Iran

Iranian law provides very strict rules regarding the export of goods to Iran.

The technical rules for trading goods in Iran are set by the Institute for Standards for Iran (ISIRI). Thus, the foreign trader è is required to know and properly apply the technical rules regarding the quality and characteristics of the goods to be brought into Iranian territory, and must assess, together with the importer, the measures to be taken to comply with these technical rules. In fact, if the rules imposed by ISIRI are not observed, the product cannot be introduced into Iranian territory.

Very severe penalties may be applied in case of violation of the above rules. In order to properly assess and address this issue, è it is preferable for the exporter/importer to apply for a certification of the quality of the product to be exported to Iran by a competent body (“Certificate of Inspection”). A product certificate è a document attesting to the quality and characteristics of a foreign product and its compliance with national and/or international technical regulations. This certificate è issued by the Certifying Bodies located in Iranian territory.

The certificate may also be issued by foreign entities located in the territory of the exporter and which have been expressly authorized. However, certificates issued by the relevant foreign entities must be notarized by the local Chamber of Commerce. The importer and exporter must closely cooperate in order to inform the Certifying Body of all the characteristics of the product to be introduced into Iran, as well as the type of business transaction to be carried out. For example, the Certifying Body must be informed about:

• The qualityà of the product;
• The quantityà of the product to be exported;
• The packaging of the goods;
• The estimated time for transportation;

In some cases, certification è a necessary requirement for trading a product in Iran, for health, consumer protection and environmental reasons. This means that the export of certain goods must be accompanied by a certificate of conformity issued by a competent body (the “Certificate of Inspection”): otherwise, the export of that product will not be allowed by the National Customs Authorities.

The list of said goods è shown in the link legislative materials. At present, nearly 200 types of products are subject to the special procedure for trade in Iran. They are divided into 10 categories: mechanical and metallurgy, electrical and electronics, weight and scope, precious metal assays and marks, automotive and dynamics, construction and mineral, food industry and agriculture, textiles and leather, packaging and cellulose materials.

The Certificate of Conformityà of a product intended for trade in Iran also plays a key role in what concerns the negotiation of a letter of credit. In fact, the Central Bank of Iran (Bank Markazi) requires this certification in order to issue a letter of credit to the importer. Therefore, the latter must choose a Certifying Entity (which must be approved by the exporter) from among the entities included in the “seller list” provided by Bank Markazi. In case the importer does not indicate any entity, Bank Markazi will independently indicate the competent entity that will process the specific transaction.

Premise

Iran has always maintained excellent trade relations with Italy, so much so that over the past decades it has become Europe’s second largest trading partner, after Germany. Although Iranian companies must generally consider themselves good payers, commercial disputes aimed at recovering a credit, in the context of trade between Italy and Iran, are part of reality. It should also be considered that the reintroduction of economic sanctions toward Iran by the United States D’America – although not by the European Union – has resulted in the emergence of new disputes between Iranian traders and those Italian companies that, being linked to the financial or economic system of the U.S., have had to leave the local market, leaving substantial receivables uncollected.

The Civil Code

In the Islamic Republic of Iran, relations between private parties are primarily governed by the Civil Code, a legal instrument of Napoleonic inspiration but based on the sources of Islamic law and the principles of the Shiite Imamite legal school. The codification of Iranian civil law began in 1928 and was subject to numerous amendments until the advent of the modern Civil Code, consisting of 1335 articles. The Code è is divided according to the tripartition of European codes, into THINGS (governed by Book I), PEOPLE (governed by Book II) and ACTIONS (governed by Book III). As will be seen below, it is not a given that the contract that is the subject of the business relationship with the Iranian party is governed by local law. However, should litigation be instituted before the Iranian Judicial Authority for the recovery of the debt, the law applied by the court in the proceedings can only be the local law, as the application of a foreign law in an ordinary judgment is not permitted in Iran.

The preliminary steps

Let us now see what are the preliminaries to be put in place in the event that the Iranian debtor has not settled her commercial debt.

Preliminarily, it is necessary to correctly identify what the debtor's actual business name is. It often happens, in fact, that Iranian companies operating with foreign countries maintain two names: an official one designated at the Company Registry (in Farsi) and an international one (in Latin characters), used only for commercial and marketing purposes.

Preme emphasize that only the official name will be the one valid for the purposes of the law and the only one that should be used to carry out any kind of legal activity, including that of recovering a debt.

Secondly, in the case of a contract for the supply of goods, it will be necessary to make sure that the person who appears in the customs documents as the consignee of the goods is actually the debtor. Often, in fact, when the customer does not have the necessary import licenses to bring foreign goods into the country, he relies on the figure of the importer, to whom the customs documents, including invoices, are made out. In such cases, from a formal point of view, the importer is not the owner of the contractual relationship and therefore cannot be the recipient of credit recovery activities. Be careful, therefore, not to confuse the importer with the customer: only the latter is to be considered the actual obligor.

Identified correctly the debtor, it will be necessary to send it a legal notice, intimating the payment of the amount due within a peremptory term, generally 15 days.

The legal notice can be put in place directly from Italy or from Iran.

Taking into consideration that there is no certified mail in Iran and that international couriers (such as DHL) do not operate to the country due to the U.S. embargo, in case the notice is sent from Italy by international registered mail, the time of receipt will be particularly long. Therefore, it is suggested that the debtor be anticipated to receive the notice by e-mail and fax as well.

If the notice is sent from Iran, on the other hand, è it is possible to avail of the institution of the so-called “judicial notice”, which allows the creditor to enjoin the debtor to fulfillment through the Iranian Judicial Authority, although he has not yet instituted a court case. This type of notice will be’served by the same Judicial Authority.

The Judicial Proceedings

In the event that the notice sent has no effect and thus the debtor continues to remain in default, the option of instituting judicial proceedings aimed at recovering the debt will have to be considered.

If a written contract has been concluded between the parties, è it is necessary to check preliminarily whether a forum for dispute resolution has been provided in it, which may be a judicial forum (e.g. Tehran Court or Milan Court), or an arbitration forum (e.g. Lugano Chamber of Commerce). In that case, it will necessarily be necessary to institute the proceedings at the indicated forum, under penalty of a declaration of lack of jurisdiction by the court otherwise seized. If, on the other hand, there is no written contract, it will be necessary to consider where to institute the proceedings, whether in Italy or Iran, depending on the type of service envisaged between the parties.

All foreign natural and legal persons have the right to access local Justice: it should be noted that access to the courts, unlike in the vast majority of states, can also be done independently, i.e., without the aid of a lawyer, but this practice is now almost abandoned and in any case not recommended.

The Iranian judiciary is exercised by the Courts of Justice under both domestic law and Islamic principles and è is characterized by three degrees of judgment. The first degree è represented by the Common Courts of First Instance, which are responsible for all disputes in civil and criminal matters. The second degree of judgment is up to the Common Courts of Appeal, one for each of Iran's 30 provinces, which are responsible for ruling on judgments rendered by the courts of first instance. Last instance, which operates only in cases provided for by law, è that of the Supreme Court, which has three different branches (one in Tehran, one in Qom and one in Mashhad), which is responsible for reviewing the legitimacy of judgments issued by the lower courts. Cases worth more than Rial 20,000,000.00 (approximately Euro 400.00) can be submitted to the Supreme Court's review in civil matters.

Claims secured by Iranian checks

In Italy, the delivery to the creditor by the debtor of a check to secure a debt è contrary to mandatory rules, and in view of this; the guarantee agreement underlying the delivery of the ’check è illegitimate and void.

In Iran, on the other hand, the issuance of a check by the debtor, to be returned only if the latter properly fulfills its obligation 'remaining in the creditor's possession in the meantime as an enforceable title to be enforced in case of non-performance or defective performance' è a fully legitimate and frequent practice, especially when dealing with contracts of significant amounts. Obviously, the check will be drawn on an Iranian bank and the expected amount will be in Rial currency.

If the Italian creditor had received an Iranian check as collateral and the notice to pay remained unfulfilled, he or she, independently or through an attorney, may take it to a local bank for collection. Under Iranian law, the lack of funds in the drawer's account can result in very serious consequences, both civilly and criminally.

Specifically, it è provides for the blocking of all current accounts in the debtor’s name in the country and the debtor’s loss of the right to receive bank loans. Moreover, the outstanding check constitutes an enforceable title for the creditor, which can be immediately enforced before the Judicial Authority.

Under criminal law, the issuance of an unpaid check can result in the debtor being imprisoned for up to two years and banned from leaving the country.

Practical Tips

In Iran there is no statute of limitations, so that it is possible to collect a debt at any time. However, in the event that it has been secured by a check, the latter must be cashed within the period of 5 years from the date affixed to the title. Criminal liability for the outstanding check, on the other hand, may be exercised within 6 months from the date affixed to it. In any case, regardless of whether the claim is secured by a check, è it is crucial to act as soon as possible in view of the frequent fluctuations of the Iranian currency, which è is often subject to devaluation phenomena.

The protection of trademarks in the Islamic Republic of Iran è is guaranteed by domestic legislation and the country’s adherence to major international conventions in the field. Iran protects trademarks understood in both individual and collective forms, in the dual profile of figurative and verbal trademarks. It is of crucial importance that the Italian entrepreneur exporting his products to Iran register his trademark in the country in advance. Ownership in Iran of a trademark, in fact, implies a whole series of rights, first of which is the right to apply for and obtain licenses for the importation of foreign products: only the company owning the trademark - or its local agent with the appropriate powers - are the entities entitled to apply for the aforementioned licenses at the Iranian Ministry of Trade and Industry. Registering a trademark in Iran can be done through two different ways: through the so-called “national filing” or through the so-called “international filing” the benefits and modalities of which are summarized below.

Registration of a trademark in Iran through national filing

The protection of trademarks in the country è is governed by the “Law on the Registration of Patents, Industrial Designs and Trademarks (note1)”. The Italian entrepreneur can apply, through his attorney, for the registration of his trademark directly with the Iranian Industrial Property Office, accompanying his application with the reproduction of the trademark and the indication of the reference classes, according to the Nice Convention. In this regard, è it is highly inadvisable to entrust the performance of these tasks to one's local agents or distributors who, if in bad faith, could qualify as the owner of the trademark at the time of filing, illegitimately acquiring ownership. Generally, there are no limitations on registering foreign trademarks unless one of the following conditions is met:

• the trademarks are contrary to Shari’a (the Islamic Law), public order or morality;
• generate confusion with other trademarks;
.
• are similar to other trademarks already registered in Iran;
.
• are likely to confuse the public as to the origin, nature or characteristics of a product;
• contain symbols or emblems referable to a state or other international organizations;
.

Iranian Law also protects the so-called notorious trademark, which is that trademark which, although not registered, è is so widespread in the market that it is associated by consumers with a particular product. With reference to the notorious trademark, the law provides for the prohibition of registering trademarks that are identical or similar to it, whether they refer to goods/services that are identical or similar to those to which the notorious trademark is attached, or to different products: in the latter case, the prohibition operates as long as the registration of the trademark would be detrimental to the owner of the notorious trademark.

In procedural terms, national trademark filing is completed with the following process. After submission to the trademark office, the application is examined within 3-4 months. Once it has been verified as admissible, the Office gives’place to the publication of the application in the Official Trademark Gazette. From this moment, within the period of 30 days, those interested in the registration may make an’opposition to it. In the event that such opposition takes place, the applicant è be allowed a right of reply within the period of 20 days. After the aforementioned time limits have expired, the proceedings shall be considered concluded and, on the basis of the application and any opposition or reply, the Trademark Office shall proceed or not proceed with the registration.

The foreign trademark registered through the so-called national filing has an’efficacy in the country equal to that of any other registered Iranian trademark. Registration is valid for 10 years and is renewable.

The registration is valid for 10 years and is renewable.

Registering a trademark in Iran through international filing

As of December 25, 2003, the Islamic Republic of Iran è became a contracting party to the Madrid Agreement and the Madrid Protocol, thus adhering in all respects to the so-called Madrid System. The Madrid System provides that the filing of trademarks in one of the member states of the System itself, may, under certain conditions, be fully effective in the other states as well. In this case, in order to register an Italian trademark in Iran through the System's procedure, it is necessary to have filed the trademark with any Italian Chamber of Commerce or with the European Union's Intellectual Property Office and to apply - jointly or even subsequently - for the extension of the registration in Iran, through the World Intellectual Property Organization's Office (i.e. WIPO), which will consequently provide for the registration of the trademark in the country as well.

This procedure, although it has the advantage of being able to be initiated directly from Italy, is particularly cumbersome in terms of time: in fact, the transmission of the application for registration to the Iranian Trademark Office and its analysis can take 2 to 3 years.

It should also be noted that, once the registration in Iran is completed through international filing, the trademark will not appear in the local Intellectual Property database anyway: in fact, it is necessary for the registration holder, with a subsequent application, to initiate the so-called “confirmation” procedure, which consists of a request for recognition of the international registration at the local trademark office. This application is followed by the issuance of a certificate.

In conclusion, we would like to point out that in order to best ensure the protection of one's trademark in the country and, in case of infringements, in order to benefit to the fullest from the sanctioning system provided by the’Domestic Ordinance (note2), è it is strongly advisable to proceed with the filing of the trademark directly in Iran through the so-called national filing, described in the first paragraph.

note1:The law è entered into force on February 12, 2008 and è was made enforceable by the January 21, 2009 regulation of the’State Organization for Registration of Documents and Propertyà;

footnote2:In the I.R. of Iran there are severe penalties for infringement of intellectual property, punishing the offender with a fine of Rial 10,000,000 to Rial 50,000,000 and imprisonment from 91 days to 6 months.