Bahrain has been ordered by the Permanent Court of Arbitration in The Hague to pay $240 million damages in addition to the litigation costs of two Iranian state-owned banks over the unlawful expropriation of their operations in Manama. It has also been ordered to release $1.7 billion in frozen assets.
"The PCA ruled in favour of Iran against the Bahrain government saying that the seizure of Iranian banks' shares in Future Bank was against international law and bilateral agreements between the two countries," said Tavakol Habibzadeh, an official with the Vice Presidency for Legal Affairs in Tehran, according to IRNA. He also went on to describe Bahrain's actions as "political retribution".
Iran's Central Bank had been accused by Bahrain's public prosecutor of "money laundering" over $1.3 billion along with 12 other banks, using the Manama-based Future Bank, which was set up in 2004 as a joint venture between Iranian banks Saderat and Melli. Fines and prison sentences were also handed down to a number of defendants in the Gulf kingdom's largest case of its kind.
Around the time of the 2015 nuclear deal and the rift between Iran and Saudi Arabia, the Bahraini central bank placed Future Bank under its administration, accusing it of being involved in sanctions-evading operations, before closing it a year later after Manama severed all diplomatic ties with Tehran.
Earlier this month, ahead of the PCA's ruling, Bahrain's top court upheld its verdict against the Iranian banks and six Future Bank officials, five of whom were sentenced to ten years imprisonment, while the sixth was given a five-year term.
Reacting to the news on Twitter, Iran's former foreign minister Javad Zarif described it as "An important triumph of the rule of law. We know the origin of such lawless bullying, and it should be stopped at its roots."
"Arbitrary economic coercion by the US continues to undermine the global economic order," he added.