13 May 2021
TEHRAN (CBI PR dept.) - On April 30th 2021, the Luxembourg District Court handed down a landmark decision in proceedings initiated by the Central Bank of the Islamic Republic of Iran.
The case which gave rise to judgment 2021TALCH02/00649 takes place in the context of recent legislative changes in the United States, allowing American courts to directly order the transfer to the United States of certain assets belonging directly or indirectly to Iranian entities (including the Central Bank of the Islamic Republic of Iran), regardless of where these assets are located worldwide. This legislation goes as far as to expressly provide that international comity, which obliges sovereign states to respect each other's national sovereignty, is to be plainly and expressly disregarded.
In this context, and in order to preserve its rights, and assets located in Luxembourg, the Central Bank of the Islamic Republic of Iran, which holds assets with Clearstream Banking S.A., asked the Luxembourg District Court to issue a prohibition directed towards Clearstream Banking S.A. to transfer any of those assets, on the basis of merely a US decision, unless such decision is first duly recognised, and declared enforceable, in Luxembourg, through the normal “exequatur proceedings” applicable to all foreign decisions which need to be enforced on the national territory.
In its decision, the Luxembourg Court confirms that any foreign judgment, before being enforced on the national territory, must be recognised and declared enforceable by the Luxembourg courts. The exequatur proceeding of a judgment, rendered by a foreign court, requires the Luxembourg courts to verify that this judgment is compliant with local public policy.
The recent Luxembourg decision expressly prevents Clearstream Banking S.A. from voluntarily comply with an US decision, ordering the transfer to the United States of the Central Bank of the Islamic Republic of Iran’s assets, without a prior final exequatur in Luxembourg of this decision.