Iran's state shipping line will challenge the latest round of sanctions at the European Union's (EU) highest court, saying there is no evidence showing that it has been involved in arms trafficking as EU and US officials say.

In written answers to questions from Reuters received on Sunday, the managing director of Islamic Republic of Iran Shipping Lines (IRISL) also said the company planned to counter financial sanctions that have hampered its access to insurance by the creation of an Iranian P&I (protection and indemnity) fund.

Last month the EU targeted over 30 IRISL holding companies as part of a wider sanctions campaign led by Western states aimed mostly at forcing Tehran to curb its nuclear energy drive, which they suspect is meant to develop atomic bombs.

Iran denies this, saying it wants nuclear energy only for electricity or medical treatments.

Sanctions have caused several IRISL vessels to be temporarily seized in foreign ports.

The latest clampdown, on its affiliates overseas, pushed a major British shipping agency that used to represent IRISL, Johnson Stevens Agencies, into administration.

'Since the cancellation of P&I insurance coverage on the company's vessels by European and British insurers with the intention of grounding the company's fleet nationally and internationally failed, the European Union, in an unjust move, put on its sanctions list some of the companies that had commercial co-operation with the IRISL,' Mohammad Hossein Dajmar, managing director, told Reuters in his written response.

Sanctions

'This is in the face of the fact that the EU has not presented any proof or document signifying any wrongdoing by the IRISL for intensification of the sanctions. This goes to indicate the sheer political nature of the recent sanctions.

'We are currently pursuing the EU sanctions issue through the European Court of Justice and if the case follows a normal course, the outcome may very well surprise the sanctioning parties,' Dajmar said.

Five IRISL cargo ships were impounded in Singapore, Hong Kong and Malta last year when European banks demanded early repayment of loans. They were released after several months when the line repaid the loans.

Dajmar said in January the loans had been called in early due to the banks' understanding that the vessels no longer had valid insurance, amid tightened financial sanctions on Iran.

He told Reuters that insurance was no longer a problem as Iranian insurers and the central bank had stepped in.

'The establishment of an Iranian P&I through a consortium made up of all Iranian insurers through a $1 billion guarantee fund provided by the Central Bank of Iran is one of the measures to overcome that (problem),' Dajmar said.

'Consequently, the company's fleet does not have any problem in that respect.'

Dajmar rejected accusations by EU and U.S. authorities that IRISL might be involved in illegal arms shipments.

'As the country's and the region's biggest marine carrier, IRISL is involved in the transportation of legal cargoes in compliance with the provisions of relevant international conventions,' he said.

'So far, despite various rounds of sanctions by the United States, Europe and some of their allies, there has been as yet no proof or document submitted to indicate any illegal activity.'-Reuters