The parties’ dispute was in particular whether the collecting of costs by the municipality for the development of infrastructure in a more specified area in Reykjavík on the basis of a 2016 agreement with the landlords had been legal. The Supreme Court’s judgment stated that this was a contract of a private law nature where the landlords undertook to pay a certain consideration for the interests that the agreement brought them. It was considered that the legal reasons of S ehf. for the parties’ accommodation, the forced position of the parties to the contract and the one-sided decision on the amount of their cost participation were not justified and were rejected. The Supreme Court considered that Article 78 of the Constitution gave municipalities independent power, within the framework of law, to make decisions on the use and allocation of revenue and must give them the flexibility to decide on priorities within that framework, including whether revenue from private agreements would be used to some extent for statutory projects. The conclusion of the Landsréttur was confirmed on the acquittal of the City of Reykjavík from all claims made by S ehf.