Moscow, Jun 11 (IANS): Iran seeks to settle its contract dispute with Russia over the supply of S-300 anti-aircraft missile systems, Iranian ambassador to Moscow has said.

The Islamic republic is suing Moscow in the International Court of Arbitration demanding $950 million of compensation for the contract cancelled by Russia arms export agency Rosoboronexport.

"We want to resolve that issue peacefully and don't want there will be spots in our relations with Russia," Xinhua quoted Reza Sajjadi as telling reporters here Monday.

The UN Security Council in 2010 passed a resolution banning supply of conventional weapons to Iran, including missile systems, tanks and warships.

Russia cancelled the S-300 contract, saying the resolution applied to former contract of the missile system.

Rosoboronexport earlier admitted it has been seeking a settlement agreement with Tehran over the contract after the court fined Russian company $3 billion.