptions, and I have seen complaints as long as 30–40 pages.
There is currently a discussion about introducing guidelines on the length of complaints and statements of defense in the courts. Unfortunately, I cannot provide a publicly available example, as such documents are not typically published online.
Generally speaking, how long does it take for a case to go from complaint to judgment?
This varies significantly from case to case, but I generally advise my clients to expect proceedings in the district court to take at least 9–12 months. If a case is appealed to the Court of Appeal (Landsréttur), it can typically add another year to the timeline.
Generally speaking, how is evidence exchanged between the parties before trial? Do you get to interview the opposing witnesses before the trial?
Evidence is submitted at the initial court hearing and can be supplemented in later hearings if necessary. Parties must usually disclose their witnesses at least one week before the trial itself.
There is no tradition of interviewing the opposing party’s witnesses before trial in Iceland.
If you win, does the other side reimburse your attorneys’ fees?
Yes, the general rule is that the losing party is ordered to pay the winning party’s legal costs. However, the awarded amount does not always fully cover actual attorney’s fees.
It is also quite common for courts to waive legal costs in cases where individuals or smaller entities are litigating against large corporations or the government.
I remember that the financial crisis in 2009 had a big impact on Icelandic business. Have you observed changes in how Icelandic courts consider business or financial disputes following the crisis?
I was still in law school in 2009, so I have limited firsthand experience with how courts operated before the financial crisis. However, there were a significant number of criminal cases brought against bank executives in the aftermath.
That said, to my knowledge, the core principles of contract and financial law have remained largely unchanged despite the crisis.
Are the Icelandic courts open to the public? Can ordinary people watch a commercial trial?
The general rule is that court hearings and trials in Iceland are open to the public. However, certain cases, particularly sensitive matters such as sexual offenses or cases involving children, are closed to protect privacy.
Do you believe that Icelandic courts have a particular strength for resolving commercial disputes?
One of the strengths of the Icelandic courts in resolving commercial disputes is their efficiency and impartiality. Judges are highly professional, and corruption is virtually nonexistent. Additionally, the legal framework is stable and well-developed, providing predictability for businesses.
How about a weakness?
A weakness, however, is that cases can take a long time to resolve, especially if they are appealed. While the courts function well, backlogs and delays can sometimes be an issue.
How often do you go to the courthouse?
I typically go to the courthouse several times a month, often at least once a week.
When you are there, do you need to wear a special robe or wig?
For regular court hearings, there is no strict dress code beyond professional attire, such as a suit or a jacket and shirt. However, for trials or oral arguments, I always wear a suit, tie, and a lawyer’s robe. Unlike in some other countries, Icelandic lawyers do not wear wigs.