Reuters: A London-based unit of Iran's largest bank, Bank Melli, failed in a High Court challenge on Wednesday against an asset freeze imposed by the European Union.
LONDON (Reuters) – A London-based unit of Iran's largest bank, Bank Melli, failed in a High Court challenge on Wednesday against an asset freeze imposed by the European Union.
Bank Melli and its subsidiaries were named in the latest round of sanctions agreed by the EU on June 23 to increase pressure on Tehran to scale back its nuclear programme and abandon enrichment of uranium.
The British unit, Melli Bank , challenged the sanctions, which it said were disproportionate and discriminatory.
But Judge Lord Justice Alan Moses ruled that the bank was wrong to take the British Treasury to court. He said the proper authority to decide on the issue was the EU's Court of First Instance, where the bank has also lodged a challenge.
"Melli UK has taken the wrong point, in the wrong court, with the wrong defendant," he said in the hour-long ruling.
The bank had argued it was legally distinct from its Iranian parent, and was fully compliant with British regulations and with international sanctions against Iran.
But Moses said that exempting the subsidiary from the sanctions against Bank Melli could be regarded as undermining their purpose.
The EU said last month it imposed the sanctions on Bank Melli, its branches and subsidiaries because the bank had "facilitated numerous purchases of sensitive materials for Iran's nuclear and missile programmes" and provided a range of financial services to entities involved.
But Richard Gordon, a lawyer representing Melli Bank Plc, told the High Court on Tuesday: "There is no evidence whatever to suggest the subsidiary has given any support whatever to nuclear activities."
The United States imposed similar sanctions on Bank Melli last October. Iran rejects Western suspicions its nuclear programme is a cover for building an atomic bomb, saying it is solely aimed at generating electricity.
Melli Bank Plc, which also has a Hong Kong branch, specialises in trade financing for British companies doing business with Iran. Its work force as of last year was just over 90 people.
The bank extensively restructured its holdings last year to reduce the impact of U.S. sanctions, but saw after-tax profit fall to 34.5 million euros (27.5 million pounds) in the year to December 31, 2007, from 41.6 million euros in 2006.
Total assets fell by a third to 1.8 billion euros, more than half of which were held in Iran.
(Reporting by Mark Trevelyan; Editing by Charles Dick)