Economy, Business And Markets

UK Court Backs Bank Mellat in Legal Claim

UK Court Backs Bank Mellat in Legal Claim
UK Court Backs Bank Mellat in Legal Claim

A high court in the UK has rejected the British government's attempts to dismiss Bank Mellat's $4 billion damage claim against the UK Treasury for imposing "irrational" sanctions on the private lender, British and Iranian media sources reported.

Bank Mellat, Iran's largest private bank had sued  the UK government for losses after it succeeded in 2014 in challenging a 2009 treasury order prohibiting that country's financial institutions from doing business with the Iranian lender — in effect shutting it out of the UK financial sector — because of its alleged links to Tehran’s nuclear program.

Reacting to the high court's ruling in favor of his bank, Ali Rastegar, CEO of Bank Mellat, called it a major step toward winning the $4 billion case against the UK treasury, the Iranian Persian-language website quoted him as saying on Sunday.  

"The UK Supreme Court, contrary to the verdict of the initial trial, has demanded that the treasury provide more evidence about Bank Mellat's activities," he said.

Rastegar noted that his bank had employed a group of top lawyers to pursue the case. "The court also ruled that the UK Treasury must compensate Bank Mellat's judicial (court) expenses."

Mellat would keep on fighting for the case through the courts against the government in London to compensate a small portion of the colossal damage inflicted on the nation due to the western-instigated international sanctions.

Tehran has been under punishing economic and banking sanctions for more than 12 years due to the dispute over its nuclear energy program the West claims is a cover to develop an atomic weapon. Iran has dismissed the charge at the highest echelons of power and said the program is geared to the peaceful use of nuclear power, especially for producing advanced medicine and fuel for the nuclear power plant in the southern port city of Bushehr.


Violation of Human Rights

Despite UK government's attempt to turn down the appeal, the high court has ruled that Mellat's $4 billion damage claim against the treasury would proceed.

The judge, Justice Flaux, said that the case could not be reopened, because the Supreme Court had already ruled that UK Treasury had violated Bank Mellat's rights under the UK human rights act.

The British government had prohibited UK financial institutions from doing business with Bank Mellat due to its alleged links to Iran's nuclear program.

In June 2013, the UK Supreme Court concluded that the direction was arbitrary and irrational and procedurally unfair. The nub of the complaint was that there were other Iranian banks against whom this very draconian measure was not taken, and that there was nothing specific about the bank which made it more implicated than the rest of the banking system.

Bank Mellat has made wide-ranging claims. It lost return on funds deposited with three subsidiaries and with other non-Iranian banks, as well as suffering a diminution in the dividends derived, and to be derived, from those three subsidiaries. Much of the claim was for future loss of earnings or profits.

Bank Mellat is known to be the first of companies and Iranian state entities to bring legal action against western governments to claim damages.

Soon after the six world powers and Iran reached an agreement in July to put a permanent end to the nuclear dossier, reports emerged in the domestic news outlets that companies and financial/monetary bodies in Tehran have been advised to take the western governments to court for their illegal restrictions that impaired their businesses, some irreversibly.

Iran and the P5+1 (permanent members if the UN Security Council plus Germany) are now in the process of working out the final ways and means to eliminate the economic/banking sanctions in return for verified limits on the disputed nuclear program.