LONDON — Britain's Supreme Court quashed sanctions against an Iranian bank penalized over its alleged links to Iran's nuclear weapons program, saying Wednesday that Bank Mellat had been arbitrarily singled out.
The U.S. Treasury Department slammed the ruling as mistaken and warned that Bank Mellat remains under American sanctions.
Bank Mellat, a privately owned commercial bank, was seeking to overturn a 2009 order by the British Treasury barring it from operating in the country. That order, made under counterterrorism laws, shut the bank out of the British financial sector because it allegedly helped finance Tehran's nuclear program.
The bank had denied the allegation and argued that the order was unlawful, taking the case to the Supreme Court after failing to persuade Britain's High Court and Court of Appeal to overturn the order.
Britain's Supreme Court agreed, saying in a ruling Wednesday that the order was "arbitrary and irrational" and "disproportionate."
Lawyer Sarosh Zaiwalla, who represented Bank Mellat, called the ruling a victory for his client and "for the rule of law."
But the United States, which along with the EU has levied sanctions against Bank Mellat, said in a statement that it is "very disappointed" by the court's decision, which it called "mistaken."
"Bank Mellat was designated for sanctions by the U.S., the UK and the EU because it supports Iran's nuclear and ballistic missile proliferation activities," the U.S. Treasury Department said in a statement. "It has no place in the international financial system."
The Treasury statement added that as the Bank Mellat remains under U.S. sanctions, under U.S. law any bank that transacts with the lender or provides it services can be cut off from the American financial system.
"We have exercised this authority in the past and will not hesitate to do so again in order to ensure that Bank Mellat is not able to operate," the statement said.
The EU sanctions against Bank Mellat were overturned by the European General Court in January, but remain in effect since that ruling is being appealed.
Separately, the British Supreme Court justices said in a related judgment that it had been unnecessary for them to hear some evidence in the case in secret. The decision for Britain's highest court to convene for the first time ever behind closed doors had sparked fierce criticism from anti-secrecy activists.
The justices said Wednesday there had been no point in hearing evidence in secret because there was nothing said behind closed doors that would have impacted the court's decision in the case.
Associated Press writer Marjorie Olster contributed from Washington.