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Wed 12 Feb 2014 03:19 PM

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Iran's biggest bank to sue the UK gov't for up to $825m

Exclusive: Lawyer to lodge damages claim after Bank Mellat won case to have sanctions removed last year

Iran's biggest bank to sue the UK gov't for up to $825m
A bank clerk deals with customers at Bank Mellat. (Getty Images -for illustrative purposes only)

Bank Mellat, Iran’s biggest lender, on Friday will lodge a damages claim of at least £500m ($825m) against the British government, a move which resulting from its winning of a landmark case last year to have sanctions against it lifted by the UK, the lawyer representing the bank told Arabian Business.

London-based Indian lawyer Sarosh Zaiwalla, who has previously acted for clients such as India’s Gandhi family, the Dalai Lama and the Russian, Hong Kong and Dubai governments, represented Bank Mellat in a case against the London government last summer.

In its verdict, the UK Supreme Court found that the government was wrong to have imposed sanctions on the bank over its alleged links to the Tehran regime.

As a result of the successful outcome, Zaiwalla confirmed a damages claim is set to be filed at Britain’s Commercial Court on Friday, February 14. It is estimated the amount will run into the hundreds of millions of dollars but has been estimated at around £500m ($825m).

Zaiwalla said this was the first time an Iranian plaintiff against sanctions in Europe has pursued a damages claim and he confirmed forensic accountants were currently looking at the case to determine what impact the sanctions had on the bank’s financial performance.

He said the case was seen as a watershed in attitudes to Iranian companies and sanctions against the regime and was likely to lead to a flood of similar claims and cases.

“The decision that the British government had singled out Bank Mellat without rational and valid legal ground could prove a precedent-setting case that has wider reaching implications for Western sanctions against Iran and could lead to further payouts,” Zaiwalla said.

“To my knowledge there are 10 other private Iranian companies bringing law suits in Europe and Iranian state entities are also beginning to take legal action.

“It reveals a great deal about the high quality of British justice system that a court would make a decision against the British government in favour of a bank from Iran, a country that is perceived to be hostile to the UK I am not sure if this could happen in any other legal system around the world,” he added.

In May 2012, a UAE firm cleared of European Union allegations it was operating as a front for the Iranian government said it may seek to recover costs involved in fighting its case.

Morison Menon Chartered Accountants (MMCA) brought legal action against the Council of the European Union in December 2011 after its name was added to a list of companies suspected of being “involved in the nuclear or ballistic missile programmes of the Islamic Republic of Iran”.

Following an investigation, MMCA was found innocent by the European Communities Court of Justice in Luxembourg, and removed from the list on April 24 of that year.

“You cannot expect... [an apology] but you can ask for your costs, which we have already file. Lawyers costs could be somewhere in the region of AED400,000 ($108,896)… It was not a cheap case,” Raju Menon, managing partner of MMCA, told Arabian Business in an interview in May 2012.

The issue of Iranian sanctions has become a hot topic after Iran and six world powers struck an interim deal in November under which Tehran agreed to limit parts of its nuclear work in return for the easing of some sanctions.

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