Plans to sell off the assets of failed Icelandic bank Landsbanki and pay back its investors were supported with more than $5 billion worth of loans from the UK and Dutch governments.
The UK lent the Icelandic government $3.84 billion while the Dutch put up $1.79 billion.
But there were disagreements over how and when Iceland should repay the loans.
Thousands of investors from the two countries feared for their life savings when Landsbanki collapsed in 2008.
The loans meant foreign depositor claims against Landsbanki were guaranteed as the Icelandic government began the liquidation of the bank.
Iceland, which has already received $827 million from the International Monetary Fund (IMF) to help sustain its struggling economy, will pay 5.5 per cent interest on the loans.
Last week, Reuters reported that Icelandic prime minister Johanna Sigurdardottir had accused Britain and the Netherlands of holding up IMF aid to the country because of the dispute