Foreign Investment Law
Foreign Investment Laws
One of the most important branches of international trade law that examines and identifies the set of rules and regulations governing investment in other countries is foreign investment law. In fact, the basic prerequisite for any economic activity in the form of foreign investment in other countries is knowledge of the laws and regulations in the field of foreign investment. These sets of laws are formulated and enforced in each country to determine attendance rules, regulations, bylaws, instructions, and terms of reference for foreign investment.
ESK Internationla Law Firm
Our team is composed of highly skilled and versatile lawyers who combine practical experience and academic knowledge of their field. Most of our practitioners have worked in different professional environments, often outside their home jurisdiction.
Types of Foreign Investment
Foreign investment is made in two ways, direct and indirect:
1. Direct investment, which means direct intervention in the labor market and capital of a foreign country by investing capital or establishing a company in that country or participating in an existing company to the extent that the investor can be influential in that company. In direct investment, investors are allowed to operate in areas where it is possible for the Iranian private sector to operate. Also, all legal procedures and arrangements in this type of investment must be subject to FIPPA rules and regulations.
2. Indirect investment, which includes various types of investment in the public and government sectors that are monopolized by the government. In this case, the return on interest and capital must be without the guarantee of the government or other financial institutions and banks. This investment must be made within the framework of contractual arrangements (civil partnership, joint venture, buyback, and BOT).
Also, individuals and companies residing in other countries can independently make cross-border and international investments with the aim of making long-term profits in Iran. Foreign Investment Promotion and Protection Act (FIPPA) provides for the establishment of a company or participation in the shares of an Iranian company; and investing through contractual arrangements without forming a company.
Foreign Investment Law in Iran
The history of legislation on foreign investment in Iran dates back to 1953. In 2002, however, a law entitled “Foreign Investment Promotion and Protection Act” was approved by the parliament to provide suitable conditions for the activities of foreign investment companies in the country. This law, taking into account the many incentive conditions, provides the necessary conditions for the activity of foreign private and public investors in the country and provides guarantees for non-commercial risks. According to FIPPA law, foreign investment is allowed in almost all areas except security and ammunition.
The law and its executive regulations provide for many incentives, including the fact that no distinction is made between foreign and domestic investors, and all protections, exemptions, facilities and customs facilitating conditions for domestic investors are available for foreign investors too without any discrimination. In terms of other issues such as residency, employment and property ownership, special conditions are provided for foreign investors.
Furthermore, the “Organization for Investment, Economic and Technical Assistance of Iran” was established to implement the FIPPA and to implement its related regulations. The most important tasks of this organization are the following:
♦ Issuance of investment license.
♦ Protecting the rights of investors in approved projects and providing assistance, coordination and facilitation of investment matters.
♦ Handling all matters related to foreign capital transfers.
♦ Managing and negotiating bilateral and multilateral agreements with other governments and international organizations.
♦ Informing about foreign investment rules and regulations and introducing new foreign investment opportunities in the country.
Dealing with Disputes Related to Foreign Investment in Iran
As in other areas of economic activity, foreign investment will not be immune to disputes in the process of achieving goals. Since most of the foreign investment platforms in Iran are related to the construction industry and infrastructure projects, construction contracts that are concluded between foreign investors and the Iranian side often consider dispute resolution methods such as mediation and arbitration. However, often in the field of dispute resolution, there are complexities in terms of standards governing dispute resolution and contractual procedures embedded in the contract, which doubles the need to use knowledgeable legal advisers.
ESK International Law Firm, with years of continuous activity in this field and by drafting the book “Foreign Investment Law in Iran in the Light of Laws and Foreign Investment Contracts”, which is the most detailed book in Iran in the field of foreign investment, is ready to provide services to foreign and Iranian individuals and legal persons. Obtaining investment licenses, consulting and registering different types of companies, establishing branches and representative offices of foreign companies in Iran, consulting in the field of labor, tax, and residence laws in Iran are some of the services of this law firm. The specialist provides the desired legal services in the field of investment. Our legal services in the field of investment are provided by registered lawyers and experienced legal advisors.
ESK Law Firm and Foreign Investment Services
ESK has successfully provided investment related services to many of the world’s leading enterprises in the chemical, auto, iron & steel industries and has assisted them clear the anti-trust examination made by supervising bodies.
ESK is expert in providing services to clients wishing to establish JVs, wholly foreign-owned enterprises, investment holding companies, startup companies, marketing and distributing companies, trade companies, bonded warehouses and representative offices in Iran. We also help our clients exit investment projects by means of equity or assets transfers or settlements.
Our lawyers provide clients with legal opinions about laws, regulations and policies concerning foreign investment; prepare feasibility studies for investment projects, assist with negotiations on JV or other forms of cooperation and finalize legal formalities necessary for establishing foreign-invested enterprises; and provide legal services for international clients engaging in M&A in Iran, such as investment due diligence, documentation preparation, negotiations, legal opinions and transaction finalizing.