The United Kingdom has used a third country to evade the US sanctions as it paid Iran's Bank Mellat a settlement in a $1.6 billion damage case, The Times reports.

Back in June, the UK government reached an agreement with Bank Mellat to settle the $1.6-billion damages claim brought by the Iranian bank after 10 years of negotiations.

Now a Times report shows the British government has paid the money to the Iranian bank through a third country and entity in order to evade US sanctions.

“Bank Mellat’s claims have been concluded on terms confidential to the parties," the UK Treasury announced.

Iran's Ambassador to London Hamid Baeidinejad confirmed on Friday that the UK government has made the payment to the Iranian side.

He also described the procedure as an important legal success for the Islamic Republic of Iran.

In 2009, the UK Treasury imposed sanctions on Bank Mellat after it claimed that the bank was financing firms involved in Iran’s nuclear program. But in 2013, the UK’s Supreme Court ruled that the sanctions were unlawful and that the government’s response was irrational and disproportionate.

The sanctions – part of the 28-member European Council’s freeze of the funds of Iranian financial entities from 2010 – were lifted in 2016 when an international nuclear deal with Iran came into effect.

Bank Mellat argued that the UK’s actions “substantially damaged the bank's reputation” and led to the loss of profits, customers and access to international banking services.

The bank says the UK government also lobbied other international authorities to impose financial restrictions, leading to “copycat” sanctions being introduced by the United Nations, the European Union and others.

Bank Mellat had sought 3.2 billion pounds sterling but this fell to 1.25 billion pounds sterling with interest, the Times report said.