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Treasury Must Face Iranian Bank’s Multi-Billion-Pound Claim

The Treasury must face the full brunt of an Iranian bank’s multi-billion-pound damages claim after it was unlawfully shut out of the UK financial sector as international sanctions against Iran were implemented.

The bank was in 2009 hit with a financial restrictions order which was issued under the Counter-Terrorism Act 2008. The order remained in force for a year, during which the bank suffered heavy losses, could not make use of its goodwill or complete transactions and lost a great deal of business to other institutions.

The bank argued that the order violated its human rights in that it was an unjustified interference with its right to peaceful enjoyment of its possessions. It had been given no opportunity to make representations before the order was made. The Supreme Court ultimately ruled that the Treasury had failed to comply with procedural requirements and declared the order unlawful.

Before the High Court, the Treasury sought to limit the impact of that decision and to cut the bank’s compensation claim down to size. However, the High Court found that, in the light of the Supreme Court’s ruling, it was not open to the Treasury to contend that it had not acted in a way which was incompatible with the bank’s human rights.

Amongst other things, the Treasury tried unsuccessfully to strike out part of the bank’s case and to limit its claim in respect of lost profits. However, the Court found that losses which the bank could show were directly caused by the unlawful order were recoverable from the Treasury. The bank’s final award would be assessed at a later date in accordance with the Court’s decision.