ECJ upholds sanctions on Iran-based bank

[JURIST] The European Court of Justice (ECJ) [official website] on Tuesday upheld a lower court decision [judgment text] that a UK subsidiary of Bank Melli Iran (BMI) [corporate website, in Persian] can be included in a list of entities engaged in nuclear proliferation. A 2007 UN Security Council Resolution [Resolution 1337 text] requires member states to freeze the assets, funds and economic resources of entities and their subsidiaries that are determined to be "engaged in, directly associated with or providing support for Iran's proliferation sensitive nuclear activities or the development of nuclear weapon delivery systems." Melli Bank [corporate website], which is registered in the UK and regulated by the UK Financial Services Authority, was included on the list of entities subject to the freezing of assets by the EU, due to being a wholly owned subsidiary of BMI. The ECJ ruled that the lower court did not err in determining that EU law required the freezing of funds of any entity "owned or controlled" by an entity identified as engaged in nuclear proliferation. The ECJ concluded that Melli Bank did not itself have to be engaged in the nuclear proliferation, and it was enough that the parent-company BMI was engaged in such activity. The ECJ also concluded that freezing of Melli Bank's funds is an appropriate measure to be taken in order to attain the "legitimate objective of preserving international peace and security." According to the court:

[W]here the funds of an entity identified as engaged in nuclear proliferation are frozen there is a not insignificant danger that that entity may exert pressure on the entities it owns or controls in order to circumvent the effect of the measures applying to it. In such circumstances, the freezing of the funds of entities owned or controlled by an entity engaged in nuclear proliferation is necessary and appropriate in order to ensure the effectiveness of the measures adopted against the latter and to ensure that those measures are not circumvented.
The ECJ also upheld the lower court finding that no appropriate alternative measures existed to achieve the same objective. In addition to financial sanctions, the EU is scheduled to ban oil imports [Bloomberg report] from Iran beginning on July 1.

The international community continues to urge Iran not to seek a nuclear weapons program. In February UN Secretary-General Ban Ki-Moon [official profile] called for Iran to prove its commitment [JURIST report] to not seeking nuclear weapons after giving remarks [text] at an event marking the fifteenth anniversary of the Comprehensive Nuclear-Test-Ban Treaty (CTBT) [text, PDF]. Also in February the US began imposing strict sanctions on Iran because of its nuclear program. Iran claims that its nuclear rights are being taken away [JURIST reports], but there are those who argue the International Atomic Energy Agency (IAEA) [official website] has a legal right to regulate nuclear weapons [JURIST op-ed]. There has also been a continued international response from the UN with new sanctions being imposed in June 2010 to increase the restrictions placed on Iran from the first set of sanctions in 2006 [JURIST reports].

 

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