Russia said Thursday it was surprised by Iran's move to lodge a legal complaint against Moscow over the cancellation of an S-300 missile contract, insisting that sanctions had tied its hands.

Iran's ambassador to Moscow, Mahmoud Reza Sajjadi, announced on Wednesday that Tehran had lodged a complaint against Russia with an international court of arbitration, Russian news agencies reported.

He did not say which tribunal had been approached or if it involved the the International Court of Justice, which settles disputes between states.

Russia's state news agency RIA Novosti, quoting Sajjadi, said Iran had filed the complaint nearly half a year ago.

A Russian foreign ministry spokesman said Moscow took note of Iran's move but insisted it had had no choice but to cancel the long-agreed delivery of ground-to-air-missiles due to UN sanctions.

"Taking into account the traditionally friendly nature of bilateral ties, the fact that our Iranian partners have chosen this path cannot but cause surprise," the Interfax news agency quoted Alexander Lukashevich as saying.

"The fulfilment by the Russian side of the relevant contract has become impossible due to the United Nations Security Council Resolution 1929," Lukashevich said.

He added the two countries should look for ways to resolve contentious issues in a "mutually acceptable" manner.

Following the toughening of existing UN sanctions against Iran, Russian President Dmitry Medvedev last year signed a decree banning supplies of S-300 ground-to-air missiles missiles and other arms to Iran.

Russia, which has been a strong ally of Iran and built the Islamic republic's first nuclear power plant in the southern city of Bushehr, said it would reimburse Tehran for its downpayments on the deal.

The entire contract is estimated to be worth 800 million dollars (572 million euros).

Top Iranian officials, including President Mahmoud Ahmadinejad, have lashed out at Russia for cancelling the S-300 deal.