Iran Initiates Legal Action
After years of unsuccessful diplomatic efforts, the Iranian government has decided to take action and initiate legal proceedings against South Korea regarding Iran’s blocked assets in the East Asian nation.
On July 22, Iranian President Ebrahim Raisi sent a letter to the Speaker of Parliament, Mohammad Bagher Qalibaf, referring to a government bill to observe the necessary legal formalities.
This bill, titled “The Referral of Dispute between the Central Bank of the Islamic Republic of Iran and the Government of the Korean Republic for Arbitration,” had already been ratified by the cabinet of ministers on July 5. Tehran Times reported this development on Sunday.
File photo of foreign currencies as Iran initiates legal action against South Korea over frozen funds.
The financial dispute between Iran and South Korea goes back to 2018 when the United States withdrew from the 2015 Iran nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA), and imposed economic sanctions on Iran. Prior to 2018, South Korea was a major buyer of Iranian oil and the top customer of Iranian condensates, resulting in the accumulation of approximately $7 billion in Iranian oil revenues in South Korean banks.
Due to escalating tensions between Tehran and Washington, Seoul decided to block the Iranian funds, fearing repercussions from U.S. sanctions on Iran.
Iran repeatedly demanded the release of the frozen funds through various rounds of talks with South Korea, some of which were part of broader negotiations between Iran and Western countries.
In May, officials from the United States and South Korea engaged in talks to unfreeze Iranian funds held in South Korean banks, particularly focusing on releasing the $7 billion that had been blocked due to U.S. sanctions. However, these talks failed to yield concrete results, leading Oman to offer mediation in June. While the Omani initiative seemed promising, it ultimately did not succeed, leaving Iran with little hope of resolving the issue through diplomatic means.
Consequently, the Iranian government opted to pursue legal avenues, signifying a shift away from previous diplomatic efforts. During this period, Oman had been actively involved in mediating between Iran and the U.S., attempting to secure an unwritten agreement involving the exchange of prisoners and the release of frozen Iranian funds in Iraq and South Korea.
