Iran set to refer dispute over frozen assets with South Korea for arbitration

By Syed Zafar Mehdi

TEHRAN (AA) - A dispute between Iran and South Korea over $7 billion frozen funds is set for legal arbitration as a presiding committee of the Iranian parliament announced the decision on Tuesday.

The parliament said a bill was approved that would refer the dispute between the Central Bank of Iran and the government of South Korea to arbitration.

The decision comes days after Iranian 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, Referral of Dispute between the Central Bank of the Islamic Republic of Iran and the Government of the Korean Republic for Arbitration, was ratified by the Cabinet earlier this month.

Tehran has accused Seoul of freezing more than $7 billion in foreign exchange reserves belonging to Iran under US pressure.

Iranian funds were frozen by Seoul after the then-US government led by Donald Trump unilaterally withdrew from the Iran nuclear deal in May 2018 and reinstated unprecedented sanctions on Iran.

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 re-imposed, Seoul could not settle the 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 said a high-level delegation from a regional country will be visiting Tehran to finalize the mechanism for unblocking what he called “significant assets,” without mentioning the country’s name.

In January, Iran’s deputy Foreign Minister Ali Bagheri told his South Korean counterpart Choi Jong-kun on the sidelines 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.

Oman’s mediation in the past few months, however, also produced no results, prompting Tehran to seek legal arbitration in order to unfreeze funds.

It comes two months after Iraq agreed to release $2.7 billion in Iranian funds frozen in the Arab country after Baghdad received a sanctions waiver from the US.​​​​​​​