Iranian Lawyer for Foreign Companies: Compliance & Disputes

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When foreign companies enter or operate in Iran, they face a unique set of legal, regulatory, and commercial challenges. From navigating foreign-investment rules to contract enforcement, local compliance obligations, and dispute resolution mechanisms, the need for expert local counsel is critical. A skilled Iranian lawyer acts as your guide, interpreter of local law, and strategic partner. In this article, the Corporate Law team at MJK Law Firm explains how Iranian lawyers serve foreign-client mandates: the key practice areas, real-world examples, and how to select local counsel.

What does an “Iranian Lawyer” mean for a foreign client?

Legal definitions and framework

In Iran, lawyers who are admitted to practice and are members of the bar act in accordance with Iranian law, including commercial law, civil procedure, arbitration, and investment law. The central body is the Iranian Central Bar Association (ICBA), which governs the licensing and conduct of lawyers.

From a foreign-client perspective, working with an Iranian lawyer means obtaining advice on Iranian law (corporate structures, compliance & regulation, dispute resolution) and often interfacing with local courts, arbitration centres, or administrative authorities on your behalf.

Key services for foreign-client mandates

An Iranian lawyer supporting foreign companies will typically provide:

Legal due diligence and structuring advice for entry into Iran (company formation, branch offices, joint ventures).
Advice on investment licensing and foreign-investment protections (under the Foreign Investment Promotion and Protection Act (FIPPA)).
Regulatory and sanctions compliance (especially given Iran’s international sanctions environment).
Contract drafting and negotiation (supply agreements, joint-venture agreements, service contracts, distribution).
Dispute prevention and management (commercial disputes, breach of contract, partner disputes, enforcement of foreign judgments or arbitral awards).
Representation or coordination with local authorities, courts or arbitration panels.
Exit strategy, restructuring, repatriation of profits, tax planning (in coordination with local counsel and tax advisors).

Key Practice Areas for Foreign-Client Matters

1. Entry and structuring

When a foreign company considers operations in Iran, the first step is to determine the appropriate legal form: a joint-stock company, limited liability company (LLC), branch office, representative office, etc. Under FIPPA, 100 % foreign ownership is generally permitted in many sectors, but exceptions apply and careful legal structuring is required.

An Iranian lawyer will guide you through:

Selecting the entity type appropriate for your business model.
Registering with the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI) (for foreign-investment licences).
Complying with foreign-ownership ceilings, if any, and sector-specific rules.
Drafting the foundational contracts: shareholders’ agreement, joint-venture agreement, license agreements, lease of property, etc.
Advising on local employment law, regulatory approvals, and tax incentives.

2. Compliance and regulatory risk

Operating in Iran as a foreign company means navigating both Iranian domestic law and international regulatory regimes (including sanctions). A foreign company’s general counsel needs to ensure the business is structured and operated to minimize compliance risk.

For example:

The Iranian sanctions framework means that the provision of services (including legal services) to Iranian entities or from U.S./European persons may trigger sanctions consequences.
Ensuring contractual counterparts are not listed or blocked under sanctions, and that payment/finance flows are lawful.
Understanding Iranian regulatory regimes (customs, export/import, investment incentives, tax exemptions). For example, tax holidays may be available under certain conditions.
Ongoing corporate compliance: corporate governance, local filings, licensing, sector regulation (for example, in energy, manufacturing, trade).

An Iranian lawyer contributes by performing risk assessments, drafting compliance policies, reviewing contracts, advising on sanctions/controls, and liaising with local authorities.

3. Contract negotiation & drafting

Transactions involving foreign companies often involve cross-border contracts. The local law perspective matters: choice of law, language issues, enforceability, translation into Persian, applicable dispute resolution clause, and local content obligations. For example:

Whilst contracts can be in English, Persian translation is highly advisable for enforceability in Iranian courts.
Ensuring that the contract aligns with Iranian mandatory law (labour law, company law, corporate governance).
Drafting joint-venture agreements that anticipate termination, exit, profit repatriation, and local partner relations.
Supply/distribution agreements accounting for local customs, taxation, currency repatriation, and export control.

4. Dispute resolution & enforcement

When disputes arise, choosing the right mechanism and having a local strategy matters. An Iranian lawyer helps foreign companies with:

Arbitration (domestic Iranian arbitration centres or international arbitration if agreed)
Litigation in Iranian courts (with local representation)
Enforcement of foreign judgments or arbitral awards in Iran: for example, recognition of a foreign court ruling may face barriers under Iranian law.
Negotiation and settlement strategy (often preferable for cross-border clients because Iranian court proceedings may be unfamiliar or slow).
Coordinating with foreign counsel to ensure the local strategy aligns with global exposure (for instance sanctions, asset recovery).

5. Exit, restructuring, repatriation

Foreign companies may eventually want to restructure, exit or repatriate profits. Iranian lawyers help with:

Designing exit mechanisms (sale of shareholding, buy-out of Iranian partner, liquidation).
Repatriation of dividends or capital under FIPPA protections.
Handling tax implications and local regulatory de-registration.
Handling disputes arising from exit (for example, minority partner claims, partner disputes, contractual liabilities).

Real-World Case Examples

Example 1: Joint-venture structuring in manufacturing

A European manufacturing company wishes to set up a joint venture in Iran for local production and export from Iran. The Iranian lawyer supports by analysing the sector for foreign-ownership limits, obtaining the investment licence via OIETAI, negotiating the joint-venture agreement with the Iranian partner (including technology transfer, export obligations, profit-sharing, exit rights), registering the company in Iran, and advising on local labour and environmental regulation.

Example 2: Contract enforcement and foreign judgment recognition

A foreign services provider has obtained a favorable judgment in a foreign court but needs to enforce it in Iran. The appointed Iranian lawyer investigates the enforceability under Iranian law, identifies procedural obstacles (for example, irregularities in the foreign proceedings, translation requirements, or local public-policy barriers), and negotiates a settlement with the counterparty under the threat of local enforcement.

Example 3: Sanctions-compliance risk review

A multinational company is considering sourcing materials through an Iranian supplier. The compliance lawyer (in Iran) helps with due diligence of the Iranian counterparty, reviews exposure to U.S./EU sanctions, advises on contractual safeguards and exit rights, and monitors the ongoing regulatory regime to mitigate future risk.

Each of these illustrates how the Iranian lawyer is not just a “local counsel” but a strategic partner combining local-law knowledge, international perspective, and compliance-sensitivity.

Common Mistakes and How to Avoid Them

Mistake 1: Assuming foreign investment is simple and unrestricted.
Foreign companies sometimes assume that they can simply establish a wholly-owned entity and operate without local counsel. In fact, foreign-investment rules (under FIPPA) require precise compliance and often specific licensing.
Solution: Engage local counsel early, conduct legal feasibility and due diligence, and structure the investment correctly from the start.

Mistake 2: Using English-only contracts without localisation.
Failing to provide Persian translations or not adapting the contract to Iranian mandatory law can cause enforcement problems.
Solution: Draft bilingual contracts, involve Iranian counsel during negotiation to ensure compatibility with local law, and include clear dispute-resolution mechanisms.

Mistake 3: Ignoring sanctions/regulatory exposure.
Especially for companies whose home jurisdiction is the U.S. or EU, ignoring Iran-related sanctions can expose them to major regulatory risk.
Solution: Conduct a sanctions risk review, monitor updates, include compliance clauses, ensure payments/financial flows comply with the law.

Mistake 4: Underestimating dispute-resolution and enforcement realities.
Foreign clients may assume a foreign court or arbitral award will be easily enforceable in Iran. However, Iranian courts may decline recognition if certain procedural or public-policy issues exist.
Solution: Plan the dispute-resolution clause carefully, include fallback mechanisms, and work with Iranian counsel to assess enforcement strategy.

Mistake 5: Delaying local counsel involvement.
Waiting until a problem has arisen often increases cost, risk, and diminishes options (especially before exit, restructuring, or dispute).
Solution: Engage Iranian counsel at an early stage (structuring, contract drafting, compliance review) for strategic benefit and risk mitigation.

How MJK Law Firm Approaches These Engagements

At MJK Law Firm, foreign-client matters receive a tailored, client-centric approach:

Deep jurisdictional knowledge. We maintain a team of lawyers fluent in Persian and English, experienced in Iranian commercial, investment, and dispute-resolution matters.
Client-aligned strategy. We begin with a risk assessment and map out an engagement plan aligned with your business objectives (entry, operations, exit, dispute resolution).
Integrated compliance lens. We incorporate sanctions and regulatory compliance into our legal advice — not as an afterthought.
Transaction-ready documentation. We prepare bilingual contracts, advise on local company formation, governance, and investment licensing.
Dispute-resolution readiness. We help clients build enforceable contracts, select appropriate dispute-resolution mechanisms, and are prepared to act in Iranian courts or arbitration if required.
Exit and restructuring support. Whether you’re scaling back, repatriating capital or restructuring, we provide legal guidance to protect your interests and manage risk.

By partnering with MJK Law Firm as your local counsel in Iran, your organisation gains access to a local-law expert working in sync with your international legal and commercial teams.

FAQ

Q1. Can a foreign company wholly own its business in Iran?
Yes, under the Foreign Investment Promotion and Protection Act (FIPPA), foreign investors may, in many sectors, hold 100% ownership. However, sector-specific restrictions may apply, and licensing via the Organization for Investment may be required.

Q2. What sanctions risks should a foreign company consider when operating in Iran?
Foreign companies should assess whether their activities might fall within U.S., EU or other jurisdictional sanctions regimes (for example, transactions with persons/entities subject to blocking, or activities in sanctioned sectors). Legal services provided can also raise issues under U.S. law if they facilitate prohibited services.

Q3. Are foreign judgments enforceable in Iran?
Recognition and enforcement of foreign judgments or arbitral awards in Iran is possible but may be subject to procedural hurdles (e.g., translation, proof of regularity, compatibility with Iranian public policy). An Iranian lawyer can assess enforceability and propose an appropriate strategy.

Q4. What are the common legal structures used by foreign companies in Iran?
Common structures include: limited-liability companies (LLCs), joint-stock companies (JSCs), branch offices of a foreign entity, and representative offices. The choice depends on business model, liability exposure, regulatory obligations, and exit strategy.

Q5. How should a foreign company choose local counsel in Iran?
Look for: (i) lawyers experienced with foreign-client mandates and international business transactions; (ii) fluency in English (and Persian); (iii) demonstrable experience in corporate/investment law, compliance, and dispute resolution; (iv) strong communication and responsiveness; (v) transparency on fees and scope of engagement.

Call to Action

If your company is exploring operations in Iran, facing a contractual dispute with an Iranian counterparty, or simply needs a compliance review of your Iran exposure, contact the business-law team at MJK Law Firm. Our experienced Iranian lawyers are ready to help you navigate the local legal landscape and protect your interests. Contact a lawyer in Iran today to ensure your strategy is robust, compliant, and future-ready.