Arbitration bodies: There are two main arbitration bodies in Iran:
-The Arbitration Centre of the Iran Chamber (“ACIC”) which was established by law in 2002 as an affiliate to the Iran Chamber of Commerce, but enjoys an independent legal personality. It was established for the settlement of domestic and international disputes
-The Tehran Regional Arbitration Centre (“TRAC”) which was established in 2004 as an independent international organization, under the auspices of the Asian-African Legal Consultative Organization (“AALCO”). The agreement between AALCO and Iran was signed in 1997 and came into force in 2004. TRAC commenced its activities in July 2005. TRAC Rules are essentially based on the UNCITRAL Rules.
The costs of arbitration fall into two categories: (1) a registration fee and administration costs, and (2) arbitrators` fees.
Arbitration Proceedings
Domestic arbitration is governed by specific provisions of the Iranian Code of Civil Procedure. International arbitration is governed by the Law of International Commercial Arbitration (“LICA”), which was adopted in 1997 and is based on the UNCITRAL Model law.
The parties may agree on the procedure that will govern their arbitration, provided that they are consistent with the public policy and good morals of Iran, and with the exception of certain mandatory provisions of LICA. LICA recognizes the principle of competence-competence, party autonomy in the choice of the applicable law, the appointment of arbitrator(s), language and seat of the arbitration.
An arbitral award can be set aside on limited grounds.
It must be noted that, under the Iranian Constitution, the referral of claims relating to public and state property, i.e. in practical terms claims relating to contracts between foreign parties and the Iranian State and government entities, require the prior approval of the council of Ministers and the Majlis before being referred to arbitration. The dispute resolution clauses in such cases should therefore be carefully drafted.
New York convention on recognition and Enforcement of Foreign Arbitral Awards
Iran ratified the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards which entered into force in Iran in 2002, with two reservation: (1) Iran will apply the Convention only to recognition and enforcement of awards made in the territory of another contracting State, and (2) Iran will apply the Convention only to disputes arising out of legal relationships, whether contractual or not, that are considered commercial under the national law.
