Role of Administrative Justice Court in Foreign Investments in Iran

1. Introduction

Administrative Justice Court (AJC) is the main Iranian court responsible for considering and settling the disputes which are arising from citizen-government relations. According to Article 10 of Administrative Justice Court Procedure and Organization Act, this court jurisdiction includes but not limited to the i) claims against governmental and public organization’s decisions, instructions, and regulations, ii) governmental and public Organization’s officials and employees’ decisions, iii) administrative adjudication commissions’ decisions.

According to the Iranian Constitution Act and Iranian Civil Act, foreign nationals enjoy the same rights that Iranians do except those that are exempted by the Iranian Legislatures. Since there is no general provision that asserts such a thing, foreign investors can file their claims against the above-mentioned persons, decisions and provisions in Administrative Justice Court.

2. Foreign Investment Promotion and Protection Act (FIPPA)

After nearly 48 years, the new law on foreign investment in Iran under the name of the “Foreign Investment Promotion and Protection Act” (FIPPA) was ratified by the Parliament in 2002. FIPPA replaced the Law for the “Attraction and Protection of Foreign Investment” which was in effect since 1955. This Act provides guarantee and other advantages for foreign investment in Iran.

Some of FIPPA advantages:

(i) Foreign Capital is guaranteed against nationalization and expropriation, and in such cases, the Foreign Investor shall be entitled to receive compensation (Article 9 of the FIPPA).

(ii) Acceptance of foreign investments in all the production, industrial, agricultural, transportation, communications, and services fields as well as in fields related to water, power, and gas supply and energy fields.

(iii) Foreign investments subject to this Act shall enjoy the same rights, protections, and facilities available to domestic investments in a non-discriminatory manner (Article 8 of the FIPPA).

3. Role of the Administrative Justice Court in Protecting Investors’ rights

According to the jurisdictions of Administrative Justice Court (AJC) explained above, decisions related to FIPPA and foreign investments such as Investment License, Capital Entrance, Capital Transfer in and out of Iran, Capital and Shares Transfer to Iranians or to foreign nationals can be challenged in AJC. It should be noted that other decisions or provisions issued by the governmental institutions which may illegally deteriorate the investors’ rights or their investment could also be the subject of a claim in AJC and the above examples are not meant to be exclusive. On the other hand, decisions made by Judicial Courts, Military organizations, Expediency Discernment Council, and Supreme National Security Council are not dealt with in AJC as they are beyond its jurisdiction.

4. Administrative Justice Court Procedure

AJC procedure is almost the same as General Civil Courts. According to Article 21 of the “Administrative Justice Court Procedure and Organization Act”, litigation is started when a claim is written in the provided forms and Persian language.

One of the main differences between AJC procedure and Civil Courts is the presence of the parties which is necessary for the civil courts’ sessions while it is not required in AJC. It should be noted that the parties are obliged to attend the hearings if requested by a judge of AJC. The litigation costs are low comparing to Civil Courts’ litigation costs. Generally speaking, the AJC procedure is simpler compared to the Civil and Criminal Courts of Iran.

5. Claiming Compensation in AJC

According to Note 1 of Article 10 of the “Administrative Justice Court Procedure and Organization Act”, claims regarding loss and damages incurred by a person can be admitted by AJC, but calculating amounts of damages must be determined by General Civil or Criminal Courts as it is out of AJC’s jurisdiction.

6. Other Legal Institutions for Complaint against Public Organizations

It might be interesting to know that AJC is not the only legal institution that deals with complaints against governmental and public organization’s decisions. Inspection Organization of Iran (a subdivision of Judiciary) and Supreme Audit Court of Iran (a subdivision of Parliament) are other institutions which are competent to deal with specific defaults and wrong decisions of public organizations.