Icelandic tech company Vélfag and its majority shareholder have filed a formal complaint with the EFTA Surveillance Authority (ESA) requesting an expedited infringement procedure against the Icelandic State. Earlier this year the company found itself facing allegations of connections to sanctioned Russian companies.
The company has brought in legal heavyweights Dr. iur. Laura Melusine Baudenbacher and Prof. Dr. Dr. h.c. Carl Baudenbacher, a former President of the EFTA Court. Carl Baudenbacher has been formally appointed the company’s legal counsel, following approval by the Icelandic Ministry for Foreign Affairs (MOFA).
Vélfag’s complaint seeks to highlight serious breaches of EEA law and fundamental rights of the company. Among these are the freezing of the company’s bank accounts in July at the request of the Ministry for Foreign Affairs, which subsequently imposed conditions requiring ministerial approval for financial transactions and changes to the company’s board.
‘Vélfag has repeatedly sought formal remedies domestically without success,’ said Vélfag chairman Alfreð Tulinius.
‘With this complaint to ESA, we seek a fair and timely resolution within the EEA framework – ensuring equality, due process, and respect for fundamental rights.’
According to the company, its majority shareholder, a Swiss national, was denied a seat on the board and there was no substantive reasoning for this refusal. Vélfag states that two independent due diligence reviews commissioned by German authorities confirmed there are no links to sanctioned entities.
Vélfag allegs that the Ministry’s actions breach Article 4 of the EEA Agreement (prohibition of discrimination on grounds of nationality), as well as the freedoms of capital movement, establishment, and pursuit of occupation. It also claims that freezing of funds and operational restrictions have placed the company under severe financial strain and may adversely affect services to the Icelandic fishing industry, where the majority of freezer trawlers are equipped with Vélfag machines.
The complaint requests that ESA initiates an expedited infringement procedure under Article 31 of the Surveillance and Court Agreement, on the premise that further delays could render any remedy ineffective.
