The High Court has rejected an application by Kaupthing Bank to dismiss the claim for the technical legal reason that it did not have the jurisdiction to hear it. The case will now proceed to be heard in England.
London-based Vincent and Robert Tchenguiz, two of Britain's most high-profile entrepreneurs, sued for damages last July, alleging they had suffered "massive losses" because the bank's failure to recognise their claim "gravely compromised" their relationship with other financing counterparties.
Speaking as chairman of Consensus Business Group – an advisor of the Tchenguiz Family Trust's Euro Group which is also a claimant in the proceedings – Vincent Tchenguiz said the claimants would "vigorously" pursue compensation.
He declined to take questions outside the court, where his legal team handed a statement to journalists.
Vincent and Robert Tchenguiz's relationship with Kaupthing has become thorny since the bank was felled by its debts during the credit crisis of 2008, compounded by a property collapse that helped severely dent the brothers' once huge fortunes.
The brothers were among nine people arrested last week after police raided addresses in London and the Icelandic capital Reykjavik as part of an investigation co-ordinated by Britain's Serious Fraud Office (SFO).
But the Iranian-born Tchenguiz duo, who denied any wrongdoing and said they were cooperating fully with investigators, were released without charge after questioning.
Less than one week later, however, Vincent Tchenguiz's property management company Peverel Group was pushed into administration because Bank of America Merrill Lynch demanded the repayment of a £124.6m loan plus accrued interest within 24 hours.
Tchenguiz blamed the "very public commencement of the Serious Fraud Office's investigation" into Kaupthing for the bank's decision to recall the loan.
The SFO has been investigating the collapse of Kaupthing since 2009, focusing in part on why substantial value was extracted from the bank shortly before its collapse.
Robert Tchenguiz, a shareholder both directly and indirectly in Kaupthing Bank, along with "related parties" owed around €2bn (£1.73bn) on top of loan facilities secured with subsidiaries when Kaupthing failed, according to an Icelandic investigation committee.