After international sanctions were imposed Iran, particularly after April 2012, the NIOC faced serious challenges in collecting its debts. The reason was the illegality of cooperation between foreign and Iranian banks. Of course we can pin hopes on the resolution of this problem in the wake of the implementation of the JCPOA.
Q: What is the international procedure for the settlement of legal disputes arising from oil contracts? Has Iran seen any changes in following up on its legal actions after the sanctions were lifted?
A: International norms governing upstream petroleum industry contracts stipulate that in case of a dispute, the parties would try to resolve the issue as quickly as possible through consultation between the contractor and the client. In case such arbitration fails to yield any result, a mutually satisfactory team of experts will be consulted. In this stage, two different situations would arise depending on the parties' obedience to the view of experts and considering their views as the conclusive argument. In case both parties agree that the view of the independent expert is binding, the case will be closed off. In case the expert's view is not binding, the case will be reported to international trade arbitration.
It does not seem that anything new has happened with regard to Iran's lawsuits. Both before and after the sanctions, legal bodies file lawsuits when necessary. Of course, it must be noted that after the JCPOA, certain openings have been seen with regard to communications with foreign lawyers and law firms.
Q: What are the points of discussion in foreign contracts? What are Iran's priorities?
A: The main point in oil contracts is the "take" of parties. Other issues come next. It is natural that in every contract, each party will spare no efforts to take maximum advantage in favor of its own interests. Oil contracts are no exception to this rule. This issue has reached the point that fiscal system is the dominant aspect of oil contracts. If anyone wants to know the main points of negotiations in the oil contracts, he has first to consult financial and contract experts. Our priority in all contracts has been to maximize national interests, particularly with regard to jointly owned hydrocarbon fields which are of vital priority for NIOC and the entire country.
Q: How does the NIOC Directorate of Legal Affairs supervise NIOC's agreements and memorandums? Do all of them need the approval of this directorate?
A: The Directorate of Legal Affairs is tasked with examining the legal aspects of the draft of memorandums and agreements signed by NIOC. If necessary, it drafts them. After the draft is compiled, it is sent to relevant directorates and departments for consultation with experts with a view to completing or amending the text. The next stage would be to negotiate the terms of the agreement or the memorandum by a team of negotiators, comprising representatives of different departments including legal affairs. Therefore, the Directorate of Legal Affairs is present from beginning to end of the drafting of memorandums and agreements of the NIOC. The documents need the approval of this directorate before being finalized. However, it does not mean that the Directorate of Legal Affairs approves the agreements or memorandums because the law has made it clear which officials are competent to endorse the agreements. Depending on the type of the memorandum or agreement and its provisions, the authority competent to approve the text would be the Board of Directors of NIOC, the Economic Council, Competitive Bidding Exception Committee or other legal authorities.
Q: What strategy does the NIOC Directorate of Legal Affairs pursue with regard to providing legal consultations?
A: Generally speaking, legal consultations are classified under two groups: The first group provides advisory services regarding all contracts which are signed in compliance with Article 37 of the Bylaw Governing NIOC Transactions. On this basis, the draft of all contracts are sent to this Directorate in order to be compared with the latest regulations, bylaws, instructions, directives and decisions of the Board of Ministers, the Economic Council, the Board of Directors, etc. In the end, the advisory view of the Directorate of Legal Affairs is sought, and this directorate submits its views along with possible changes and amendments. The second group is comprised of legal advice including responding to legal questions sent by different departments affiliated by NIOC or its subsidiaries about laws, plans and bills, administrative and employment regulations, land ownership contracts, Supreme Audit Court, Administrative Court and interaction with other state-run organs.
It is clear that offering legal advice will be in full compliance with domestic and international rules and regulations governing the activity of NIOC and in line with the country and the company's interests.