Iran’s Bank Mellat is suing the British government for 2.3 billion pounds ($3.8 billion) saying the UK wrongfully imposed sanctions on it, thus causing the bank substantial losses and reputational damage.
Bank Mellat, Iran’s largest private bank, filed the claim in London’s High Court in February after the UK Supreme Court quashed UK sanctions imposed against it over alleged links to Tehran’s nuclear program.
The bank said it suffered “significant pecuniary loss” and substantial reputational damage as a result of the measures that were taken against it in 2009.
It claimed the British government also successfully lobbied other authorities to take their own action against Bank Mellat, which it says ultimately caused and continue to cause the loss of profitable business, customers, banking relationships and dealing services.
In a defense filed in court Friday and seen by Reuters, the British Treasury rejected those allegations.
“It is denied that the 2009 order substantially damaged Bank Mellat’s reputation and goodwill in both the UK and internationally and caused significant pecuniary loss.”
Any such losses would have been suffered anyway, because at the time there was a general reluctance to conduct business with Iranian banks in light of earlier US financial sanctions, the defense document stated.
“By this time, the overall exposure of the UK financial sector to Iran was very low and many participants in the UK financial sector had, of their own volition, decided generally to wind down, or had completely ceased, business with the Iranian banks based in the UK, including Bank Mellat,” it said.
With the claim being made against the British Treasury, a ruling in favor of Bank Mellat would effectively hit UK taxpayers, which the bank’s lawyer Sarosh Zaiwalla, of Zaiwalla & Co, believes will make authorities more careful when enforcing sanctions.