© wikileaks
Icelandic court rules that payment processor broke contract laws by blocking credit card donations to whistleblowing site

WikiLeaks has claimed a "significant victory" in its struggle with the US government to allow people to make donations to it through the Visa payment scheme, after an Icelandic court ruled that a payment processor there had broken contract laws by blocking credit card donations to Julian Assange's whistleblowing site.

But Visa International said that the ruling, against a Reykjavik-based company called Valitor - formerly Visa Iceland - might not have any broader application and may not change the current position, in which payments cannot be made to WikiLeaks using Visa cards and other US-owned credit cards. That has choked off the vast majority of donations to WikiLeaks, which said it had lost about $20m in funding as a result.

US financial institutions including Visa, Bank of America, Mastercard, PayPal and Western Union, stopped accepting or handling payments intended for WikiLeaks in December 2010, after the site began leaking US diplomatic cables from a cache of nearly 250,000 it had acquired.

MasterCard and Visa both said at the time that they were cutting the links because WikiLeaks was "engaging in or facilititating" illegal activity. A PayPal vice-president said that he had come under pressure from the US state department to cut payment links with the site. Until Visa cut its links, the only way to pay a donation was via a web page hosted by Iceland-based Datacell, which acted as WikiLeaks's payment processor.

Attorney Sveinn Andri Sveinsson told Reuters that an Icelandic court has ordered Valitor to resume processing donations to WikiLeaks within two weeks or face Kr800,000 (about £3,000) in daily fines.

Assange said in a statement: "This is a significant victory against Washington's attempt to silence WikiLeaks. We will not be silenced. Economic censorship is censorship. It is wrong. When it's done outside of the rule of law its doubly wrong. One by one those involved in the attempted censorship of WikiLeaks will find themselves on the wrong side of history."

Sveinsson claims that Thursday's judgment means credit card donations could soon be flowing to DataCell. The court ruled that Valitor had broken its contract by refusing to pass donations to WikiLeaks.

But even if Valitor does resume passing payments to WikiLeaks accounts in Iceland, it is not clear that it would have any to process. The Visa and Mastercard system works in a "four-party" model, where the customer holding a credit card effectively has a contract with an "issuing bank". At the receiving end is the "accepting bank" - in this case Valitor - and its "merchant" (here, WikiLeaks).

Visa and Mastercard effect the transfer of funds between the issuing bank and the accepting bank. While the court may have restored the tie between Valitor and WikiLeaks, it is unclear whether that means that Visa is obliged to pass on money transferred to an issuing bank from a cardholder.

WikiLeaks says that the European Commission is conducting an investigation into what it calls the "banking blockade" imposed by the US financial organisations. It filed a complaint in July 2011 with the competition arm of the EC, saying that Visa and MasterCard had breached antitrust provisions.

In October 2011, Assange said that the site needed $3.5m over the next year in order to continue operating because of the restrictions on funding, and that he expected the EC to decide on whether to carry out a full antitrust investigation into Visa and MasterCard by mid-November.

On Thursday, he said he expected an EC decision on whether to carry out the investigation "before the end of August".