Bank Mellat to be reimbursed for reputational damage, loss of earnings

TEHRAN, May 31 (MNA) – Sarosh Zaiwalla, Senior Partner of Zaiwalla & Co., has announced that Iran’s Bank Mellat will receive what is fairly owed to it to compensate for the many years of reputational damage and loss of earnings it has suffered.

Bank Mellat, Iran’s largest privately-owned bank, has been fighting a legal battle since 2009 against sanctions that it said were wrongfully placed on it by the European Union and the UK Treasury over alleged links to Tehran’s nuclear program.

Led by Sarosh Zaiwalla, a lawyer for the Iranian bank at Zaiwalla & Co. Solicitors, the bank challenged the European Council’s assertion that it engaged in conduct that supported Iran’s nuclear program 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.

Bank Mellat was unlawfully sanctioned by HM Treasury and after the UK Supreme Court dismissed HM Treasury’s appeal, the Bank is pursuing a damages claim against the HM Treasury to the tune of US $4bn in the UK Courts.

On 10th May, the HM Treasury had applied to the Commercial Court to determine three preliminary issues relating to heads of losses under which Bank Mellat can claim its losses falling under those heads as damages.

It was the first ruling in favor of an Iranian company since international sanctions were lifted on the Islamic Republic last month as part of a nuclear deal with world powers.

Mr. Zaiwalla has described the judgment as the first big legal success for an Iranian corporation challenging the sanctions regime and predicted it could open the door to others.

In an interview to Mehr News, sanctions expert Sarosh Zaiwalla, answered the following questions on the issue:

Why did the Bank Mellat sanction pop up? Why was it an abrogation of the international law?

The case of Bank Mellat is a long running case, which began seven years ago in 2009 when the UK government issued notification prohibiting dealing with Bank Mellat. This decision of the government was challenged by Bank Mellat in the London Court. In June 2013, my firm had a breakthrough in the case when a Judgment by the Supreme Court of the United Kingdom held that the sanctions imposed by the UK government on Bank Mellat, in 2009, were both irrational and unlawful. The UK Supreme Court then asked the London High Court to assess Bank Mellat’s losses, which the bank can claim as damages for its unlawful listing by the UK government. The bank has now commenced a claim in the London High Court claiming USD 4 billion damages against the UK government. The trial of this claim will take place shortly.

The subsequent positive court judgment of the Supreme Court, follows a victory in the European Court in January 2013, where the European Court of Justice said there was no evidence connecting Iran’s largest private bank to the government’s nuclear programme.


What is the stature of our Bank Mellat foreign trade and what impact did the sanction have on its revenues?

Bank Mellat has claimed in the English Court that it has suffered substantial damages because of the UK government’s actions. It is the bank’s position that it has suffered substantial losses as a result of the government’s listing of Bank Mellat.


When and how do you expect the US$4 billion damages to be cleared by HM Treasury?

The next scheduled hearing to decide on the compensation for Bank Mellat from HM Treasury is scheduled for October 2016. We are quietly optimistic that the bank will receive what is fairly owed to it to compensate for the many years of reputational damage and loss of earnings it has suffered.


You have deemed the law case as ‘a crucial victory for Bank Mellat’. What are the significances of this major legal victory?

The Bank Mellat case clearly shows the world that even in the world of sanctions, the rule of law still applies in the Western world, particularly in the English Court. The UK Supreme Court judges showed great independence and courage to hold the UK government’s conduct as both unlawful and irrational.

Regardless of international politics, Europe says there must be a reason to curtail the rights of an entity or individual. The EU court held that the EU Council was wrong in its designation of the bank as the bank did not fit the EU’s criteria for sanctions. The message that this shows to the world outside of Europe is that there is a true independence of the EU Court, which is willing to fight against its sister institutions. Unlike cases we are seeing from the US, we can see that true justice can be sought and delivered from the European courts.


The case was an interesting example of the difficult terrain of court ‘interference’ with essentially political decisions. How would you evaluate the stance and decision taken by the Supreme Court?

The United Nations Treaty on International Human Rights, which every member of the United Nations has signed, no country is allowed to interfere with the property rights of any individual without due process. This makes it essential that actions taken by the government, like imposing sanctions for political reasons, are based on good reliable evidence and not on the whims and fancy of any government.


Sarosh Zaiwalla founded Zaiwalla & Co. Solicitors in April 1982 with offices in Chancery Lane, London. He has been involved in over 1200 International Energy, Maritime and Construction Arbitrations in London and worldwide either as a solicitor, Counsel, party-appointed Arbitrator or Sole Arbitrator. Recently, he succeeded for Bank Mellat of Iran against the UK Government in the UK Supreme Court challenging legality of Iran nuclear sanctions.

By Mehr News Agency