Iranian Banks Win Case vs Closure Of Sanctioned Bahrain Firm

An arbitration panel has ruled in favor of two Iranian banks in a financial dispute over the 2015 closing of a Bahraini financial institution accused of helping Iran skirt US and UN economic sanctions, Joby Warrick and Souad Mekhennet reported for the Washington Post.

Photo Insert: The government of Bahrain has been ordered to pay more than $270 million in compensation for losses and legal fees stemming from the closure of Future Bank

The Hague-based tribunal’s three arbitrators ordered the government of Bahrain to pay more than $270 million in compensation for losses and legal fees stemming from its decision to close Future Bank, an institution co-founded by Iranians and linked by Bahraini officials to money-laundering and other illicit practices.

While acknowledging that infractions had occurred, the panel said Bahrain’s enforcement measures violated its own banking policies and regulations and were motivated primarily by politics — a “contrived agenda of political retribution” that reflected regional animosities against Iran, according to a copy of the panel’s ruling reviewed by the Washington Post.

Future Bank was established in Bahrain in 2004 with the backing of Bank Melli and Bank Saderat, two of Iran’s largest financial institutions, both of which, like Future Bank, have been previous targets of US economic sanctions.

Bahrain closed Future Bank in April 2015, just weeks after the Iran nuclear agreement was negotiated between Tehran on one side and the United States and five other world powers on the other.

Bahrain argued closing the bank was necessary to protect investors against corruption and sanctions violations by Future Bank’s managers, several of whom were subsequently convicted of financial crimes in Bahraini legal proceedings. Bahrain has announced plans to appeal the panel’s ruling before a Dutch court.

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