A Swiss court has ordered Israel to pay $1.1 billion to Iran over a shah-era oil debt.
The debt harkens back to a 1968 agreement in which the government-controlled National Iranian Oil Company shipped oil through Israeli ports and sold crude oil to Israel. Under the agreement, Israel was allowed three months after delivery of the oil to pay its bills, according to the The Jerusalem Post.
After the Islamic Revolution in 1979, when the new rulers in Tehran ended the oil shipments, Israel failed to pay for its final oil deliveries, amounting to $450 million, according to the International Business Times. Israel also nationalized joint Iranian-Israeli oil interests, the Iranians alleged.
Iran filed a lawsuit over the debt in the early 1990s, and commercial arbitration courts in Switzerland and France dealt with the issue. Israel, represented by Israeli lawyers, argued that Iran was responsible for breaking its agreements, according to the Post.
A few years ago, three Israeli gas companies lost one of the arbitration cases and were ordered to pay about $100 million, and Israel was ordered to cover the legal expenses. Israel paid, the Post reported.
On Wednesday, Israeli Finance Ministry officials suggested that they would not comply with the ruling by the Swiss Court of Arbitration issued this month.
“Without referring to the matter at hand, we’ll note that according to the Trading with the Enemy Act it is forbidden to transfer money to the enemy, including the Iranian national oil company,” the Finance Ministry said, according to the Business Times.
Israel and Iran once had strong economic and strategic ties, including common enemies in the Sunni Arab regimes of the Middle East. Diplomatic ties were severed after 1979, and today Israeli regional interests are aligned with those of Sunni powers like Egypt and Saudi Arabia against Tehran’s Shiite regime.
Iran also has become a major funder and arms supplier for anti-Israel terrorism, including to Hamas in Gaza and Hezbollah in Lebanon. Additionally, Iran has been implicated in targeting Israel and Jews overseas, as in the 1994 bombing of the AMIA Jewish center in Buenos Aires, Argentina.