International Commercial Contracts
The number of international companies that are either negotiating, or planning, or at least considering a return to the Iranian market is increasing. Sooner or later, foreign companies need to initiate the process of negotiating an agreement with their Iranian counterparts. In that case they have to respond to few difficult questions: What are the crucial issues of concern during the negotiation process? Later, when the parties start the process of drafting their agreement(s), what are the key issues that the foreign party must take into consideration? What are the legal sources of international commercial contracts in the Iranian legal system? Is there any specific law that determines the limits of the contract law of Iran? How the laws of Iran interact with its jurisprudence? Would it be necessary for a foreign party to learn about Sharia rules, as far as international commercial contracts are concerned?
International companies must raise their issues of concern with their lawyers to enhance their understanding of the legal system of Iran. They are informed and sophisticated business persons. As such, they need to make head or tail of their eventual commercial activities in Iran before initiating a negotiation process with their Iranian counterparts.
The legal and business environments of Iran are changing constantly due to the fact that the policy-making structure in Iran has gone through a complex process since 1989, i.e. when the Expediency Discernment Council (EDC) was established in Iran. During the last 25 years, the EDC as well as other policy-making entities have tried to define and clarify legal policies of Iran, especially those policies related to international trade activities of the public and private sectors of Iranian economy.
Another challenge for international companies in Iran is to understand the sui generis legal system of Iran. Two main steps in this direction must be taken: First, to understand basic terms that may enable them to communicate with their Iranian partners; and second, to discern several sources of contract law of Iran in order to put each legal concept or legal rule in its proper place. These two steps may provide them with a compass that shall guide them through negotiation, conclusion, performance, interpretation, and termination phases of international commercial contracts in Iran.