Beside all other issues that must be carefully considered for entering into contracts, where the contracting party is an entity belongs to the public sector, there would be additional items for being observed. Herein, we have prepared a limited list of more important items required to be checked in order to transacting with the public sector and or to be properly provided in the relevant contract. 

• An entity belongs to the public sector is obliged to tender its transactions unless there are grounds to leave tender procedure or specific approval has been obtained for that specific transaction.
• The laws and regulations that govern the said entity should be checked for any specific approvals, confirmation or consents that must be obtained from any specific authority either for the relevant transaction / project and for the contract discussed and ready to signature between the parties for that purpose. This is in addition to what should be taken by the said entity under the provisions of its Articles of Association and, if the said entity has been organised as a company, of the provisions generally applicable to the Iranian commercial companies.
• Article 139 of the Iranian Constitution provides that “Settlement of the claims related to public and state property or the referral thereof to arbitration shall in every case be subject to the approval of the Council of Ministers, and the Parliament must be informed of. In cases where one party to the dispute is a foreigner, as well as in important domestic cases, the approval of the Parliament must also be obtained.” Article 457 of the Code of Civil Procedure, also, determines the same as a requirement for recognition of a relevant arbitral award by the Iranian courts as enforceable. So, any provision in the relevant contract for the purposes of dispute resolution, should be prepared and agreed in the light of the said restrictions. 
• If and where the relevant project is supposed to be financed via public sources, confirmation of the relevant executive authority; Ministry of Economic Affairs and Finance; the Plan and Budget Organization and the Central Bank of Iran would basically be required. 
• If and where required by specific regulations applicable to the relevant particular transaction for the occasions that foreign investors are involved, obtaining a permit by the foreign investor from the Organisation for Investment Economic and Technical Assistance might be necessary.  
• As required by the law, all public projects (including those proposed by the government companies) should basically be assigned to the Iranian companies and if not possible to an Iranian-Foreign participation and if not possible to the foreigners and in any event at least 51% of the value of the work should be supplied from local sources. Any exception would require a specific approval from the competent authorities. 

 

For more information and advice, please contact us in Tavakoli & Colleagues law firm.