* Bank Mellat claiming damages after wrongful sanctions
* Treasury denies sanctions caused the bank ubstantial
(Adds details, comments from Bank Mellat lawyer, HM Treasury no
By Clare Hutchison
LONDON, May 9 The British government has filed a
defence against a $4 billion lawsuit brought by an Iranian bank
against which it wrongfully imposed sanctions, denying that the
sanctions caused the bank substantial losses or reputational
Bank Mellat, Iran's largest private bank, filed a damages
claim in London's High Court in February after the Supreme Court
quashed UK sanctions imposed against it over alleged links to
Tehran's nuclear programme.
The lender said the bank suffered "significant pecuniary
loss" and substantial reputational damage as a result of the
measures that were taken against it in 2009.
It claimed the British government also successfully lobbied
other authorities to take their own action against Bank Mellat,
which it says ultimately caused and continue to cause the loss
of profitable business, customers, banking relationships and
In a defence filed in court on Friday and seen by Reuters,
the Treasury, Britain's finance ministry, rejected those
"It is denied that the 2009 order substantially damaged Bank
Mellat's reputation and goodwill in both the UK and
internationally and caused significant pecuniary loss."
Any such losses would have been suffered anyway, because at
the time there was a general reluctance to conduct business with
Iranian banks in light of earlier U.S. financial sanctions, the
defence document stated.
"By this time, the overall exposure of the UK financial
sector to Iran was very low and many participants in the UK
financial sector had, of their own volition, decided generally
to wind down, or had completely ceased, business with the
Iranian banks based in the UK, including Bank Mellat," it said.
Europe and the United States imposed sanctions against
specific Iranians, state institutions and companies in an
attemnpt to persuade Tehran to rein in its nuclear programme,
which they believe to be attempting to enrich uranium for use in
atomic bombs, and open its doors to U.N. inspectors.
Tehran maintains that its nuclear programme is for peaceful
purposes only and Western governments are now starting to ease
part of the sanctions after Iran and world powers reached an
interim deal in November.
With the claim being made against the British Treasury, a
ruling in favour of Bank Mellat would effectively hit UK
taxpayers, which the bank's lawyer Sarosh Zaiwalla, of Zawailla
& Co, believes will make authorities more careful when enforcing
Zaiwalla said that the effect of the case can already been
seen in the more cautious approach British and European Union
officials have taken with sanctions against Russia after its
actions in Ukraine.
"The EU council and the UK government has learned a lesson,"
he said, adding that Bank Mellat had also recently filed an
application for a judicial review into the Treasury's action
regarding the bank.
A Treasury spokesman declined to comment because the case is
(Editing by Jason Neely and David Goodman)