Abstract :
In this article, the first issue that is tackled is related to Iran’s sovereignty
over its natural resources. In the area of natural resources, a host state acting
to preserve the interests of its people may adopt legal measures running
counter to the terms of a pre-agreed contract. Therefore, a state may not
abide by some provisions of a contract that has been entered into with
foreign companies in order to protect the legitimate interests of the country.
Under international law, states have the right to nationalize their own
natural resources subject to the obligation to compensate the foreign
investors. However, the question of whether a state may invoke its
sovereign right to disregard its contractual obligations in the presence of a
stabilization clause arises. The role of international law will also be examined
in order to determine its application to state contracts. It can be gleaned
from the material referred to in this article that international law does not
have a sufficiently developed body of rules to regulate foreign investments.
The second part touches upon a discussion on the applicable law of the
contract with regard to the practices of Iran. In so far as the appropriate
mechanisms for the settlement of disputes are concerned, foreign
corporations that intend to sign agreements with the Iranian public sector
must accept the respective Iranian law in their international transactions at
inception. The chief justification for adopting this approach relies on the
fact that the contracts entered into by the public sector corporations involve
the State of Iran and consequently impinge upon its responsibilities. It is the
purpose of this study to reflect on these issues and to explore the bases on
which they are founded and advanced.
