Seoul court orders Bank of Korea to pay $6.6 million to Iran's Mellat Bank

A Seoul court on Wednesday ordered the Bank of Korea to pay 10 billion won to Iran's Mellat Bank, ruling the central bank wrongly denied the Iranian lender's 2019 request to open a temporary deposit account, The Korea Times reported.

The ruling tests how far South Korean financial institutions can rely on U.S. sanctions designations to refuse banking services, with Mellat Bank claiming combined losses of 104.5 billion won in foregone interest.

Seoul Central District Court delivered its verdict Wednesday, directing the Bank of Korea to pay Mellat Bank 10 billion won — roughly $6.6 million — plus interest on arrears, according to The Korea Times.

In June 2019, Mellat Bank requested to deposit 10 billion won with the Bank of Korea under a one-day temporary arrangement. The central bank rejected the request, citing both the absence of prior transaction records with other financial institutions and Mellat's listing on the U.S. Specially Designated Nationals list.

The court declined to validate the central bank's reasoning. "The BOK said it denied the request in principle of good faith as the Iranian bank was on the U.S. government's Specially Designated Nationals list, but the court did not acknowledge such a claim as validating the decision," The Korea Times reported.

Mellat Bank filed its compensation suit in December 2024, claiming combined losses of 104.5 billion won in foregone interest stemming from the rejected deposit. The bank expects to collect more than 110 billion won if it prevails in the full case.

The Bank of Korea has not indicated whether it will appeal the ruling.