June 28, 2019
The UK government has settled out of court a lawsuit filed against it by Iran’s Bank Mellat regarding sanctions imposed on the bank in 2009, actions that Britain’s Supreme Court has said were improper.
Both sides reached a compromise ending a decade-long dispute on June 17, the bank’s lawyer, Nicholas Vineall, told the High Court. Bank Mellat sued for $1.6 million. Neither side said how much the bank would be paid as a result of the settlement.
“Bank Mellat’s claims have been concluded on terms confidential to the parties,” a UK Treasury spokesperson said in a statement.
In 2009, the government prohibited other firms from doing business with Bank Mellat — effectively shutting it out of the UK — based on the belief that it had been financing a nuclear weapons program in Iran.
In 2013, the UK Supreme Court ruled that the sanctions were unlawful and infringed on the bank’s rights. In another 2013 ruling, one of the EU’s highest courts struck down the sanctions against Bank Mellat, concluding there was no evidence to support claims that the bank was involved in a nuclear program.
Bank Mellat, one of the largest banks in Iran, is 20 percent owned by the Iranian government and 80 percent privately held.
In its case, the bank alleged that the sanctions “substantially damaged the bank’s reputation,” in turn leading to the loss of profits and customers, and further sanctions from other countries.
In its defense, the UK Treasury was expected to argue that its concerns about the bank’s involvement in the program gave it “ample justification for taking action to prevent the UK financial sector being involved in transactions of concern.”
The sanctions were imposed by the Labor government of Prime Minister Gordon Brown. They were fully lifted in 2016 as part of the nuclear deal with Iran.
