Iran’s leading private bank, Bank Mellat, won a major legal battle against the UK Treasury in its claim of $4 billion damages for the sanctions imposed on it in 2009, with the English Court of Appeal, presided by Lord Chief Justice Thomas of Cwmgiedd, upholding on Tuesday the bank’s claim that damages should cover loss to future income as well.
Bank Mellat brought this claim following a judgment of the Supreme Court of the United Kingdom, in June 2013, in which it had held that the sanctions imposed on Bank Mellat, in 2009, were both irrational and unlawful.
The Court of Appeal gave its judgment following an appeal by HM Treasury against the decision of Justice Flaux, sitting in the English Commercial Court–the major civil court in England and Wales– who ruled against the Treasury contention that it had not acted unlawfully.
Justice Flaux also ruled that there was no scope of limiting the damages recoverable by the bank, at that stage, so as to exclude loss suffered to future income. But the Treasury appealed against such claim.
The Court of Appeal has held that the bank’s claim for 60% of the loss suffered by its London subsidiary Persia International Bank is sustainable, but should be claimed by PIB rather than Bank Mellat. This is because the court held that PIB was a separate legal entity and such loss should be claimed by the company rather than its part shareholder.
Furthermore, the Court held that PIB was itself a “victim” of the sanctions imposed by the Treasury. It reached the conclusion on the basis that PIB is a UK Financial Institution.
Notable Achievement
“This is a crucial victory for Bank Mellat. The court has decided not to limit Bank Mellat’s damages save for the loss claimed by Bank Mellat on behalf of its London subsidiary. The bank will be considering whether to include PIB in this action so that it can claim directly against HM Treasury for the losses caused to it,” Sarosh Zaiwalla, Senior Partner of Zaiwalla & Co, which successfully challenged the sanctions, said, the arabianpost.com reported.
Regulators in the UK had claimed that PIB is owed 100% by two blacklisted entities, Bank Mellat and Bank Tejarat. According to Mohammad Reza Meskarian, CEO of PIB, there were no clear allegations against PIB except that it has been operating under Bank Mellat.
“The size of our balance sheet was reduced from €1.4 billion in 2009 to €900 million in 2010 and now it is €225 million,” he said.
