The Iranian administration opened formal legal proceedings against South Korea which has refused to pay off oil debts after all diplomatic efforts.

In a letter dated July 22, Iranian President Ebrahim Raisi referred a governmental bill about the financial dispute with South Korea to Speaker of the Parliament Mohammad Baqer Qalibaf.

According to the bill, ratified by the cabinet of ministers on July 5, the dispute between the Central Bank of the Islamic Republic of Iran and the Government of South Korea is going to arbitration.

South Korea was the third largest customer of Iranian crude oil and the number one buyer of Iranian condensate before 2018, when a former administration in the United States pulled out of the 2015 nuclear deal and imposed sanctions on Iran.

Since then, the country has refused to repatriate the funds it owes Iran for energy imports due to fears of US penalties on its economy.

Unofficial estimates suggest Iran has more than $7 billion worth of funds in two South Korean banks that it cannot access simply because banks and authorities in the East Asian country refuse to process them because of fears of facing US penalties.

By Tasnim