Foreign Investment in Iran — Legal Advisory for International Investors

Foreign investment in Iran is governed by a specific legal framework that covers company registration, sector-specific regulations, currency repatriation, bilateral investment treaties, and dispute resolution. Businesses and individuals considering foreign investment in Iran typically need guidance on selecting an appropriate investment structure and understanding the protections and obligations that apply once an investment is registered.

Milani Law Firm is an established law firm in Iran, based in Tehran, and has worked as an Iran investment law firm for more than 20 years, advising multinational companies and individual investors on foreign investment in Iran. The firm’s Iranian lawyers and English-speaking advisors work with clients from the earliest stage of structuring an investment through to registration, ongoing compliance, and, where necessary, dispute resolution before Iranian courts or through international arbitration.

What Does Foreign Investment Law in Iran Cover?

This area of law typically covers:

• Company registration in Iran for wholly foreign-owned companies, joint ventures, and branch or representative offices
• Licensing of foreign investment under Iran’s Foreign Investment Promotion and Protection Act (FIPPA)
• Sector-specific regulations that apply to banking, insurance, oil and gas, real estate, and other regulated industries
• Rules governing the repatriation of profits, dividends, and capital in foreign currency
• Protections available under bilateral investment treaties signed by Iran
• Dispute resolution mechanisms, including domestic courts, international arbitration, and treaty-based claims

Because foreign investment in Iran can take several different legal forms, the rules that apply, and the protections available, depend on how the investment is structured and the sector in which it operates.

Milani Law Firm’s Foreign Investment Services

The firm provides legal services for foreign investors across the following areas:

• Advising on the choice of investment structure before registration
• Preparing and submitting applications for a FIPPA license
• Drafting and reviewing joint venture, shareholder, and partnership agreements
• Advising on sector-specific regulatory requirements, including banking, insurance, and energy projects
• Assessing the protections available under bilateral investment treaties relevant to an investor’s country of origin
• Representing investors in disputes with local partners, counterparties, or authorities
• Providing ongoing regulatory and compliance guidance after an investment is established

These services are intended to help investors approach foreign investment in Iran with a clearer understanding of the legal requirements involved, from the initial structuring stage through to day-to-day operation.

Who Is This Service For?

This service is typically relevant for:

• Foreign companies evaluating market entry into Iran
• Multinational investors considering a joint venture with an Iranian partner
• Foreign shareholders structuring or restructuring an existing investment
• Companies already operating in Iran that need a compliance review of their investment status
• Investors facing a dispute with a local partner, counterparty, or regulatory authority

Each of these situations calls for a different starting point, but all of them benefit from legal advice grounded in the practical realities of foreign investment in Iran, not only the formal legal text.

The Foreign Investment Promotion and Protection Act (FIPPA)

FIPPA is the primary legal framework governing foreign investment in Iran. Investments approved and licensed under FIPPA, through Iran’s Organization for Investment, Economic and Technical Assistance (OIETAI), may benefit from a number of legal protections, including:

• Treatment comparable to that of domestic investors in the licensed sector
• Mechanisms for the repatriation of profits and capital in foreign currency
• Protection against uncompensated expropriation, subject to the conditions and exceptions set out in Iranian law
• Recognition, in some cases, of arbitration as a method of resolving investment disputes

The scope of these protections depends on the structure of the investment, the sector involved, and whether the investment has been properly licensed under FIPPA. Reviewing how a specific investment fits within this framework is typically the first step before proceeding with registration.

Bilateral Investment Treaties and International Arbitration

Iran has entered into bilateral investment treaties with a number of countries, many of which are designed to provide additional protections to investors from the treaty partner state. Some of these treaties reference international arbitration as a method of resolving disputes between an investor and the host state, in addition to protections available under domestic law.

Whether a specific treaty applies, and what protections it provides, depends on the investor’s country of origin and the terms of the relevant treaty. Milani Law Firm’s lawyers assist investors in reviewing the treaties that may apply to their situation and assessing the realistic options for resolving a dispute, whether through domestic proceedings, arbitration, or treaty-based claims.

Key Legal Considerations Before Investing in Iran

Several practical issues tend to arise before an investment is finalized:

• The choice between a wholly foreign-owned company, a joint venture, or a branch office, each with different regulatory and tax implications
• Sector-specific restrictions or licensing requirements, particularly in banking, insurance, oil and gas, and real estate
• The terms governing profit repatriation and currency conversion
• Due diligence on a prospective local partner before entering a joint venture
• Clear dispute resolution clauses in joint venture and shareholder agreements

Addressing these issues before an investment is registered tends to reduce the likelihood of disputes once the investment is operational. Investors who also plan to engage in ongoing trade activity after entering the Iranian market may find it useful to review our separate guidance on commercial law in Iran.

When to Seek Legal Advice Before or During an Investment in Iran

Legal advice is particularly useful before selecting an investment structure, before submitting a FIPPA license application, before signing a joint venture or shareholder agreement, and as soon as a dispute arises with a local partner or regulatory authority. Engaging Milani Law Firm’s lawyers at an early stage of foreign investment in Iran allows for a clearer assessment of the available structures and protections, rather than addressing these questions only after an issue has already arisen.

To review an investment structure, a FIPPA license application, or a dispute connected to foreign investment in Iran, you can contact the English-speaking lawyers at Milani Law Firm in Tehran.