Iran Files Compensation Suit against Woori Bank for Frozen Funds

The Seoul branch of Iran’s Bank Mellat has initiated a lawsuit against Woori Bank, seeking the return and a 6 percent annual interest payment on 20.2 billion won (US$14.96 million) in funds frozen due to U.S. sanctions.

According to financial industry sources on Sept. 26, Bank Mellat filed a deposit return and compensation lawsuit against Woori Bank on the 22nd in the Seoul Central District Court. The lawsuit demands the return of 20,208,733,719 won deposited in Woori Bank, along with 6 percent annual interest for five years and 11 months, from November 2018 to the date of delivering the petition, and a 12 percent annual interest rate until the date of return. Consequently, Woori Bank is liable for approximately 6 billion won in interest payments to Bank Mellat to date.

These deposits are funds that have been tied up in domestic banks due to the U.S. government’s sanctions against Iran. Since 2010, Iran has opened won-denominated accounts in Woori Bank and IBK Industrial Bank of Korea under the name of the Central Bank of Iran (CBI) and received payment for oil exports to South Korea.

Bank Mellat said, “Woori Bank unilaterally froze our deposits on November 17, 2018, without any prior notice. Despite numerous attempts to request deposit return and engage in dialogue with Woori Bank, we received no response, leading us to file the lawsuit as a last resort.”

A representative from Woori Bank stated, “Woori Bank has paid regular interest on the frozen 20.2 billion won (US$14.96 million). Bank Mellat has filed the lawsuit seeking additional compensation, claiming that it could have earned additional profits by managing financial assets during the frozen period.” Woori Bank plans to come up with its response strategy to the lawsuit in the near future.