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Photo courtesy of Yonhap News |
[Alpha Biz= Ellie Kim] SEOUL, June 1, 2026 — A South Korean court has ruled in favor of Bank Mellat in a damages lawsuit against the Bank of Korea, finding that U.S. sanctions on Iran do not justify the refusal to accept deposit transactions.
The Seoul Central District Court ordered the Bank of Korea to pay KRW 10 billion ($7.3 million) in damages, along with delay interest, after determining that the central bank unlawfully rejected the Iranian bank’s deposit request.
The dispute stems from June 12, 2019, when Bank Mellat sought to place a KRW 10 billion liquidity adjustment deposit with the central bank. The Bank of Korea refused the request, citing concerns over potential secondary sanctions from the United States, as Bank Mellat had been designated a Specially Designated National (SDN).
A liquidity adjustment deposit is a short-term facility that allows financial institutions to place excess reserves with the central bank at below-policy interest rates.
Following the rejection, Bank Mellat claimed total interest losses of approximately KRW 104.5 billion and filed a lawsuit in December 2024 seeking partial compensation of KRW 10 billion.
The court sided with the plaintiff, concluding that the refusal lacked sufficient legal grounds and constituted a breach of obligation, and ordered the central bank to compensate the bank for its losses.
The ruling is expected to have broader implications for how financial institutions in South Korea interpret and respond to international sanctions in cross-border transactions.
Alphabiz Reporter Ellie Kim(press@alphabiz.co.kr)
https://www.alphabiz.co.kr/news/view/1065549601824837
This article is based on global economic content from Alphabiz, which distributes English-language news on Korean markets and companies to international audiences.
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