A privately owned Iranian bank accused of providing financial services to companies involved in Iran's nuclear and ballistic missile programmes has won a landmark victory in a British High Court.

Bank Mellat is fighting to overturn an order by the British government prohibiting all financial companies doing business with it, including a substantial amount of letter of credit (L/C) business written by one of its affiliates.

Fair hearing

The bank is seeking to have the order made by the British government set aside on a number of grounds, including the right to challenge the order and to receive sufficient information about the allegations being made against it to ensure a fair hearing.

The High Court in London essentially decided a fair hearing should go ahead under the European Convention on Human Rights.

In this way the bank would be treated in the same way as an individual terror suspect challenging a control order.

L/C business

Bank Mellat owns 60 per cent of Persia International Bank (PIB), through which it conducts most of its UK business.

A substantial amount of its business is L/C issuance, valued at around EUR 1.98 billion in 2008 and EUR 970 million in the first half of 2009.

Prohibition

The bank had approximately EUR 185 million in PIB accounts when the British government imposed the order on Bank Mellat.

The order effectively prohibited entities in the financial sector, including PIB, from making any transactions with the bank.

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