UK High Court allows IOEC a remedy in fraud although party to a contract to circumvent Iran sanctions

The UK Commercial Court has given judgment in IOEC v Dean Investments and Ors [2019] EWHC 472 (Comm).  The Court found the defendants liable to IOEC (Iranian Offshore Engineering Company) in fraud, breach of fiduciary duty, and other torts in relation to a US$87 payment for an oil rig.

The defendants argued that IOEC should not be granted any relief because the claim arose out of a contract which was prohibited by EU Iran sanctions, and which IOEC entered into in order to circumvent sanctions. The Court rejected this argument and held that the scheme was designed to circumvent sanctions, encouraged and abetted by IOEC, but that applying the test in Patel v Mirza [2017] AC 467 (the leading UK case on the “illegality doctrine”, i.e. when it would be contrary to the public interest to enforce a claim), IOEC should nonetheless be given a remedy.  This was because (inter alia) it was not contrary to the purpose of the sanctions to allow recovery, the JCPOA has now lifted sanctions, and it would be contrary to public policy to prevent a remedy in fraud.

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About Maya Lester QC

Maya Lester QC

Maya Lester QC is a senior barrister (Queen’s Counsel) at Brick Court Chambers with a wide-ranging practice in public law, European law, competition law, international law, human rights & civil liberties. She has a particular expertise in sanctions. The legal directories say she is the...

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