EU may re-impose sanctions on Iran ship line despite court order

(Reuters) - European governments have taken preliminary steps to re-impose sanctions against Iran's main cargo shipping line, potentially complicating a new diplomatic push to settle the dispute over Tehran's nuclear program.

Diplomats told Reuters the governments had agreed this week to send letters to Islamic Republic of Iran Shipping Lines (IRISL) and some of its subsidiaries to inform them of their intention.

The decision, not yet final, is part of a broader EU effort to counter a number of court rulings annulling European sanctions such as these ones in recent months.

"We will give notice to the companies that if they have information that would affect the decision, they should submit it. It is a notice," one EU source said, speaking on condition of anonymity.

The source said the EU would use any response from the targeted companies to decide how to formulate new sanctions, which would freeze the company's assets in Europe.

Governments in Europe and the United States had targeted hundreds of Iranian companies such as IRISL, accusing them of aiding Tehran's nuclear program which they suspect has covert military aims and which they want curbed.

But Europe's second-highest General Court has argued in some cases, including the one related to IRISL, that the EU failed to provide sufficient evidence linking the companies to Iran's nuclear work to justify sanctions and ordered them lifted.

Iran denies having any military goals and says it needs nuclear power for electricity generation and medical purposes.

Diplomats in Brussels are keen to portray any possible new listings of previously targeted companies as a technical issue, not a new push to increase economic pressure on Iran, and stress that final decisions have not yet been taken.

NUCLEAR NEGOTIATIONS

The timing of any sanctions decision is sensitive. Six world powers - the United States, Russia, China, France, Britain and Germany - and Iran have started a new series of negotiations this month.

Tehran has signaled new willingness to compromise over its nuclear work since the relative moderate President Hassan Rouhani took office in August but it wants sanctions lifted as part of any deal.

A new round of talks is scheduled for November 7-8 in Geneva, and the EU in its letter to IRISL is asking for feedback before November 5.

The EU has in the past appealed against cases of sanctions that have been quashed, for example after the General Court overturned sanctions on Bank Mellat and Bank Saderat, among the biggest private lenders in Iran, earlier this year.

But diplomats say a growing body of litigation makes it difficult to find legal bases for appeals, complicating Europe's effort to exert economic pressure on Iran.

"There is no chance for the appeals to win," one EU diplomat told Reuters.

Policymakers say they cannot provide detailed proof of the plaintiffs' alleged links to Iran's atomic program to better justify sanctions because doing so may expose confidential intelligence and damage efforts to combat the activities.

Hundreds of Iranian institutions and companies such as IRISL face EU sanctions such as asset freezes. In addition, the EU has banned imports of Iranian oil and restricted trade.

Other solutions, such as targeting entire sectors of the Iranian economy, are also under discussion. But some EU governments would oppose that, concerned about punishing companies not involved in atomic work.