EU Court Upholds Clearstream’s Decision to Block Iranian Funds
In a significant decision on 12 July 2023, the European General Court upheld the European Commission’s decision to allow Clearstream Banking AG, a subsidiary of the Deutsche Boerse financial exchange, to comply with U.S. sanctions by freezing dividends and assets owed to IFIC Holding, a German company indirectly owned by the Iranian state. The court’s ruling confirms that Clearstream acted lawfully when it blocked approximately €2 billion in dividends due to IFIC, following the latter’s inclusion on the U.S. Specially Designated Nationals (SDN) list in 2018.
IFIC Holding had sought the annulment of the European Commission’s decision, arguing that its interests were not taken into account and that alternative, less damaging measures were available. However, the court ruled in favor of Clearstream, citing the legality of the U.S. sanctions and the Commission’s adherence to the EU Blocking Statute, which governs European companies’ compliance with foreign sanctions under certain conditions.
Key Points
- Clearstream Banking froze €2 billion in dividends owed to IFIC Holding.
- IFIC Holding challenged the European Commission’s decision, but the court upheld the freezing of assets.
- The ruling confirms the Commission’s decision to prioritize compliance with U.S. sanctions.
This case has broader implications for European companies balancing U.S. sanctions with EU regulations, particularly as the geopolitical landscape around Iran remains tense.
IFIC Holding Overview
IFIC Holding AG is the foreign branch of Iran Foreign Investment Company. According to its website, IFIC “is an economic holding company and the sole official governmental entity responsible for Iran’s foreign investments, and managing profits from the country’s foreign assets” and the company only operates outside Iran’s borders.
The company is governed by a General Assembly and a board of directors, according to an archived version of its website. The General Assembly consists of the Islamic republic’s ministers of Economy, Commerce (now Labor), Foreign Affairs and Mining and Industries, and the VP Strategic Planning and Supervision. The IFIC General Assembly appoints its board of directors.
In August 2016, IFIC had $2.5 billion in capital, Iran Steel News Agency (IFNAA) reported at the time. The same report revealed that IFIC “directly manages approximately 30 companies” across three continents: Europe, Asia, and Africa. “Most of IFIC’s investments are in European countries, particularly Germany, and predate the Islamic Revolution,” the report states.
IFIC’s website puts the company’s European investments at 60%, African investments at 16%, Asian investments at 13%, and its American investments at 11%.
Information regarding the companies wholly or partially owned by IFIC can only be gathered from various reports in Iranian media. For instance, in 2008, Donyaye Eqtesad reported that IFIC planned on offloading its shares in 28 foreign companies and listed the foreign subsidiaries Pars Armen, Piunik, Mesico (Bd) Ltd. (Bangladesh), Merific IranGasCO. P.L.C (Ethiopia), and AEG as being owned by IFIC.
IFIC Holding AG in Germany is also connected to a company called IHAG, which state-controlled media in Iran describe as the operational arm of IFIC in Germany. IHAG has been struck from the German business register, but at the peak of operations, it had 600 million Euros in assets and was active in Germany, Iran, and South Africa. In 2023, the official Islamic Republic News Agency IRNA claimed IHAG had been “recovered” and was once again operational.
In 2015, Resalat Newspaper reported that IFIC had 25 subsidiaries, including the Eurodif nuclear power station in France, Namibia’s Rössing Uranium Mine (15% stake), Oman’s Taageer Finance Company (12% stake), and EPICO Emirates Pulverization Industries.