An Iranian bank has lost its appeal for £78.7m (Dh367m) in damages from the EU after it was wrongly placed on a sanctions list.

The Bank Saderat Iran (BSI) was seeking damages after it was placed on the EU sanctions list over alleged connections to the development of nuclear weapons in Iran.

The bank was initially placed on the list in 2010 until it was removed in 2013 due to lack of evidence.

The move led to its assets being frozen.

BSI had claimed it suffered “material damage” but on Wednesday an EU court rejected the application ruling there was not a “flagrant” breach of the bloc’s law.

The original move by the Council of the European Union saw the bank's 28 international branches, including Bank Saderat PLC in London, placed on the blacklist.

BSI, which is registered in the UK and regulated by the Financial Conduct Authority, had sought at least £21.1m (Dh98.6m) in interest, £12.9m (Dh60.2m) to cover the losses incurred since the legal proceedings began, and a further £890,000 (Dh4.1m) for “non-material damage".

However, the court has ruled that listing BSI on the sanctions list was not “flagrant and inexcusable” within the meaning of EU law.

“The infringement ... does not amount to a sufficiently serious breach in order to give rise to non-contractual liability on the part of the European Union,” the court said.

“The action must, therefore, be dismissed in its entirety, without there being any need to examine whether the other conditions for establishing the European Union’s non-contractual liability have been met,” the ruling said.

The case was brought after the Council was reprimanded over placing BSI on the list after it failed to comply with its disclosure obligations over its failure to hand over evidence supporting its allegation that the bank had provided financial services to entities involved in transactions for Iran’s nuclear and ballistic missile programs.

An appeal against that decision by the Council was dismissed in 2016.

The case is one of a number of law suits over the sanctions the EU has imposed on firms allegedly linked to the nuclear activities in Iran.

When the sanctions were lifted in 2013 the bank hailed the move as “beneficial” for the whole of Iran.

In a statement it said: “The unfreezing of the assets of the largest stock exchange bank in Iran that holds over 50 per cent of the country’s banking system capacities overseas, is promising and beneficial not only for the stakeholders, but the economy of the whole country.”

BSI was founded in 1952 in Tehran and has 28 international branches and services in 12 countries such as London, Paris, Hamburg, Frankfurt and Athens.