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Iran to refer South Korea dispute over frozen assets for arbitration 

August 8, 2023 at 3:29 pm

Iranian President Ebrahim Raisi make a speech during press conference in Nairobi, Kenya on July 12, 223 [Iranian Presidency/Anadolu Agency]

A dispute between Iran and South Korea over $7 billion in frozen assets is set for legal arbitration, a presiding committee of the Iranian parliament announced on Tuesday. The dispute is between the Central Bank of Iran and the government of South Korea.

The decision comes days after Iran’s President Ebrahim Raisi wrote a letter to parliament speaker Mohammad Bagher Qalibaf, seeking the legislative body’s nod to send the case for arbitration. The bill was ratified by the Iranian Cabinet earlier this month.

Tehran has accused Seoul of freezing the foreign exchange reserves belonging to Iran under US pressure. The funds were frozen after the US administration of Donald Trump withdrew unilaterally from the 2015 Iran nuclear deal in May 2018 and reinstated unprecedented sanctions on the country.

In the period between 2015 and 2018, South Korea was one of the three largest importers of oil and condensates from Iran. After the sanctions were reimposed, Seoul could not settle its debt.

Iran and South Korea have held multiple rounds of negotiations at various levels to unfreeze the funds, especially after Joe Biden launched talks aimed at the revival of the 2015 accord in 2021. In April, Iran’s foreign ministry spokesman Saeed Khatibzadeh told reporters in Tehran that the necessary framework for unblocking the assets in South Korea had been identified and agreed upon. He explained that a high-level delegation from a regional country will be visiting Tehran to finalise the mechanism for unblocking what he called “significant assets”, without mentioning the country’s name.

READ: Iran to access $24bn in frozen assets

In January, Iran’s deputy Foreign Minister Ali Bagheri told his South Korean counterpart Choi Jong-kun on the side-lines of the nuclear talks in Vienna that Seoul was “obliged” to release Tehran’s frozen assets, and that US sanctions cannot justify its non-payment. The unblocking of Iranian funds has been tied to the revival of the nuclear accord as well as the exchange of prisoners, according to experts.

South Korean and American officials are said to have held talks over unblocking Iranian funds in May, which failed to make any breakthrough, after which Oman offered mediation. Over the past few months, however, Oman’s effort has produced no results, prompting Tehran to seek legal arbitration in order to unfreeze the funds in question.

The latest moves come two months after Iraq agreed to release $2.7bn in Iranian funds frozen in Baghdad after the Iraqi government was granted a sanctions waiver by the US.