THE BRITISH AND Dutch governments are preparing a court action against the Icelandic state in the hopes of recovering billions of euro lost in deposits after the country’s banking system collapsed in 2008.

Some €4 billion deposited by people in the UK and Netherlands was lost when the country’s banks failed. Today Iceland voted against a repayment plan for the second time.

The first referendum on the issue was saw a massive 93 per  cent of voters reject the proposal to repay with 5.5 per cent interest between 2016 and 2024.

Yesterday’s referendum proposed that the money would be paid back with interest of 3.3 per cent to the UK, and 3 per cent to the Netherlands, over a 30-year period between 2016 and 2046. However, partial results from yesterday show that the public voted down this proposal at 58 per cent to 42 per cent.

The UK has said it is “disappointed” by the rejection of the second payment proposal, while the Dutch Minister for Finance has said that the time to negotiate is “over”, the BBC reports.

Prime Minister Johanna Sigurdardottir said that the “worst option” had been chosen, and that the country had been split in two.

Britain’s Chief Secretary to the Treasury, Danny Alexander, said that the matter would now go to the international court.