Iranian Bank Restrictions

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FACTS -

HM Treasury restricted access to the UK's financial markets by a major Iranian commercial bank, Bank Mellat, on account of its alleged connection with Iran's nuclear weapons and ballistic missile programmes. The Treasury used a statutory instrument: the Financial Restrictions (Iran) Order 2009.

CONCLUSION -

In the leading majority judgment, Lord Sumption held that on substantive and procedural grounds the Treasury's direction should be set aside.

Substantively, an arbitrary and irrational distinction had been made between the Bank and other Iranian banks operating in the UK. The measure as a whole was disproportionate. The problem was not specific to the Bank but an inherent risk of banking. Comparable banks continued to enjoy access to the market. Other banks were as likely to have the same problem which was inherent in international banking. The direction was irrational in its incidence and disproportionate to any contribution which it could rationally be expected to make to its objective. The first instance judge found that the Bank had a conscientiously applied policy of not providing banking services to entities identified in the United Nations list of prohibited customers.

Originally published in Journal of International Banking & Financial Law/2013 Volume 28/Issue 7, August/Articles/Iranian Bank Restrictions - (2013) 7 JIBFL 448.

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Topics:  Foreign Banks, Iran, Iran Sanctions, UK

Published In: Civil Procedure Updates, General Business Updates, Finance & Banking Updates, International Trade Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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