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Sanctions imposed on Bank Saderat Iran annulled by EU General Court
The General Court today annulled the asset freeze imposed on Bank Saderat Iran, a bank part-owned by the Islamic Republic of Iran. The judgment followed closely on the heels of the Court's annulment last week of the sanctions imposed on the Iranian Bank Mellat. The Council's practice is attracting increasing criticism from the Court and it is regrettable that it has taken some two and a half years for these cases to reach judgment, given the onerous effects of the sanctions on the entities concerned and their subsidiaries (including UK subsidiaries) who are also automatically designated.
The Bank was designated by the EU Council in July 2010, and re-designated numerous time since, on several alleged bases, including that it was part owned by the Iranian State and that it had handled letters of credit for two entities said to be involved in Iran's nuclear and ballistic missile programmes.
The Court held that the fact that the Bank was part-owned by the Iranian State was not of itself a ground for designation and could not justify the imposition of restrictive measures as support for an allegation that the Bank provided support for Iranian proliferation.
The Bank accepted that it had handled letters of credit for two entities which it did not dispute were involved in nuclear proliferation. The Bank's position was that the provision of routine banking services, particularly as regarding handling export letters of credit issued by third-party banks, did not constitute support for Iranian nuclear proliferation and that the services provided did not relate to any transactions linked to proliferation. The General Court asked the Council to provide detailed information on the letters of credit handled by the Bank. This was not provided by the Council, but nor was any evidence led by the Bank who submitted that the burden of proof was on the Council and not on the party subjected to restrictive measures. The General Court accepted the Bank's submissions and robustly reaffirmed that the Council bore the burden, holding that that the impossibility of determining the factual point should not prejudice the Bank, but rather the Council.
The Court also held that a Regulation imposing restrictive measures was a true Regulation and not a Regulation in the form of a Decision. Thus Article 60(2) of the Statute of the Court of Justice was held to apply and the effects of annulled Regulations imposing restrictive measures remain in force pending the expiry of the time limit for appeal.
David Anderson QC acted for the bank prior to his appointment as the Government's Independent Reviewer of Terrorism Legislation.
Please click here for a link to the judgment.