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12 May, 2015 14:46

Iranian bank sues UK govt for £2.3bn damages incurred under nuclear sanctions

Iranian bank sues UK govt for £2.3bn damages incurred under nuclear sanctions

An Iranian bank is suing the British government for £2.3 billion ($4 billion) in damages after the Treasury imposed sanctions against the private business for alleged links to Iran’s nuclear program.

The High Court ruled that Bank Mellat’s damages trial against the Treasury should go ahead, after the British government attempted to delay the hearing.

Bank Mellat successfully challenged the Treasury’s sanctions in the UK’s Supreme Court and EU’s High Court in 2013, where both bodies ruled in favor of the lender.

The British government was found to have breached the bank’s rights under the European Convention of Human Rights and the Human Rights Act.

Mellatt’s case at the British Supreme Court made history for being the first hearing closed to the public since the court’s inception in 2005.

The European General Court in Luxembourg also ruled the Treasury hadn’t provided enough evidence supporting the allegation that Bank Mellat had connections with Iran’s nuclear and missile programs.

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Mellat strongly denies the accusations levied by the British government.

Government sanctions prohibited UK banks from doing business with the Iranian lender, effectively barring it from the UK financial services market.

Mellat, which describes itself as Iran’s largest private bank, wants damages for what it claims is “significant pecuniary loss” and substantial damage to its reputation.

The bank claims its biggest loss of £830 million ($1.3 billion) was via commission on its foreign currency-denominated letters of credit business.

Zaiwalla and Co, solicitors for Bank Mellat, said the damages sought include: “Consequential losses such as the loss of future earnings or profits, not constrained by whether what is claimed by way of loss is itself a ‘possession,’ but only by whether the loss claimed was caused by the unlawful interference with the relevant possessions which the Court has found.

Time and again, the courts have decided that a decision made without regard to the principles of natural justice is void.

In the case of HM Treasury, the judgment of Mr Justice Flaux confirms this and supports the bank’s position that the judgment of the Supreme Court could not be clearer — the 2009 order by the Treasury against Bank Mellat was unlawful,” he added.

Mellat’s imminent court case with HM Treasury comes as Prime Minister David Cameron appoints Michael Gove as the new justice secretary.

Gove is tasked with the job of scrapping the 1998 Human Rights Act, thereby fulfilling one of the Tories’ key election pledges.

Such a move could see Britain leave the European Convention on Human Rights.

The Conservatives’ plan to abolish the Human Rights Act comes despite a 2012 report by a commission charged with examining the legislation which found in favor of preserving the act.