IRAN’S BANK MELLAT WINS RULING OVER TREASURY

Daily Telegraph
3:47PM GMT 24 Feb 2010
UK

Bank Mellat, the privately owned Iranian bank accused of providing
financial services to companies engaged in the country’s nuclear and
ballistic missile programmes, has won a "human rights" legal victory
in the High Court.

The bank is fighting to overturn a Treasury order stopping all
financial companies doing business with it. The Treasury acted "to
hamper Iran’s nuclear and ballistic missile programmes" by shutting
out Bank Mellat from the financial sector.

Mr Justice Mitting, sitting in London, declared on Wednesday that,
in its legal battle with the Treasury, the bank was entitled under
the European Convention on Human Rights to be treated in the same
way as an individual terror suspect challenging a control order.

Chinese businessman accused of using New York banks to buy Iran
materials to make nuclear weaponsBank Mellat was entitled to sufficient
information about the allegations being made against it to ensure a
fair hearing.

The judge said he was giving Government lawyers permission to appeal
because of the importance of his decision.

The Treasury made the order under the 2008 Counter-Terrorism Act last
October, and the bank is seeking to have it set aside on a number
of grounds.

In a preliminary hearing, the judge was asked to decide whether Article
6(1) of the human rights convention, which protects the right to a
fair hearing, applied to the proceedings.

It is a key issue as it determines the extent to which the Treasury has
to disclose to the bank its grounds for seeking to uphold the order.

Jonathan Swift QC argued on behalf of the Treasury that Article 6(1)
did not apply because the order under challenge was directed at UK
credit or financial institutions and did not directly determine the
bank’s civil rights or obligations.

The judge said the difficulty for the Treasury was in the evidence
supporting the order.

The Treasury said it was satisfied that Bank Mellat had "provided
financial services to companies engaged in Iran’s nuclear and ballistic
missile programmes".

It also stated the purpose of the order was "to hamper Iran’s nuclear
and ballistic missile programmes by shutting out Bank Mellat from the
UK financial sector – perhaps restricting its access to the global
financial system as well".

The judge ruled: "Thus the target of the order is Bank Mellat: it
will not serve its purpose unless Bank Mellat is cut off."

He said the order directly impinged "on the bank’s civil rights and
obligations" and Article 6(1) did apply.

The judge referred to a landmark decision of the House of Lords in
June last year in the case of "AF", a terror suspect challenging a
control order that restricted his movements.

The law lords ruled AF "must be given sufficient information about
the essential allegations against him" so that he could give effective
instructions to his legal advisers and receive a fair trial.

The judge said an order he had made for disclosure "was intended
only to ensure that the bank had the opportunity of giving effective
instructions about the essential allegations against it".

The court heard Bank Mellat has branches throughout Iran and in Turkey
and South Korea, as well as subsidiaries in Malaysia, Armenia and
the UK.

It owns 60pc of the shares in Persia International Bank (PIB),
through which it conducts most of its UK business.

A substantial part of that business is issuing letters of credit,
for which PIB acts as the advising and reimbursing bank.

The gross value of letters of credit issued in this way was about
~@1.98bn in 2008 and ~@970m in the first half of 2009.

At the time the Treasury order was made, the bank had approximately
~@185m in call/current and time deposit accounts with PIB.

The effect of the order was to prevent all persons operating in the
financial sector, including PIB, from taking part in any transaction
with the bank.