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Iran’s “International Commercial
Arbitration Act” adopted in September 1997, is modeled on
the “UNCITRAL Model Law on International Commercial
Arbitration” with minor alterations. It is comparable with
modern law of all “arbitration friendly” countries.
Iran is a party to the “New York Convention 1958 for
Recognition and Enforcement of Foreign Arbitral Awards”.
Therefore any foreign arbitral awards rendered in a state
party, subject to the provisions of the said convention, are
recognized and enforced in Iran; and similarly arbitral
awards rendered in Iran, may be recognized and enforced in
any state party to that Convention.
Parties to international Commercial contracts usually envisage
an arbitration clause or attach an arbitration agreement to
the contracts, in order to avoid many problems associated
with compulsory jurisdiction of national courts of either
party (including lengthy and expensive court proceedings,
overlapping jurisdiction, etc). However, national law of
each contracting party should be taken into consideration
because according to some, particular disputes may not be
referred to arbitration; and there may be some restrictions
as to the arbitrators. For example according to article 139
of the Iranian Constitution, cases involving public property
may not be referred to arbitration, unless approved by the
Parliament. Nonetheless, most of the contracts between
Iranian departments/governmental organizations/state owned
companies, and foreign parties contain an arbitration
clause, which is hardly enforceable in Iran, yet may be
enforced outside Iran, provided that those entities have
assets abroad. Therefore, you should seek an advice on
Iranian Law regarding such matters, if you intend to sign
international contract with an Iranian party.
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