A Seoul court ruled in favor of Iran’s major commercial bank in a damages suit filed against the Bank of Korea, ordering the Korean central bank to pay 10 billion won ($7.3 million) plus delayed interest.
Bank Mellat filed the suit in December 2024 after the Bank of Korea refused to accept its funds into the central bank’s standing deposit facility from June 13, 2019.
The facility allows financial institutions, including banks, to deposit excess reserves overnight at an interest rate below the Bank of Korea’s base rate.
Bank Mellat sought to place 3.2 trillion won of its oil-related funds, then the daily limit for the facility, in the Bank of Korea’s standing deposit facility, a Seoul branch official told The Korea Herald.
The Iranian lender claimed it suffered 105.4 billion won in damages from the rejection and initially sought a partial payment of 10 billion won.
“The defendant shall pay the plaintiff 10 billion won and an amount calculated at an annual rate of 12 percent from Dec. 12, 2024, until the date of full payment,” Bank Mellat’s Seoul branch said in a disclosure, citing the court’s ruling.
The Seoul branch said further proceedings depend on the Bank of Korea.
“Depending on whether the defendant appeals, it will be determined whether appellate proceedings will take place,” the branch said.
Bank Mellat said it expects gains of more than 110 billion won if it ultimately wins the case and seeks the full amount of damages.
“If we ultimately win and claim the full amount of damages, gains of more than 110 billion won are expected,” the branch said.
If upheld, the ruling would mark the first time a South Korean court has recognized liability for damages linked to restrictions on Iranian funds, according to people familiar with the case.
mjcha@heraldcorp.com
