Economy, Business And Markets

EU Court: Bank Mellat Unfairly Sanctioned

EU Court: Bank Mellat Unfairly SanctionedEU Court: Bank Mellat Unfairly Sanctioned

The European Union’s top court on Thursday upheld a contention by Iran’s Bank Mellat that it was improperly sanctioned for six years without sufficient evidence of its involvement in the country's nuclear program.

The European Court of Justice said there wasn’t enough evidence to back up the European Council’s contention that Bank Mellat was involved in Iran’s nuclear and ballistic missile programs because it was the parent company of another sanctioned entity called First East Export.

The court also rejected the council’s contention that it couldn’t provide evidence of Bank Mellat’s involvement because it came from confidential sources whose safety could be compromised if they were identified, the ECJ said.

The decision isn’t open to appeal and could give rise to a claim for damages, according to the bank’s lawyers. The victory follows a similar win for Bank Mellat in the UK, where it is seeking $4 billion worth of damages for being improperly targeted.

Sarosh Zaiwalla, a London-based lawyer representing the bank, called the decision significant, though he said the EU damages claims might be wrapped together with those it is pursuing in the UK.

“It follows that because the EU Council has lost, they will pay damages, but Bank Mellat cannot recover damages twice,” he was quoted as saying by the Wall Street Journal.

Damage Claim Strengthened

However, Reuters reported that Mellat will pursue damages against Britain after the European Union's top court on Thursday effectively ruled that the bank's assets should not have been frozen from 2010.

Zaiwalla said the judgment "should have a significant impact on the principle of the rule of law ... This strengthens our $4 billion claim for damages."

"The significant aspect of this ruling is that anybody who has been a victim of unlawful listing, or who considers themselves, can now bring a claim," Zaiwalla told Reuters.

Iran's banking sector has struggled in recent years under the impact of sanctions, which have battered the country's economy. There are slow signs of change.

Global transaction network SWIFT has reconnected a number of Iranian banks to its system, allowing them to resume cross-border transactions with foreign banks four years after they were cut off from the network.

Mellat, which is 80 %  owned by private Iranian investors with Iran's government holding the remaining 20%, would press for damages from the UK with a hearing scheduled in October, Zaiwalla said.

Zaiwalla said Bank Mellat could consider damages against the European Council.

Bank Mellat, Iran’s largest privately-owned bank, was slapped with sanctions in 2010 as the EU and western countries targeted Iran’s nuclear program. The bank challenged the European Council’s assertion that it engaged in conduct that supported Iran’s nuclear and ballistic missile programs. It initially won a case before the EU’s General Court, which ruled in January 2013 that there wasn’t enough evidence to support the European asset freeze on the bank.

The European Council, however, appealed the General Court decision to the ECJ, which on Thursday confirmed the assertion of insufficient evidence for sanctions.