An Irish company which claims it has been wrongly sanctioned by US president Joe Biden for dealing with a Russian entity has launched High Court proceedings over AIB's decision to freeze its bank accounts.
The action has been brought by Cubit Semiconductor Limited, with a registered address at Milltown, Dublin 6. Its directors are Irish citizens Jae Sik Ban and his wife Joung Ok Houng, who are originally from South Korea.
The company, which is involved in the sale and supply of new and used semi-conductor equipment, was the subject of US sanctions due to its dealings with a Russian entity called Mikron KSC.
From 2016 to 2022, the company, which traded successfully since 2011 and in 2023 had a turnover of €4.9 million, was paid €47,000 to supply goods in nine different tranches to Mikron.
In late March 2022, it claims a courier was engaged to pick up goods for Mikron from Cubit's Korean office. The goods were not collected until April 4th, 2022.
A few days earlier, on March 31st, 2022, the US Department of Treasury's Office of Foreign Assets Control (OFAC), which administers and enforces economic sanctions imposed by the country, included Mikron on a list of entities sanctioned due to Russia's invasion of Ukraine.
As a result of the transaction being deemed to have taken place after the OFAC's designation of Mikron as a sanctioned entity, last February, by order of Mr Biden, the US imposed sanctions on the plaintiff.
Cubit intends to challenge that decision in the US, which it says is costly and will take time.
'Devastated'
The company says that it has been left "devastated" and has effectively ceased to trade after it was included on a list of sanctioned entities.
Following its inclusion on the US list, Cubit claims AIB informed it of its intention to close the firm's accounts. It also suspended or froze its accounts, Cubit claims.
The company claims the US sanction is a "secondary sanction", as it has no effect in law in Ireland or the EU, and there are no EU or Irish sanctions in place against the firm.
The company's directors wish to liquidate the firm, but say they are unable to take the necessary steps because its bank accounts are frozen.
As a result of AIB's action, it is claimed the company cannot deal with parties that owe it money, nor pay its suppliers or its five employees their salaries.
Represented by Gary McCarthy SC, with Michael Devitt Bl represented by Ogier LLP solicitors, Cubit says that it has attempted to resolve matters with the bank.
However, AIB's offer of allowing the sum of €232,000 to be paid to facilitate its appeal against OFAC's decision, and to provide the firm with a bank draft for the sums outstanding, of approximately €2 million, does not assist Cubit.
The bank cannot lodge those funds with another bank, nor can its directors open personal accounts with other banks due to the US sanctions, counsel said.
Obligation
AIB's concerns due to the sanctions are understandable, and the bank is entitled to close the accounts if it so wishes, counsel said, but the sanctions are not enforceable here, and it is their case the bank has a contractual obligation to the plaintiff.
Counsel added that the firm does not trade in Russia or the US, and does not support nor operate in an area that supports the Russian military. It has not had any further dealings with any sanctioned entity.
In its proceedings against AIB PLC, Cubit seeks various orders including injunctions, prohibiting the bank from continuing to freeze or suspend the accounts, or from closing the accounts.
It also seeks a declaration from the court that the bank wrongly suspended or froze the accounts as well as damages for AIB alleged breach of contract and duty.
Mr McCarthy added that while proceedings have been brought, his client remains hopeful that discussions with AIB might resolve matters without the need for a court hearing.
The matter came before Mr Justice Rory Mulchay on Friday, who granted the company permission to serve short notice of the proceedings on the bank.
Permission was granted on an ex-parte basis.
The matter will return before the courts next week.
