25 Apr 2010

UK ordered to repay arms funds to Iran

11:23 am on 25 April 2010

The British government has confirmed that it has been ordered to repay $650 million to Iran over a 1970s arms deal.

The order came from an arbitration court in the Hague.

The BBC reports Iran's last monarch, the Shah, went on a spending spree for military hardware in the 1970s.

When he was overthrown in the Islamic revolution, the new rulers did not want the tanks and canceled the order.

Britain was taken to court to reclaim the downpayment. Britain argued that Iran had entered a binding commercial agreement, but lost the case.

Compensation money for Iran is held in bank accounts waiting to be withdrawn.

But the BBC reports it is unlikely the funds will be released as long as Iran is subject to European sanctions because of its nuclear programme.