The UK and Dutch governments are preparing court action against Iceland to recover 4bn euros (£3.5bn) lost when the country's bank system collapsed.
It follows a referendum in Iceland which rejected a repayment plan.
The UK said it was "disappointed" by the "no" vote, while the Dutch finance minister said the time for negotiations was "over".
Iceland's Finance Minister Steingrimur Sigfusson said that resolving the row in court would take at least a year.
The UK and the Netherlands say they are owed the money following the collapse of Icelandic savings bank Icesave. British and Dutch depositors were bailed out by their governments, which are now demanding their money back.
http://www.bbc.co.uk/news/business-13029210
Note: 10 April 2011 Last updated at 13:30 GMT