International Agreements

The principal law regarding the Iranian applicable legal system in relation to the International Agreements is the “Foreign Investment Promotion and Protection Act” (the “FIPPA”) which has been ratified on 10th March 2002.

International Agreements

International Agreements

The mentioned law consists of 7 chapters by the below topics:

  1. Definitions
  2. General terms regarding admission of the foreign investment
  3. Relevant and competent authorities
  4. Protections on foreign investors and transferring the investment
  5. Types of investment and the rules regarding importation and repatriation of foreign capital
  6. Dispute resolution mechanisms
  7. Final provisions

As it was previously mentioned, since the FIPPA is the most relevant law regarding the investment and international agreements in Iran, we will discuss some of the critical issues by referring to the FIPPA in this paper.

 

What is the legal definition of foreign investment and what kinds of that are possible in Iran?

According to Article 1 of the FIPPA, the main criterion of foreign investment is not related to the nationality and the foreign origin of that should be considered. Therefore, Iranian nationals may enjoy from the provisions as well if the originality of the investment related to abroad.

By virtue of Article 3, there are only two ways for the establishment of foreign investment:

  1. Foreign Direct Investment (FDI) in the fields that the private sectors are allowed to do so.
  2. Foreign Investment through “civil partnership”, “buy-back” and ‘build- operation- transfer (BOT)”.

 

What is the competent authority regarding issuing the authorization?

Pursuant to Article 5, the sole official competent authority for the promotion of the foreign investment in Iran is the Organization of Iran Investment (the “Organization”). Therefore any application should be submitted before the organization whether by Iranian nationals or foreigners.

 

Is there any provision regarding the prohibition of nationalization by the host state?

As one of the principal standards relating to any kind of investment, all over the world is to protect the property and investment of the foreign investors, the FIPPA dedicated its Article 9 to the same provision. In this regard, Article 9 states that foreign investment shall not be subjected to expropriation or nationalization, only public interests, through the legal process, without any discrimination, and against appropriate compensation. Therefore, the FIPPA is not against the international rules in the mentioned subjects.

 

Is there any other kind of international agreement based on the Iranian legal system?

In addition to what was previously mentioned regarding the types of foreign investment in Iran, there are some other agreements which would be considered as international agreements and are allowed by the Iranian legal system as follows:

  • Franchise Agreement
  • Finance Contracts
  • Joint Venture
  • Licensing Agreement
  • Distribution Agreement

 

The International Agreements also divide to the below topics specifically

  • Franchise Agreement
  • International contracts on the carriage of goods
  • Finance Contracts
  • Buy Back Agreement
  • Joint Venture
  • Licensing Agreement
  • Distribution Agreement
  • BOTs
  • Payment Methods