Arbitration of Investment Disputes under Iranian Investment Treaties

In 2010, the international community including the United Nations, European Union and United States imposed a series of economic and financial sanctions on the Iranian government for its controversial nuclear programme by restricting investments by multinational companies in the Iranian oil and gas resources. In summer of 2010, major oil companies began pulling out of the South Pars block which is the world's second biggest gas field situated in the Persian Gulf. It is expected that more companies will abandon their investment projects for fear of sanctions by the US treasury which targets both US and non-US companies with investments and economic interests in the Iranian petroleum industry. The exiting firms may experience problems in transferring their capital and machinery out of the Iranian jurisdiction and may suffer damages as a result of unfair and discriminatory treatment by the authorities including customs officials, banks, oil ministry, OIETAI and other public bodies. The only remedy available to the foreign investor is to claim compensation for interference or expropriation of its property rights in investment by bringing an arbitration proceedings against the Iranian government and/or state agencies. Iran is party to more than 50 BITs with capital exporting and developing countries which guarantee access to international arbitration pursuant to arbitration rules of ICSID, ICC and UNCITRAL. This article exemplifies the dispute resolution provision contained in Iranian BITs including consent to arbitration, jurisdiction of arbitral tribunal, arbitration procedures, applicable substantive law, location of arbitration and enforcement of arbitral award. The purpose of this article is to provide investors involved in disputes over investments with the Iranian government with the remedy to pursue their compensation claims in a "neutral, impartial and third party forum" which is based outside of the Iranian jurisidiction.