The UK government has settled a £1.25bn lawsuit taken by Iran’s Bank Mellat regarding nuclear sanctions imposed on the bank in 2009, according to a Treasury spokesperson.
Both sides reached a compromise on Monday, the bank’s lawyer, Nicholas Vineall QC, told the High Court.
Vineall noted that all outstanding matters in the claim, including costs, had been settled.
“Bank Mellat’s claims have been concluded on terms confidential to the parties,” the Treasury spokesperson said in a statement.
A five-week trial in the long-running case had been due to begin this week.
In 2009, the government prohibited other firms from doing business with Bank Mellat — effectively shutting it out of the UK — based on the belief that it had been financing Iran’s nuclear weapons programme.
In 2013, the Supreme Court ruled that the sanctions were unlawful and infringed on the bank’s rights. In a similar 2013 ruling, one of the EU’s highest courts struck down the sanctions against Bank Mellat, concluding there was no evidence to support claims that the bank was involved in the programme.
Bank Mellat, one of the largest banks in Iran, is part-owned by the Iranian government.
In its case, the bank alleged that the sanctions “substantially damaged the bank's reputation,” in turn leading to the loss of profits and customers, and further sanctions from other countries.
In its defence, the Treasury was expected to argue that its concerns about the bank’s involvement in the programme gave it “ample justification for taking action to prevent the UK financial sector being involved in transactions of concern.”
In a statement following the settlement, Sarosh Zaiwalla, a senior partner in the law firm acting for the bank, Zaiwalla & Co, commended the British court system.
“This case speaks volumes for the independence of the British judiciary, that a foreign party can sue the UK government and get the Supreme Court to say that the Government have acted unlawfully and irrationally to list Bank Mellat under the Iran nuclear sanctions, and for our client to obtain damages for their loss,” he said.