Arbitration in Iran: Challenges and Opportunities

Iran’s Law on International Commercial Arbitration (LICA), inspired by the UNCITRAL Model Law on International Arbitration, was enacted in 1997 with the aim of modernizing the country’s approach to international commercial disputes. Employing a descriptive- analytical methodology, this paper analyzes LICA’s strengths and weaknesses with a focus on the Iranian Constitution which- as the country’s Supreme Law - has seemingly eclipsed the arbitration process. Specifically, this research zeroes in on the potential conflict between Article 139 of the Constitution, which mandates parliamentary approval for foreign disputes involving state assets, and the inherently expeditious nature of arbitration. This study argues that these constitutional formalities - while safeguarding national interests - should be reduced as they may hamper the efficiency and expeditiousness typically associated with arbitration. The author proposes that - as arbitration is intertwined with less formality - the Guardian Council can invoke its constitutional powers to curtail these formalities and create an environment conducive to a standard arbitration process. This analysis maintains that the Iranian Constitution does not necessarily supersede arbitration provisions, and proposes that the Council has the authority to streamline arbitral procedures within the legal framework of the Islamic Republic of Iran.