In today's interconnected global landscape, cross-border interactions have become integral to international trade and commerce. As a result, legal disputes involving foreign entities are increasingly common, necessitating the recognition and enforcement of foreign judgments in various jurisdictions. With its significant economic potential, Iran has become a destination for international business transactions and investments, leading to an upsurge in legal matters involving foreign parties. This article comprehensively overviews how foreign court judgments are recognized and executed in the Iranian legal system by analyzing relevant laws, regulations, and judicial practices.
1- Enforcement and recognition meaning:
In all legal systems, judgments issued by foreign courts cannot be recognized and enforced in the territory of another country. In other words, decisions issued by the domestic courts of any country can be recognized and executed in the territory of the same unless the foreign judgments in the domestic system of that country, i.e., The place of execution of the decision, be transformed, which means that the judiciary should recognize the foreign judgment in the domestic system of the country where it is enforced. This resolution has a mechanism under the title of recognition and enforcement of decisions of foreign courts. The rule mentioned above is also stated in Article 972 of the Civil Code of Iran, which says: "Judgments issued by foreign courts as well as valid official documents drawn up abroad cannot be enforced in Iran unless, according to the laws of Iran, the court order it to be executed.
Recognition means validating and recognizing a vote, and enforcement means implementing the same. Therefore, a foreign verdict is not enforceable until recognized and enforced. Recognition does not necessarily lead to enforcement; it may or may not lead to implementation.
3- the procedure
The applicant should apply to enforce judgments and decisions to the competent Court of the First Instance. The competent Court will examine the applicant's request in an extraordinary meeting. The Court examines two issues. First, it will check the formal conditions, and after meeting the legal requirements, it will check substantive conditions and then make a decision. Upon the Court's acceptance, the Court will issue an executive order. The Court may dismiss issuing the enforcement order. Such a decision can be appealed within ten days by the applicant in the extraordinary Court. Once notified, the Court will send the order to the executive department if the defendant does not proceed to execute the judgment in 10 days.
If the Court recognizes the verdict and issues an enforcement order, such an order is final and should proceed. However, if the Court does not accept the foreign court decision and refuses to give an executive order, the applicant can appeal the Court's refusal in the Court of Appeal. The execution will start before notification to the defendant. If the defendant believes such an order is not enforceable according to Iranian Law, they can proceed to invalidate the order by appealing to the Court of Appeal. The Court of Appeal's decision on the matter is final and binding.
If the subject of the enforcement exists, the executor will transfer the same to the applicant. Otherwise, a judicial expert will identify, evaluate, and seize all defendants' assets. The executor will then arrange an auction to sell the assets and pay the amount of judgment to the applicant. The Administrative Court will then transfer The remaining amount obtained from the auction to the defendant.
If the defendant owes no assets to pay for the judgment, the Court will issue an arrest warrant against them.
4- Competent Court to recognize and enforce foreign judgments
The Iranian Law will determine the competent Court qualified to handle the application. According to Article 170, the Law of Civil Judgment Enforcement of Iran, the Court of the defendant's city of residence or domicile is the competent Court for requesting the execution of the judgment. If the convicted person's place in Iran is unknown, the respective Court in Tehran will examine the case.
The expenses occurred to enforce a judgment in Iran are as follows:
- 5% of the claim amount as the execution fee;
- experts fee
- payment for assets protection services;
- attorney fee
6- Refusal to issue the executive order
If the Court does not accept the foreign court decision and refuses to issue an executive order, the applicant can appeal the Court's refusal in the Court of Appeal. After notification of the decision to reject the application, the applicant can appeal this decision within ten days. The Court of Appeal hears the objection in the administrative session in extraordinary time and makes the appropriate decision.
7- Conditions for the execution of foreign judgments
When the foreign applicant submits a request for recognition and enforcement to the Court, the Court first examines the formal and substantive conditions. Then, it decides if it is possible to execute the judgment.
Substantive conditions 1) The Reciprocity requirement: Similar to the civil code of Iran, the Enforcement Law requires the country where the judgment is issued to recognize and execute the Iranian Court's decisions by its domestic Law or international treaties or agreements signed between Iran and the respective country.
2) Another substantive condition mentioned in the Civil Law of Iran is that foreign judgment should not contradicted the Iranian society's public order and good morals. For instance, Iranian courts will not enforce foreign judgments on drugs and alcoholic beverages. The courts have two approaches in this case.
- First, the Court can refuse to recognize the foreign judgment;
- Second, The Court refuses to recognize the foreign approach and will issue a new judgment complying with Iran's public order and good morals.
3) The judgment should not contradict a decision issued by Iranian courts.
4) The court judgment's subject matter is not the Iranian courts' exclusive jurisdiction.
5) The foreign court decision does not involve immovable properties and rights related to such properties in Iran.
6) A formal requirement for the foreign judgment to be enforced in Iran is that it should be final, conclusive, and binding in the country where the decision is issued. It should not be nullified or overturned by any legal means. It should be a verdict and not an order. No interim or provisional security order will be accepted for enforcement in Iran.
7) A competent court should issue the foreign judgment according to the Law of the country that renders the decision.
8) The foreign judgment should not be incompatible with the International treaties signed by the Iranian government or with the provisions of special laws.
According to the Law of civil judgment enforcement of Iran
(1977), The following documents must be attached to the application
for execution of the judgment:
1- A copy of the foreign court verdict, which conforms with the original, has been certified by the consular officer of the issuing country, with an Official certified translation of it in the Persian language.
2- A copy of the execution order issued by the relevant competent authority with its certified translation.
3- Certificate of confirmation by the political or consular representative of Iran in the foreign country or the consular representative of the country issuing the judgment in Iran, which confirms the issuance and execution order of the decision from the competent authorities.
4- Certificate of signature of the political or consular representative of a foreign country residing in Iran from the Ministry of Foreign Affairs.
Below is a review of a few court enforcement orders regarding foreign judgments in Iran:
The applicant has requested the recognition of foreign judgment ordering the defendant to pay USD 494.999.46 in addition to the interest and court expenses. The verdict is final, and the foreign Court issued an enforcement letter. The defendant does not own assets in the country of the issuance of the judgment. The Iranian consulate has confirmed and stamped the validity of the foreign decision.
The Court has stated that the applicant should request both recognition and enforcement of the final verdict from the competent Court in Iran.
The Court has recognized the foreign verdict according to Articles 169 -172 of the Enforcement Law and issued a final and binding executive order.
The applicant is a foreign bank that has obtained an enforcement order to pay the amount of Dirham 200,000 in addition to the Court's expenses and attorney's fees.
The defendant claims that the foreign Court's verdict is a default judgment issued in the defendant's absence; therefore, the Court can not enforce it in Iran. However, the foreign country published the verdict in the In-Person judgment form, which means a verdict issued on a person's attendance. The Court has stated that the foreign judgment's formal proceedings are not a matter the Iranian Court should handle. The foreign Court should have investigated whether the verdict was in person or by default, and the defendant should appeal. Consequently, the Iranian Court recognized the judgment as final and binding and issued an executive order.
The competent Court in Iran has recognized the Judgment debt determined by the foreign Court. However, regarding the interest rate of four percent added to the amount payable, the Iranian Court refused to issue an enforcement letter based on the matter being against the Iranian public order and the good morals of Iranian society. The applicant appealed the Court's decision to the Court of Appeal, which validated the Court of First Instance decision. Finally, the Iranian Court issued an executory order for the judgment debt, not including the interest rate.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.