Nasim Gheidi, managing partner of Gheidi & Associates is interviewed by Maeil Business Newspaper Korea.
Thursday, February 18, 2016
English translation as below:
Three Things to Remember When Preparing Contracts, “International Standard /Comprehensive/Detailed”
◆ Radar L / ‘Center of Attention’ Iranian Legal Market ◆
Maeil Business Newspaper, Thursday, February 18, 2016
Nasim Gheidi, founder and managing partner of Gheidi & Associates, is an attorney with 13 years’ experience in international trade law. Since last November, the firm, inter alia, has been assisting foreign investors with JIPYONG, which opened its desk in Teheran, Iran in November last year for the first time as a Korean law firm.
－ How do Iranians recognize economic cooperation between Iran and South Korea?
▷ Despite the fact that the South Korea had been facing difficulties to balance between its commercial interest in Iran and its reaction to US pressures to levy sanctions against our country and in fact it somehow did so in line with its ties with the US, Korean brands in consumer electronics, telecommunication and automotive have won the Iranian market in terms of size and also captured Iranians’ hearts. Although the restriction and sanctions levied on Iran by South Korea might have had adverse effects on Iranian government attitude toward Korean companies, by removal of trade barriers with Iran in international scale, the strong hope is there so that the tight economic relation between two countries will boost again.
－ What is the recommended field of foreign investment in Iran?
▷ Answering to this question requires vast study of economic, cultural and social aspects of the society. However, as to my understanding of Iran’s economy, investment in infrastructure, new energy production such as solar power and tourism could bring advantageous results. Implementation of projects in infrastructure entails large amounts of money to be financed. Domestic sources, both private and governmental, after years of international isolation lack such capability and foreign investment is a vital asset for any project to be launched in Iran on a national scale. This reviving economy with vacant positions and unutilized capacity with young educated, growing population lays the basic grounds for any foreign investor who intends to manufacture goods and provide services with the cooperation of domestic partners.
－ What are the most common mistakes by foreign companies doing business in Iran?
▷ From general point of view, I believe that a foreign investor should gain enough knowledge on economy system, history, culture and customs as well as geographical requirements of the host country. From legal point of view, some foreign companies underestimate the importance of compliance with local laws and regulations. At the beginning steps, they need to be careful on how to draft the joint venture contracts, shareholder agreements and the like with due regard to Iranian legal system. Subsequently, they will need to uphold and update their compliance system in a meticulous way.
－ What are the most difficulties faced by foreign companies while doing business in Iran? What are the most important precautions in this regard?
▷ From legal perspective, dealing with the governing law of the contracts as well as recognition and enforcement of foreign judgments/arbitral awards have been a headache for foreigners in Iran. Lack of sufficient laws and regulations and ambiguity of existing ones resulting in variety of interpretations by authorities, and unstable and changing practices adopted by administrative bodies are the challenges that foreign companies have been facing with in Iran. What could be highly recommended to foreign investors is conclusion of comprehensive and detailed contracts; application of international standards to investment contracts; constant observation of legal as well political developments in Iran; shift of the field of investment in pursuance of a thorough market study; and timely repatriation of the capital in case of emergency.
－ How could you categorize disputes between Iranian government or companies and foreign companies doing business in Iran?
▷ The Iranian government has not yet totally left its restrictive approach towards dispute settlement with foreign investors. In accordance with the most recent foreign investment act dated 2003, any dispute between a foreign investor and the Iranian government are to be referred to local courts. However, if a bilateral investment treaty is concluded between the Iranian government and the foreign investor’s respective state, the advantages of such an agreement shall be automatically applied to any investment contract between the Iranian government and the foreign investor. The settlement of claims relating to public/state property or the referral thereof to arbitration is in every case dependent on the approval of the Council of Ministers, and the Parliament must be informed of these matters. In cases where one party to the dispute is a foreigner, as well as in important cases that are purely domestic, the approval of the Parliament must also be obtained. In case of disputes between the foreign and Iranian companies, the contracting parties are free to choose the applicable law and the competent court to hear the dispute.
Hyeon-Jeong Lee, Reporter