TEHRAN — Two Iranian banks - Europaeisch-Iranische Handelsbank AG (EIH) and Bank Mellat - have separately filed suit against the EU illegal sanctions. 

German trading bank Europaeisch-Iranische Handelsbank AG (EIH) confirmed on Friday it had filed a suit at the European Court of Justice challenging the EU's decision to freeze its assets after it processed Indian payments for Iranian oil. 

Sanctions were imposed on the bank in May by the Council of the European Union under 2010 regulations restricting trade and investment in Iran. 

"We believe that EIHB has at all times acted in accordance with applicable EU legislation," an official from the Hamburg-based bank said. 

"All transactions were either authorized by Deutsche Bundesbank or fell within exceptions to the applicable EU legislation or conformed to the rulings and guidance of Deutsche Bundesbank and the German government." 

The bank filed the suit on Aug. 3 in a bid to get the sanctions removed and its assets unfrozen, but did not announce the legal move at the time. The ECJ does not normally announce when suits are filed. 

The official said EIH's core business was the facilitation of commercial relations between European and other countries, and Iran. She said the Indian payments for Iranian oil had only been a minor aspect of its activities. 

When the EU imposed sanctions on EIH, the bank had been under close observation by the German government and was on a U.S. blacklist. 

It came under scrutiny earlier this year when it emerged Berlin had allowed India to pay for oil purchases from Iran via the bank, after India restricted its own direct payments to Iran in order to placate Washington. 

Simultaneously, a leading Indian legal firm based in the UK has been hired by the largest Iranian private bank to represent it in its appeal to the Supreme Court of London as well as before the European Court on sanctions against it.

Bank Mellat, the largest private Iranian bank, had previously instructed Stephenson Harwood, a large English firm but have now substituted Indian legal firm Zaiwalla & Co.

The bank has brought proceedings against the British Government and the European Council in respect of the effect of sanctions which the Council has imposed against Iran as consequence of the Iranian civil nuclear program.

In 2009, the bank was subjected to sanctions enacted by the Financial Restrictions (Iran) Order 2009 (Order), made pursuant to the Counter Terrorism Act 2008.

The effect of the ''Order'' is to prevent the bank from operating in the financial sector in the United Kingdom on the basis that it has been involved in financing entities that are involved in nuclear proliferation programs.

The bank argues that Treasury failed to give it notice of its intention to make the Order nor did it offer it a chance to make representations.

The bank denies all involvement in any nuclear proliferation and argues these sanctions breach its rights under the European Convention of Human Rights.

Specifically the bank argues that the Treasury's Order was irrational, unlawful, procedurally unfair, disproportionate and the Treasury failed to give adequate reasons.

The bank filed an application to the English High Court that the Order be set aside and requested damages under the Human Rights Act 1998. The High Court did not dismiss the Order and found that it was procedurally and substantively lawful, however, permission was given to the bank to appeal to the Court of Appeal.

The Court of Appeal dismissed the bank's appeal but stated that an appeal to the Supreme Court could be made on the basis that the procedural grounds of the bank's application merits serious consideration.

The Supreme Court trial is expected to be listed for 2012.

The bank has also brought separate proceedings against the European Council in respect of EU Regulations imposing sanctions on the Bank. The European Council has admitted it made a mistake of fact in deeming the bank to be state owned when it is in fact privately owned.

The bank is unable to understand why the Council has designated it. It argues that the Council has failed to give specific reasons for the bank's designation. The trial date has yet to be set but it also thought to be in 2012. The outcome of these cases is internationally awaited.