Treasury says it won’t pay $1.1 billion judgment to Iran

Israel rejects Swiss court’s demand to transfer money to Tehran over pipeline deal that soured when ties were severed in 1979

An Eilat Ashkelon Pipeline Company oil terminal in Eilat. (CC BY 2.5/Pikiwikisrael)
An Eilat Ashkelon Pipeline Company oil terminal in Eilat. (CC BY 2.5/Pikiwikisrael)

Israel has refused a Swiss court order to pay compensation to Iran in an arbitration case, it emerged Wednesday. The court ordered the Eilat Ashkelon Pipeline Company to transfer $1.1 billion to the Islamic Republic in a ruling over oil supply agreements dating back to before Tehran’s 1979 Islamic Revolution.

“Under the laws of trade we cannot transfer funds to an enemy country,” a statement issued by the Finance Minister said Wednesday.

A judicial official quoted by Iranian state news agency IRNA said Tao, an Israeli firm registered in Panama, was ordered earlier this month to pay the compensation to the National Iranian Oil Company, in a legal tussle dating back to 1989.

In 1968, the Eilat Ashkelon Pipeline Company was established as a joint Israeli-Iranian venture to carry Asian oil from Eilat to Europe via a network of pipelines that reach from Eilat to Ashkelon and up the length of Israel’s coast to Haifa.

According to the EAPC website, the company currently operates 750 kilometers of pipeline in Israel.

As relations between Israel and Iran were severed in the wake of the Islamic Revolution, the Tehran partner dropped out of the arrangement and the company is now managed only by the Israeli side.

However, for years Iran has continued to demand that Israel pay back debts acquired when the arrangement was still valid.

Last month, IDF Chief Military Censor Brig. Gen. Sima Vaknin-Gil urged the Attorney General’s Office to launch an immediate investigation into a possible severe breach of military protocol by high-ranking security officials who allegedly leaked sensitive information regarding Israel’s secret dealings with the Iranian government to the Haaretz newspaper.

Adiv Sterman and Stuart Winer contributed to this report.

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