Iranian bank avoids sanctions


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Bank Mellat, an Iranian bank, appealed to the Supreme Court in its claim against HM Treasury ([2013] UKSC 39) that sanctions imposed on it under the Counter-Terrorism Act 2008 were arbitrary, disproportionate and also unlawful because of a failure to give prior notice and any opportunity to make advance representations. The bank also claimed that the Treasury had failed to give adequate reasons and had applied irrelevant considerations and mistakes of fact. The bank relied on English common law and the European Convention on Human Rights, which provided for due process.

The court held that the essential question was whether the interruption to the commercial dealings of the bank in the UK’s financial markets was in rational and proportionate relationship to the statutory purpose of hindering Iran’s nuclear weapons programme. The court noted that the bank appeared to have been singled out and that there had been no attempt to place restrictions on every Iranian bank in London. It was therefore an arbitrary and irrational decision and the bank should have been given an opportunity to make representations. The court considered that to be among the oldest principles of public law. It was not implicit in the legislation that the right of recourse to the courts was the sole guarantee of fairness.

Paul Howcroft, Partner, Fladgate LLP (phowcroft@fladgate.com)

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