In Mellat v HM Treasury [2015] EWHC 1258 (Comm), the High Court considered preliminary issues in a claim for damages by Bank Mellat (Mellat), an Iranian bank, under section 8 of the Human Rights Act 1998 (HRA) for loss and damage to its UK subsidiary caused by the Financial Restrictions (Iran) Order 2009 (the 2009 Order). The court allowed Mellat’s claim to proceed to trial.

The Supreme Court has already ruled that the 2009 Order was unlawful, concluding that the Treasury had failed to adhere to procedural requirements.

Based on the Supreme Court’s findings, Mellat sought $4 billion in damages for loss of customers, international business and relationships with other financial institutions at its UK subsidiary as a result of the unlawful interference of the sanctions imposed in the 2009 Order.

The High Court considered a number of preliminary issues relating to the availability and scope of the potential claim for damages, finding that:

1. Mellat had a right not only to seek damages under common law, but also under section 8 of the HRA because the 2009 Order infringed Article 1 of Protocol 1 of the European Convention on Human Rights, which relates to peaceful enjoyment of possessions;
2. Mellat had standing to bring the damages claim because it satisfied the threshold test of being a “victim” within the context of the HRA and European law. A “victim” is someone who is directly affected by the unlawful act; and
3. the court noted that “possessions” that were unlawfully interfered with could not include future loss of profits but could include the bank’s goodwill. The issue of what specific losses Mellat can claim is a question of causation, which will be dealt with at trial.

A copy of the judgment is available. http://bit.ly/1FgbAg4