Bank Mellat has lost more in letter of credit (L/C) commissions than any other bank services according to lawyers representing the bank in a UK court case.

The sanctioned Iranian bank is taking legal action with the British Treasury, accusing it of causing "unnecessary delay and cost" following a decision to remove it from a sanctions list.

L/C losses

Bank Mellat is now seeking to resolve a US$4bn landmark legal battle after it successfully challenged last year a 2009 order by the Treasury prohibiting UK financial institutions from doing business with it.

Of the US$4bn losses, the bank claims its biggest loss of US$1.3bn was via commission on its foreign currency-denominated L/C business.

Legal claim

The bank launched a legal claim for substantial damages using the UK's Human Rights Act, arguing it suffered loss and damage from the order that was imposed under the Counter-Terrorism Act 2008.

Counsel for Bank Mellat told the High Court in a pre-trial hearing that the Treasury was seeking to argue the Iranian bank had suffered "no recoverable loss at all."

A trial is expected to take place next year.

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