News ID: 318218
Published: 0403 GMT November 24, 2021

Court orders Bahrain to pay damages to Iran for 'political expropriation'

Court orders Bahrain to pay damages to Iran for 'political expropriation'

Bahrain was ordered by the Permanent Court of Arbitration in The Hague to pay over 200 million euros in damages plus costs to two Iranian banks for the unlawful expropriation of their banking venture in Manama in an act of "political retribution".

Iran’s largest lenders Bank Melli and Bank Saderat had sued Bahrain before the international arbitration court in the Netherlands for confiscating nearly $1.3 billion worth of Iranian funds.   

The funds belonged to Future Bank established as a joint venture between Bahrain’s Ahli United Bank and the two Iranian lenders in 2004 when Bahraini leaders were seeking to mend strained relations with Iran, Press TV wrote on Wednesday.

In January 2016, however, the Central Bank of Bahrain said it was taking steps to close down Future Bank after Manama cut diplomatic ties with Tehran, following in the footsteps of Saudi Arabia.

In July this year, Bahrain's top court upheld a money-laundering verdict against Future Bank, the Central Bank of Iran and other Iranian banks. The ruling, issued in April 2018, included jail terms of up to 10 years for Future Bank officials and confiscation of funds.

Iranian officials rejected the allegations, asserting that Future Bank was a victim of an international political conflict, instigated by Persian Gulf Arab neighbors and other countries seeking to isolate Iran.

“There is no evidence, nor was there even an allegation, including in the ongoing arbitration, of corruption, let alone of a ‘multibillion-dollar corruption scheme,’” a joint statement issued by Bank Melli and Bank Saderat said at the time, referring to Bahrain's characterization of the case.

Both denied any improper conduct in the handling of financial transfers, asserting that Future Bank promptly responded to all concerns expressed by the host country, “without further complaint from Bahrain,” according to the statement.

“Nor is there, or has Bahrain ever put forward, any evidence of Future Bank having financed any money-laundering, terrorism, nuclear activities, or having allowed companies to operate as fronts for Iran’s Islamic Revolution Guards Corps,” the banks said.

The statement described the Iranian institutions as “collateral victims of an entirely political decision, taken in the context of tensions and efforts by some Arab countries, led by Saudi Arabia, to isolate Iran”.

“It is in this context that Bahrain targeted not just these banks but all Iranian interests on its territory,” the statement said.

In a written summation to the Permanent Court of Arbitration in The Hague, the Arab kingdom had asserted that “Bahrain has never faced violations of this magnitude”.

The international tribunal, however, decided this week that the Iranian institutions had been the target of "political retribution" and ordered Bahrain to pay over 200 million euros in damages plus costs to the banks, London-based Global Arbitration Review, a magazine dedicated to commercial arbitration, reported.

Former Central Bank of Iran governor Abdolnaser Hemmati confirmed the news on Wednesday, hailing it as a victory for the country. 

"A legal victory: With the many years of effort we have had, an international arbitration tribunal has condemned the Bahraini government, which had expropriated Bank Melli and Bank Saderat of their venture in Future Bank of Bahrain with a political motivation and violation of international laws, to paying more than 200 million euros in damages and arbitration costs," he tweeted.  

The accusations emerged from an intensive investigation that began after Bahraini regulators formally closed Future Bank in 2015. The closure prompted Future Bank’s two Iranian shareholders to file a complaint in The Hague accusing Bahrain of improperly shutting down the bank and demanding the return of frozen assets.

In response, Bahrain submitted hundreds of pages that tried to paint a portrait of a financial institution operating mainly with “the aim of concealment,” the documents stated.

Bahrain's case was supported by US officials who said the "findings" were troubling at a time when Future Bank was under intense scrutiny by American and Bahraini government agencies.

As part of its sanctions regime, the US accused Bank Melli and Bank Saderat of helping finance Iran’s nuclear program and what it says is a terrorism network, in reference to resistance groups such as Lebanon's Hezbollah.

 

 

   
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