Bank of Tokyo-Mitsubishi UFJ announced its decision on Thursday, saying it was acting on the order of a New York District Court.
“It is true that we have received the order from the U.S. court,” to freeze $2.6 billion of assets, a spokesman for the Bank of Tokyo-Mitsubishi UFJ told the AFP.
The decision by Tokyo could potentially affect Japanese crude imports from Iran, according to the head of Japan’s banking lobby group, Reuters reported.
The bank order was given to enforce a five-year-old U.S. verdict on the regime.
In 2007, a Washington judge ruled that Tehran had provided financial assistance to Hezbollah to carry out an attack on army barracks in Beirut in 1983. U.S. and French Marines were stationed in the Lebanese capital as part of a peacekeeping coalition, and 241 soldiers were killed in the suicide bombing. Iran was ordered to pay $2.6 billion in damages to survivors and the victims’ families, but ignored the U.S. ruling, as it has done with several other cases in the past.
Mitsubishi UFJ issued a formal complaint about the court order last Wednesday, saying it felt the decision was “problematic” according to Japanese law.
“It is questionable if an order by a U.S. court applies to places where it has no sovereign power,” Minister of Economy, Trade and Industry Yukio Edano said at a press conference last Friday. “I don’t understand” the court’s order, the former practicing lawyer said, according to the Tehran Times.
The bank refused to announce the amount of assets, or who they belonged to, but said Mitsubishi UFJ “handles a relatively large number of transactions for trade with Iran,” the AFP reported.
Japanese authorities are anxious to have the matter resolved.
“Iranian oil accounts for more than 10 percent of Japan’s oil imports,” Yasuhiro Sato, president of Mizuho Financial and chairman of the Japanese Bankers Association, said on Thursday at a monthly press briefing, Reuters said. “If banks can’t make settlements for Iranian oil, this will affect the nation’s energy policy.”
“The issue needs to be addressed by concerned parties including the government,” Sato added.
The Bank of Tokyo was the only Japanese bank to have been ordered by U.S. authorities to freeze Tehran’s assets, and banking experts have conjectured the bank was chosen because it deals most with Iranian holdings in Japan. Officials say the bank may be responsible for up to 80% of crude trade between the two countries.
As Western powers resumed talks with Iran over its controversial arms program this week, the looming power of economic sanctions and the biting effect of Japan’s move were in full relief. There appears to be no direct tie between the nuclear talks and the U.S’s decision to freeze Tehran’s assets at this time, however.
Japan is one of the biggest patrons of Iranian crude, but U.S. and EU sanctions have gradually reduced oil shipments between Tokyo and Tehran. Japanese imports have fallen by 40 percent over the last five years, and more than 20 percent during the last three months.