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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] The Bank of Korea has filed an appeal against a lower court ruling ordering it to pay 10 billion won (approximately $7.3 million) in damages to Bank Mellat over losses tied to the suspension of a deposit transaction.
According to legal sources on June 8, the Seoul Central District Court ruled on May 28 in favor of Bank Mellat’s Seoul branch, ordering the central bank to compensate for interest losses and pay additional delay damages.
The Bank of Korea submitted its appeal on June 2 and also requested a stay of enforcement for the 10 billion won payment, which the court granted on June 5.
The dispute stems from the central bank’s decision in June 2019 to suspend Bank Mellat’s fund adjustment deposit transactions, citing the lack of transaction history with other financial institutions. Bank Mellat had previously placed temporary surplus funds with the Bank of Korea under such agreements.
Bank Mellat later filed a lawsuit in December 2024, claiming total interest losses of over 100 billion won (approximately $70 million).
The Bank of Korea argued that continuing transactions with Bank Mellat—designated as a Specially Designated National (SDN) by the United States in 2018—could expose it to secondary sanctions, justifying the suspension.
However, the court found that the central bank did not sufficiently demonstrate that such risks had materialized at the time of the suspension and ruled that the action lacked a clear legal basis, constituting a breach of contract.
The court estimated that total potential interest losses could exceed 105 billion won. If Bank Mellat pursues additional claims beyond the initial 10 billion won awarded, the total compensation could surpass 100 billion won.
Bank Mellat stated in a disclosure that it had sought damages totaling 151.4 billion won, adding that a full victory in future claims could result in recovery exceeding 110 billion won.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
