An Analysis of the Validity of Asymmetrical Arbitration Clauses Under Iranian Law

Even though asymmetric arbitration clauses seem to be used frequently in dispute resolution clauses for various industries especially, finance industry, there is no statutory guidance with regard to the validity of such clauses. Ultimately, the validity and use of asymmetric arbitration clauses depend on the circumstances in a specific jurisdiction. On the one hand, recognition of the parties’ autonomy in the incorporation of the agreed terms, and on the other hand, the injustice caused by misusing these clauses and inequality of the parties are among issues examined in this article. Under the arbitration section of Iran’s civil procedure law, arbitration is considered an exceptional dispute resolution mechanism, and it recognizes arbitration when the parties have agreed to refer their disputes to arbitration. This arbitration section has no specific regulation when only one of the parties has the right to refer the dispute to arbitration. This article studies the validity of asymmetric arbitration clauses under the laws of the Islamic Republic of Iran. Also, this paper by way of comparative analysis, seeks to explore the background of one of the imperative principles, i.e., equal treatment. This article finds that unless in exceptional circumstances, there is no obstacle to recognition of the validity of asymmetric arbitration clauses under Iran’s law. But, the validity of these clauses faces with serious challenges when there is a significant difference between the parties bargaining power in disputes involving consumer rights.