Iceland has a civil law legal system and Icelandic law is as such characterised by written law which relies on the Constitution, statutory legislation and regulatory statutes, although legal resources such as precedent and customary law also play a significant role.
Civil legal proceedings are mainly adversarial, with the disputing parties responsible for gathering evidence and summoning witnesses. However, a judge is obliged to seek conciliation between the parties, unless they consider that an attempt at conciliation will be unsuccessful due to the nature of the case, the parties' position or other reasons. A judge may also direct parties to obtain evidence on certain aspects of a case if he considers it necessary. Proceedings in penal cases are more inquisitorial due to their nature. The legal process as a whole is a combination of oral arguments and written submissions.
The court system in Iceland is three-tiered. Court actions commence in one of eight District Courts located across the country. District courts are divided by jurisdiction but not by subject matter. The second tier is the Court of Appeal, a court of second instance established in 2018.
The judgments and decisions of the District Courts can be appealed to the Court of Appeal, provided that specific conditions for appeal are met. In special cases, and after receiving the permission of the Supreme Court, it is possible to refer the conclusion of the Court of Appeal to the Supreme Court, the third tier and the country’s court of highest instance.
Other courts are the Labour Court, dealing with labour disputes, and Landsdómur, dealing only with cases where members of the Cabinet are suspected of criminal behaviour. Courts of arbitration also exist, as discussed further in 13 Arbitration.
Under Articles 8 to 9 of Act No 91/1991 on Civil Procedure (“Civil Procedure Act”), court proceedings are open to the public as a general rule. However, a judge, by request or of their own accord, can decide to close proceedings due to any of the following reasons:
Even if proceedings are open, they may not be recorded or streamed by anyone but the court, unless clearly authorised by the preceding judge.
A litigating party may always represent himself on his own in court. Under Article 2 of Act No 77/1998 on Professional Lawyers (“Act on Professional Lawyers”), legal representation may only be entrusted to either a lawyer licensed as a representative in litigation before the courts, or to any person practising as a lawyer in any other member state of the European Economic Area, who has the right to represent litigants in court. In praxis, legal representation in Iceland is done almost exclusively by Icelandic lawyers as the language of the courts is Icelandic.
There are no rules in Icelandic Law on third-party litigation funding. Therefore, one assumes it is permissible but it must be noted however that the permissibility of such funding has not been tested before the Icelandic courts.
See 2.1 Third-Party Litigation Funding.
See 2.1 Third-Party Litigation Funding.
See 2.1 Third-Party Litigation Funding.
See 2.1 Third-Party Litigation Funding.
Contingency fees are permitted in Iceland. Under Article 24 of the Act on Professional Lawyers, a lawyer may negotiate with a client that their fee may also take the form of a part of the amount a client may recover in a case, as well as a fee which is higher if legal action is successful.
See 2.1 Third-Party Litigation Funding.
There are no specific rules that parties are required to take before initiating proceedings, but parties will often try to settle disputes prior to imitating proceedings due to the costs and time of legal action.
There is no statute of limitation for civil suits in general. However, the limitation period for claims according to Act No 150/2007 on the limitation period for claims, is generally four years. The limitation period for a claim runs from the date on which a creditor is first entitled to demand performance and for claims arising from a breach of contract, the limitation period runs from the date on which the contract is breached, as per Article 3 of the Act.
Various actions interrupt the limitation period, including legal action against a debtor regarding the claim.
The general rule is that a defendant's jurisdiction is where his home is. A similar rule goes for legal persons, that is their principal jurisdiction is where their main office is. If a defendant does not have a domicile, one can file a claim where they live or, if they do not live at any one place, where they are found. An Icelandic citizen living abroad has jurisdiction in Reykjavik if one is not able to file a claim against them where they live.
There are some other rules on jurisdiction for certain kind of legal acts and certain legal situations, such as:
Also, the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (“The Lugano Convention”) is applicable in Iceland and therefore can have an effect on jurisdiction for a defendant in Iceland.
The initial complaint, a summons, sets out the plaintiff’s case. Under Article 80 of the Civil Procedure Act it must inter alia include:
The plaintiff is generally bound by their initial complaint in later stages but may in general make small, necessary updates. Such updates are not permissible however if they increase the claims made or if they are considered to negatively impact the defendant’s defences.
The plaintiff is responsible for service. Under chapter 13 of the Civil Procedure Act, service is lawful if either:
As for parties outside the jurisdiction, if the defendant has a known address or domicile abroad or it is otherwise clear that they have a domicile in a specific country, other than Iceland, and the service is not possible in Iceland in accordance with the provisions of chapter 13, then the service is published in accordance with that country's legal system and international agreements, if such an agreement has been concluded with the country in question.
If the defendant cannot be reached in the manner described above, they may be serviced by official publication in the State Gazette.
If the defendant does not respond to a lawsuit, ie, if the defendant does not appear at the filing of the court case after being serviced (and does not have a lawful excuse), the judge in the case examines the summons and determines based on the arguments and provided evidence, whether to approve it, making it enforceable, or to reject doing so, as per Article 113 of the Civil Procedure Act.
Class action lawsuit are permitted under Article 19 a of the Civil Procedure Act. They are opt-in and entail the creation of a legal entity which becomes the sole plaintiff. The requirement is that three or more parties must each have a claim against a single party, and the claims are connected to the same event, situation or legal act.
While a lawyer bears general disclosure obligations to their client, the lawyer is obligated specifically under Article 10 of the Code of Ethics of the Icelandic Bar Association, to inform their client of the estimated cost of the litigation and to state clearly if the estimated cost is high in comparison to the potential gains of the litigation. The lawyer must also inform the client on what basis their fees are calculated.
While interim motions are not a recognised concept under Icelandic law, parties are generally able to apply for additional time for preparation or to gather evidence, or to request guidance from the judge regarding management/technical issues. Remedies from the court in this regard are not possible.
The plaintiff cannot apply for early judgment, but the defendant may submit a motion for dismissal due to procedural/formal issues, which is processed before substantive hearing. The motion must be submitted within four weeks from filing, after which the judge summons the parties and decides whether to accept the motion. If not, the defendant will be given time to prepare their substantive defence, normally between four to eight weeks.
The method of making dispositive motions prior to trial is described in 4.2 Early Judgment Applications. Such motions can be made for various reasons, such as the defendant or plaintiff not meeting the jurisdictional requirements for defendant (see 3.3 Jurisdictional Requirements for a Defendant) or the claims/arguments in the complaint being so unclear or confusing that the defendant is unable to establish their substantive defences.
Dispositive motions may be directed against either the complaint in whole or against individual claims.
Joinder is permitted between two or more parties if their claims, or the claims against them, are based on the same incident, facility or legal act, as per Article 19 of the Civil Procedure Act.
As regards adding parties after a case has been filed, the plaintiff may add a defendant to the case, if:
Intercession, wherein a third party “enters” the lawsuit demanding either that the plaintiff’s claim against the defendant be awarded to them, or that the case will be decided in favour of the plaintiff or defendant, is permitted under certain limited conditions. Procedurally, the third party sues both plaintiff and defendant, prior to trial, and the judge then decides whether to allow the intercession.
Under Article 133 of the Civil Procedures Act, the defendant may at the filing of the case demand that plaintiff provides security for the payment of legal costs if
In principle, the defendant must apply for an order when the case is filed and no later. The judge assesses whether either of above conditions are met. If they are, the judge will decide:
Costs regarding interim applications/motions are included in the legal costs of each party. See 11 Costs and 4.1 Interim Applications/Motions.
The courts shall as a general rule deal with applications and motions within a reasonable time without specifying what that exactly means. In practice, this depends heavily on the relevant court and judge and how their docket is at any given moment.
Parties may apply for rapid procedure in certain cases. Under Article 123 of the Civil Procedure Act, a party who intends to sue for a decision or action by an administrative authority or a strike, work ban or other action related to a labour dispute, which is covered by the general rules of this Act, may request rapid procedure if it is urgently needed and provided that it is of general significance or protects their substantial interests.
Discovery is not available in civil cases.
See 5.1 Discovery and Civil Cases.
See 5.1 Discovery and Civil Cases.
As previously stated, it is the disputing parties who are responsible for gathering and submitting evidence. Under chapter 10 of the Civil Procedure Act, a party who refers to a document in his possession shall submit it at the request of the other party if the document is to be taken into account in resolving a case. If a party challenges the other party (or a third party) to submit or handover a document that they have in their custody, the relevant party must comply if the original party has the right to the document regardless of the case or if the content of the document is such that the other party would be obliged to testify about its contents if they weren't a disputing party. The requesting party bears the burden of proof in these cases. The party may enlist the help of the judge if the opposing party refuses to submit or handover documents.
During proceedings, but prior to the trial, the judge will decide a date after which no new evidence may be submitted. Evidence the parties try to submit after this date is generally not taken into consideration during the trial.
Legal privilege is recognised. A lawyer is indefinitely privileged to their client on whatever is confided in them, as provided for in Article 22 of the Act on Professional Lawyers. This also extends to the lawyers’ employees.
According to the Chapter 8 of the Civil Procedure Act concerning witnesses, lawyers may not, without the approval of their clients, or a former client, testify on matters relating to private circumstances of persons confided to them in an attorney-client relationship or which they have gained knowledge of by other means of their functions. The court can, however, lift the prohibition and require the lawyer to answer questions about such matters, if, following an evaluation of the interests at stake, the specific interests of having the information disclosed are deemed to outweigh the private interests of the attorney-client relationship of not disclosing the information.
An important limitation on the protection that in-house counsels enjoy is that it is limited to information that they obtain in an attorney-client relationship. Information that is obtained in a different capacity within a company does therefore not fall within the protection. The assessment of whether or not information is obtained in an attorney-client relationship is assessed on a case-by-case basis.
The general rule in Article 67 of the Civil Procedure Act is that when a party bases their claims/arguments on a document, the party will have to disclose said document. However, if the document includes items that the person concerned was not obliged to, or cannot, testify about, the judge may then decide that the document be presented to them in confidence and against confidentiality and that they either copy it or prepares a report on its contents.
Further, if a party which has been challenged to disclose a document, makes probable that the disclosure will cause them loss or inconvenience, the judge may decide it sufficient to make a copy of the document. The same applies if a document is valuable to the person concerned or there is a special risk that it will be lost or damaged if it is handed over, and insurance may be claimed in such cases.
A witness may not, without the permission of the person concerned, answer questions about:
Finally, witnesses may not answer questions about secret plans, resolutions or agreements between holders of state power on matters concerning the security, rights or integrity of the state or are of great importance to the nation's trade or finances, without the permission of the Minister concerned.
The Act No 31/1990 on Seizures, Injunctions, etc, (“the Injunction Act”), allows funds to be temporarily frozen or seized and placed in legal custody, or an injunction to be imposed towards an action. Freezing and seizure are applicable when a monetary claim has not been enforced and it can be probably assumed that if the measure does not take place, the likelihood of successful enforcement will be significantly reduced or made difficult. Injunction may be imposed on an initiated or imminent action if the petitioner proves or makes probable that:
The Act does not cover parallel proceedings, but the Civil Procedure Act generally prohibits parallel proceedings in Icelandic jurisdiction. Parallel proceedings in another jurisdiction could presumably stop proceedings before an Icelandic court.
The Injunction Act does not provide for timeframes but the urgent nature of such measures, which are performed by local district commissioners, means that they are processed with urgency and out-of-hours if needed.
Injunctive relief cannot be obtained on an ex parte basis as the Injunction Act dictates in Articles 9 and 27 that the district commissioner who receives the petition must notify the respondent and explain how they may defend against the petition.
Under Article 42 of the Injunction Act, the applicant may be held liable for damages and financial loss suffered by the respondent if the respondent is later acquitted in a court case, or if the petition itself is flawed.
The district commissioner will at the start of the proceedings request security from the applicant for potential damages in this regard, unless one of the following conditions are met:
The Injunction Act does not allow for injunctive relief against worldwide assets of the respondent.
The Injunction Act only allows for an injunctive relief against a party to the proceedings.
However, a third party may intervene as a party in the hearing if he is able to substantiate that injunction will conflict with the rights of that third party). A third party can also join proceedings before a court in support of one of the parties if the third party has legal interest in the outcome.
If the respondent intentionally or through gross negligence violates the terms of an injunction, they may be sentenced in a case brought by the petitioner to pay a fine, or to imprisonment for up to two years. The same applies to other persons who deliberately assist the respondent in violating the injunction. Further, if the respondent or someone on their behalf intentionally or negligently violates the terms of the injunction, they must compensate the petitioner for any damage they suffer thereof, see Article 32 of the Injunction Act.
Trials are conducted via oral arguments which build on the previously submitted written documents by the parties, summons by the plaintiff and submission by the defendant. The parties themselves may give statements but such statements are usually of little impact. Witnesses may be examined by the lawyers on each side, but witness testimony is limited to what the witness itself has experienced, meaning that expert witnesses are not permissible.
The parties may ask the court to appoint an expert to evaluate a certain aspect of the case at hand. The expert delivers their valuation prior to the trial but is commonly requested to appear at the trial and answer questions relating to the valuation.
The final judgment is issued in writing at a later date.
After the plaintiff has filed a summons with the court and the defendant has filed it submission the court holds at least one hearing where the judge tries to settle the case if possible and gives the parties the opportunity to file further evidence. If the parties need time to gather further evidence and/or the court believes it to be in the interest of the case further hearings are held. In the last hearing before oral arguments the judge asks the parties whether they will be making statements before oral arguments and/or if they are going to be summoning any witnesses. Also, the court usually asks the lawyers how long they estimate their oral arguments to take. In that same hearing the judge usually informs the parties that they will not be allowed, after that hearing, to submit any further evidence.
If either party requests the court to appoint a court appointed expert, see 7.1 Trial Proceedings, a hearing will be called for the appointment of an expert or experts.
Jury trials are not a part of the Icelandic legal system.
As per 5.4 Alternatives to Discovery Mechanisms and 7.2 Case Management Hearings, evidence may, as a general rule, not be submitted after a certain date decided by the judge, prior to trial. This means evidence may not be submitted or admitted during trial, unless exceptions apply, such as the opposing party explicitly consents to such submission.
Expert testimony is not permissible at trial but the parties can ask to court to appoint an expert to answer questions and that expert is allowed to give evidence as per 7.1 Trial Proceedings. Under chapter 1 of the Civil Procedure Act, a judge in a case may appoint a specialist judge to the case, such as a doctor or engineer, if they consider it necessary.
As per 1.3 Court Filings and Proceedings, court proceedings are open to the public as a general rule but may be closed in certain instances.
The judge dictates hearings as well as the trial itself. In hearing before the trial the judge will try to settle the case as well as discuss with the parties whether they believe further evidence if needed. During the trial, the judge generally only intervenes if they believe clarification is needed.
According to the Civil Procedure Act a judge is do deliver a verdict within four weeks but that often stretches up to eight weeks, sometimes longer.
While the timeframe varies between cases, a typical duration for a commercial dispute would be nine to 15 months from commencement to judgment in the District Court. Generally, the same takes around ten to 14 months in the Court of Appeal and less than six months in the Supreme Court.
A settlement can be reached prior to, or during, a trial with or without the approval of the court although usually the parties ask for the courts approval so that the settlement can be enforced more easily.
During a trial a judge usually accepts and encourages settlement, though they can refuse to accept a settlement if:
A court settlement may be entered into on a matter that has been ruled on in a district court within the next nine months after. A court settlement must be listed in a special register at the relevant court and subsequently it takes effect.
It is possible to enter into a partial settlement and then have any outstanding claims decided by the court. Also, if a settlement is concluded during a trial without an agreement concerning legal fees, the court decides on them if asked to.
Settlements which are entered into before the court are listed in a special register. Parties that can show legitimate interest can ask the court for a copy of all court documents, including settlement agreements. If the lawsuit is settled out of court the settlement remains confidential if decided by the parties.
Settlement agreements entered into before the court are enforceable the same way as domestic judgments, see 9.4 Enforcement Mechanisms of a Domestic Judgment. A settlement agreement without the involvement of the court is not directly enforceable.
See 8.1 Court Approval.
The forms of award available to a successful litigant are varied and case dependant. Awards mostly consist of financial compensation, but other common awards include invalidation/rescission of contracts, duties to act (eg, assigning property), invalidation of administrative decisions. Rulings of recognition are also common, eg, ruling that a party may or may not act in a certain way.
A successful litigant will in many cases also receive reimbursement for some of their legal costs from the opposing party.
The general principles of tort law provide for the option of seeking damages where injury has been suffered and the defendant was either negligent or intentionally caused the damage. The damage must also be caused unlawfully and be a consequence of the conduct of the defendant. Furthermore, there must be a causal link between the conduct of the defendant and the injury of the damaged. Claims are limited to damages suffered, as punitive damages are not recognised under Icelandic law. There is no rule limiting maximum damages.
A party's possibility to claim interest from his counterparty is governed by the Act on Interests and Price Indexation claims No 38/2001 (the "Interest Act"). A party can claim interest if a due date is decided beforehand. Then interest can be collected from that day. If a due date has not been decided interest can be collected from 30 days after the creditor has requested payment. Interest can be collected until payment is received.
Damages can include “damages” interest from the date that the event giving rise to the damages occurred. After the claimant is able to substantiate their damages claim, they are able to claim penalty interest after one month has passed from the date that the creditor verifiably supplied the information required to assess the event of damage and the amount of damages. A court can also always, on its own accord, decide on another initial date for penalty interest.
The main mechanism for enforcing domestic judgments is enforcement via the Enforcement Act No 89/1989, performed by district commissioners. A domestic judgment constitutes a valid enforcement basis under Article 1 (1)(1-3) of the Act and in such cases the defendant has little to no defences against the enforcement.
According to Article 1(1)(11) of the Enforcement Act foreign judgments are directly enforceable in Iceland if Iceland has committed itself at international law to recognise those judgments. Specifically if Iceland has entered into bilateral agreements with other countries that stipulate a mutual enforceability and/or recognition of judgments.
Iceland has, for example, agreed to the Lugano Convention so, accordingly, the rules on enforcement of foreign judgments in Iceland are similar to those in force within the EU and the EFTA countries which have agreed to the same convention.
Rulings and judgments of the Districts courts in civil and criminal cases are appealed to the Court of Appeal and rulings and judgments of the Court of Appeal are appealed to the Supreme Court. As it is a general rule in Iceland that a party has a right to have their case heard in two instances, there is generally a low threshold for parties to be able to appeal their case to the Court of Appeal while appeals to the Supreme Court are very difficult and require a permission from the Supreme Court itself.
There is a distinction under the Icelandic legal system between judgments and rulings of the courts. Judgments are generally a final conclusion in a dispute between parties while rulings are often interim and concern procedural issues.
Judgments of District courts in civil cases are appealable within four weeks to the Court of Appeal if a case concerns a monetary claim of a certain value that changes each year, today equivalent of ISK1,058,054. The Court of Appeal can allow appeals of lower amounts if the cases are considered to have great interest.
The monetary value condition does not apply to appeals of judgments to the Supreme Court. Parties can request a permission from the Supreme Court to appeal a judgment of the Court of Appeal to the Supreme Court. There are strict requirements for appealing to the Supreme Court and very few of the permission requests are accepted. The Supreme Court decides whether to accept an appeal based on, among other things, whether the outcome of the case has a significant general value or concerns the substantial interests of the appellant.
Rulings are appealable to the Court of Appeal if so decided in the Civil Procedure Act. Those rulings that are not considered appealable by that Act are final.
A party has four weeks from day the judgment of the District Court is delivered to take an appeal, but the court may agree to receive the appeal within the next four weeks after the aforementioned time limit, provided that the delay in the appeal is sufficiently justified. This applies for appeals to both the Court of Appeal and the Supreme Court, as per Articles 153 and 177 of the Civil Procedure Act.
The appellant sends the Court of Appeal a written notice of appeal which the Court of Appeal issues and the appellant serves to the opposing party. The appeal application states in detail why the applicant considers the conditions for appeal to be fulfilled.
Within four to six weeks after the Court of Appeal has issued the notice of appeal the appellant has to file their submission with the Court of Appeal with all documents of the case. The defendant then gets four to six weeks to file its defence submission and well as any evidence they deem necessary.
The appeal may seek a review of the rulings and decisions that have been the subject of proceedings. Specifically, a judgment may be appealed in order for it to be amended or upheld, annulled and sent back to the lower court, or dismissed, see Article 151 of the Civil Procedure Act.
If an appeal is granted before the Court of Appeal the parties may, within certain restrictions, gather new evidence and lead new witnesses so new points may be explored in that regard. The parties are though bound by the scope of the claims and arguments set out in the initial documents before the District Court. Parties may also gather new evidence before the Supreme Court if appeal is granted.
The courts are not authorised to impose conditions on granting an appeal as rules of appeal are governed by law.
The Appellate Court delivers a judgment on the matters the parties bring before the court but it does not have the power to rule on matters which are not appealed by the parties. The Appellate Court is therefore able to amend, uphold, annul and send back a case to the lower court as well as dismissing a case.
The general rule in civil litigation in Iceland is that the losing party must compensate the other party for costs that are both necessary and associated with the case. The process is that each party submits a summary/bill of their legal costs in the case and demands that the opposing party be made to pay for them. However, court compensation is rarely awarded on the exact amounts of the summaries, which means that parties may have to pay at least some and often a large portion of their own legal expenses, even if they win. The court decides on the cost of the case along with the substantive judgment. Decisions on court compensation may generally be appealed.
In certain instances, parties may be eligible to have all legal costs awarded, regardless of what the outcome of the case will be. Low income parties may apply for free legal costs and also parties of cases where the outcome of the case can have a very general significance or is very important for the work, social status or other private interests of the party.
Article 129 of the Civil Procedure Act provides that the courts will consider the following factors when awarding costs:
Costs which are awarded by the court shall bear penalty interest from the 15th day after the pronouncement of the judgment or ruling and until the date of payment, even if this is not specifically required or mentioned in the judgment or ruling.
ADR is generally respected in Iceland but is not common. The Iceland Chamber of Commerce has an independent arbitration institute called the Nordic Arbitration Centre (NAC).
The arbitration process and the Arbitral Tribunals final awards are confidential, and the parties are able to appoint arbitrators with the desired specialty suited for the dispute at hand. Parties to an agreement can decide to refer a dispute that will arise out of an agreement to arbitration, instead of the national courts. Arbitration in this regard results in an award that is enforceable in 159 countries on the grounds of the New York Convention.
Also, the Iceland Chamber of Commerce offers assistance to solve disputes via special mediation.
Other ADR methods, such as mediation, are not widely used in Iceland.
According to the Civil Procedure Act a judge must seek to reconcile the parties to a dispute unless they believe that the attempt will fail. A judge can accept wishes from parties to a case to direct the case to a county magistrate for mediation if they believe it could be useful and not lead to unnecessary delays. Even though the Civil Procedure Act has this possibility, it is very seldomly used.
The Iceland Chamber of Commerce, via NAC and other methods, is well organised and efficient. There is no awareness of other institutions offering ADR in Iceland.
As per 12.2 ADR within the Legal System, the Act on Contractual Tribunals No 53/1989 covers arbitration in Iceland. The procedural rules of the Act are generally based upon the same principles as the Civil Procedure Act. However, there are some contrasts, the most important ones being party control regarding procedural issues and confidentiality of the proceedings.
Article 13 of the Act provides unless stipulated otherwise in the arbitration agreement, an award or a settlement made before an arbitral tribunal shall be enforceable. The rules applicable to the enforcement of arbitral awards shall be the same as apply to the procedure of enforcement of judgments rendered by Icelandic courts and settlements made before Icelandic courts.
Parties may refer a matter to arbitration if they have autonomy/control over the subject matter, which means that civil disputes may generally be referred to arbitration, but penal cases may not be referred to arbitration.
An arbitral award can be wholly or partially set aside in legal proceedings issued by either party before the District Court:
An arbitral award may not be challenged on other grounds in the courts.
Arbitral awards which are rendered in accordance with international conventions to which Iceland is a party, shall be recognised and be enforceable in Iceland. Iceland is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
Other international arbitral awards shall be recognised and become enforceable if they fulfil the requirements of the Act No 53/1989. To enforce arbitral awards as referred to above, the same rules as apply to the enforcement of foreign court judgments shall be applicable.
On 1 December 2020 a Court on Judgment Revision will be established. Until then Iceland has had a Judgment Revision committee which did not have the same powers as the court will have.
The impact of COVID-19 in Iceland on courts and court hearings has mainly been that the courts are taking steps to utilise technology in proceedings, such as allowing witnesses to testify via video. No official measures have been taken to suspend the operation of limitation periods.