There are two different regimes of arbitration in Iran for governing domestic and international arbitrations, and consequently, for governing the arbitration agreement in Iran:
- Section 7 of the Civil Procedure Code which governs the “Domestic Arbitrations”; and
- Law on International Commercial Arbitration (LICA) (Also known as International Commercial Arbitration Act (ICAA)) which governs the “International Arbitrations”.
For more information regarding these two types of arbitration click here.
Since Iran domestic and international arbitration regimes are different, accordingly, the requirements and specifications of arbitration agreements are different under two regimes, although they might have some common aspects.
It is accepted in both Iran Acts of Arbitration that the Arbitration Agreement in Iran can be either in the form of a separate agreement or in the form of a clause of the underlying contract.
Arbitration Agreement in Iran
Regarding the “written requirement” of an Arbitration Agreement in Iran (whether a separate agreement or an arbitration clause), Iran domestic and international arbitration acts have different approaches. In domestic arbitration which is regulated in the Civil Procedure Act of Iran, there is no written requirement for an arbitration agreement. Therefore, according to the general principle of Iranian contract law, there is no requirement for concluding contract unless otherwise stipulated in the law. In contrast, article 7 of Iran Law on International Commercial Arbitration (LICA) provides that the arbitration agreement shall be contained in a document signed by the parties. LICA also allows that exchange of letters, telex, telegrams or other means of telecommunication (which provides a record of the agreement) is considered as a valid arbitration agreement. In addition, there are situations in which patties’ conduct can constitute an arbitration agreement, even if there is no written document. By way of example, an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and accepted by the practice of the other party can validly establish an arbitration agreement.
As to the matter of the Separability of the Arbitration Agreement in Iran, again, Iran’s domestic and international acts have different approaches. While LICA has fully adopted the Separability of the Arbitration Agreement in Iran, the Civil Procedure Act of Iran does not allow it. Article 7 of LICA provides that reference in a written contract to a document containing an arbitration clause shall be deemed as an independent arbitration agreement. Also, Article 16.1 of the same Act provides that an arbitration clause that forms part of a contract shall be treated as an independent agreement. A decision by the arbitrator that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
In contrast, Article 461 of the Civil Procedure Act of Iran provides that if there is any dispute as to the existence or validity of a contract itself, the court shall decide on this matter first, which means that Separability is not accepted under the Iran domestic arbitration regime.