Iceland weighs taking Britain to European court

REYKJAVIK (Reuters) - Iceland said on Tuesday it was considering going to the European Court of Human Rights over Britain's use of anti-terrorism legislation to seize assets of Icelandic bank Landsbanki during the island's financial crisis.

Iceland said it would not pursue the case in the British courts after lawyers advised it was unlikely to be successful there.

Iceland's three biggest commercial banks collapsed in early October as the island's financial system buckled under the weight of tens of billions of dollars' worth of foreign debts and the effects of the global financial crisis.

Thousands of savers in Britain, as well as in the Netherlands and Germany, had money deposited in Icelandic banks, which had expanded rapidly overseas in recent years.

Britain used anti-terrorism legislation to seize the assets of the British arm of Landsbanki, which marketed products under the Icesave brand.

The move sparked outrage in Iceland and led to a diplomatic row between the crisis-hit country and Britain. British Prime Minister Gordon Brown and the British Treasury have stood by the decisions taken.

"The government has decided to explore to the full extent the possibility of taking Britain's decision to use the Anti-Terrorism, Crime and Security Act from 2001, against Landsbanki last year, to the European Court of Human Rights," Iceland's government said in a press release.

The Icelandic government said it had asked British law firm Lovells to determine whether there were grounds for Britain's action to be considered illegitimate and whether Iceland could sue for damages.

"The lawyers' opinion was that the Icelandic government could not win such a case before the British courts," the statement said, noting this was based on legal precedents and the belief Britain had wide leeway in the use of freezing orders.