International Commercial Arbitration at Iran
Sure! Here’s a detailed overview of International Commercial Arbitration in Iran:
International Commercial Arbitration in Iran
🔹 Legal Framework
Iran’s main arbitration law is the Iranian Arbitration Act (1997), which applies to both domestic and international arbitration.
Iran is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) since 2003.
Arbitration is also governed by the Iranian Civil Procedure Code and other related regulations.
The law explicitly allows arbitration for commercial disputes and provides mechanisms for recognition and enforcement of awards.
🔹 Arbitration Institutions
Iran has both governmental and non-governmental arbitration bodies:
Tehran Regional Arbitration Center (TRAC) under the Chamber of Commerce, Industry, Mines and Agriculture of Tehran.
Iranian Arbitration Association (IAA) – a private organization promoting arbitration.
International Arbitration Center of Iran (IACI) – established for cross-border disputes.
Many foreign parties prefer international institutions such as ICC, LCIA, or SIAC for neutrality.
🔹 Arbitrability
Commercial disputes are arbitrable in Iran, including international commercial contracts.
Non-arbitrable matters include:
Criminal cases
Family law
Public order and sovereignty issues
Arbitration must be based on a written arbitration agreement between the parties.
🔹 Arbitration Agreement
Must be in writing (contract clause or separate agreement).
Iranian courts generally uphold arbitration agreements.
The agreement must specify arbitration rules, the seat of arbitration, and language where possible.
🔹 Recognition and Enforcement of Arbitral Awards
Iran recognizes foreign arbitral awards under the New York Convention.
Awards are enforced by the Iranian courts if:
The arbitration agreement is valid.
Due process was followed.
The award does not conflict with Iranian public policy or Islamic law.
Enforcement may require review by the Iranian judiciary, which sometimes subjects awards to stricter scrutiny than in other jurisdictions.
Awards in foreign languages must be translated into Persian.
🔹 Role of Courts
Iranian courts generally respect arbitration and defer to arbitral tribunals.
Courts may annul arbitration awards if:
The arbitration agreement is invalid.
Due process was violated.
The award contradicts public order or Islamic principles.
Courts assist in enforcing arbitration agreements and in enforcement of awards.
🔹 Advantages of Arbitration in Iran
Allows resolution of commercial disputes outside the judicial system.
Enables parties to choose arbitrators with expertise.
Provides confidentiality.
Provides access to international arbitration bodies.
🔹 Challenges
Judicial interference can be significant, especially if awards conflict with public policy or Sharia law.
Enforcement of foreign awards can be unpredictable.
Limited domestic expertise and experience in international commercial arbitration.
Political and economic sanctions can impact dispute resolution processes.
🔹 Recent Developments
Iran is working to improve arbitration frameworks to attract foreign investment.
Efforts are ongoing to align arbitration practices with international standards.
The government encourages arbitration centers and alternative dispute resolution methods to reduce court caseloads.
✅ When to Use Arbitration in Iran
Cross-border trade contracts involving Iranian companies.
Energy, oil, gas, and infrastructure sectors.
Situations where confidentiality and neutrality are important.
Where parties want to avoid the unpredictability of the local courts.
RELATED Blog
0 comments