The Role of Contract in Creation of Compulsory Arbitration Under the Iranian Legal Regime

Although the compulsory arbitration is not a new legal matter in Iran and many other jurisdictions, forcing the parties to insert the arbitration agreement in their contract is both new in Iranian legal regime and unprecedented elsewhere. One of the most salient forms of such compulsion is perhaps the one in Article 20 of the Third Five-year Development Plan of Iran, where the legislator requires that the arbitration agreement shall be inserted in the Shares Ceding contracts and duly signed by the parties. This new requirement of Iranian legislator, raises a number of new questions with regards to the nature and effects of such arbitration.In the current research paper, after reviewing the history of matter in Iranian legal regime and comparing it with some other jurisdictions, the writers attempted to discover the reasoning(s) of the legislator for such a questionable innovation. To this aim, the main concentration of the writers was on Article 20 of the Third Five-year Development Plan of Iran, as the most salient example of such compulsory arbitration. The main question to answer was whether the jurisdiction of such an arbitration panel is arising out of the legislation (like other compulsory arbitrations) or it could be considered as the parties’ intentions. The writers, for several reasons, concluded that compulsory arbitrate by forcing the parties to include the arbitration agreement in the contract, shall in no way be construed as contractual arbitration, but it is the same as other compulsory arbitrations, i.e. those by legislation.