Iran Arbitration: How It Works?
Iran arbitration laws are governed by a dual system; domestic arbitration and international arbitration. When all parties, at the time of concluding the arbitration agreement, are considered to be Iranian, the arbitration is considered as domestic and contrastingly, when at least one of the parties is not an Iranian national, the arbitration will be international. These two systems are governed by two different models. Section 7 of the CPC is the law which regulates domestic arbitration. On the other hand, LICA, which is essentially based on UNCITRAL’s Model Law, governs international arbitration.
The distinction between international and domestic arbitration affects some important aspects of arbitration in Iran. By way of example, since LICA is inspired by UNCITRAL Model Law, many internationally accepted principles, such as the separability of the arbitration agreement, competence-competence and an arbitral tribunal’s authority to issue interim measures is recognised under international arbitration. On the other hand, in domestic arbitration, such examples are seriously disputed.
The governance of two different models in international and domestic arbitration also affects the enforcement procedure, setting aside, and annulment of the arbitral awards. When it comes to the matter of enforcement of awards, one should differentiate foreign awards from national awards. Foreign awards are enforceable under the New York Convention, since Iran is a member state. On the other hand, national awards (the awards which were issued in the arbitrations seated in Iran), are either enforceable under the CPC or LICA (depending on the domestic or international nature of said award).