Iran: Executive Directives to the Law Concerning Maximum Use of Iranian Technical Engineering and Manufacturing Capabilities

Last Updated: 24 June 2002
Article by Behrooz Akhlaghi

On 29th April 2002, the Executive Directives has been formulated, by the State Management and Planning Organization (SMPO), relating to the supervision over the implementation of Articles of the Law Concerning Maximum Use of Iranian Technical Engineering and Manufacturing Capabilities for Projects Implementation and Provision of Facilities for Export of Services, approved on March 3, 1997 by the Islamic Consultative Assembly (ICA).

The Executive Directives of Article 3 of the Law on Maximum Use of Iranian Technical, Engineering Capabilities is as follows:

In order to exert general supervision over the implementation of Articles of the Law Concerning Maximum Use of Iranian Technical Engineering and Manufacturing Capabilities for Projects Implementation and Provision of Facilities for Export of Services, approved on March 3, 1997 by the Islamic Consultative Assembly (ICA), a responsibility which is included in the duties of the State Management and Planning Organization (SMPO), the executive directives have been formulated, which have been reflected according to Circular Letter No. 105/18089 dated April 29, 2002 communicated to government executive organizations.

The Executive Directives on the manner of assigning consultant engineering services, contractor services, and service activities of the projects which could be assigned both individually and jointly are as following:

2. On Manner of Assigning Works:

2-1 It shall be authorized to assign various works of projects, either individually or collectively, exclusively to Iranian companies and institutes.

2-2 If after having made the necessary consultations and co-ordinations with the SMPO or after having made the required inquiry or having held the tender, the executive organizations shall come to the conclusion that no competent Iranian company or institute is available or that competent Iranian companies/institutes are not sufficient in number, such executives organization, upon production of a well-reasoned and justified report and after having obtained the authorization of the Council of Economy, shall be authorized to assign and cede their projects to Iranian-foreign joint ventures, provided that the share or participation interest of the Iranian company or institute in the Iranian-foreign joint venture shall not measure less than 51% of the value of contract compensation of the work so assigned.

2-3 In the tender and inquiry notices to be published, it shall be required to clearly and unequivocally reiterate that Iranian companies and institutes may declare their readiness to participate in the tender either independently or in the form of civil partnership with foreign companies, on condition that the share and participation interest of the Iranian company or institute in the civil partnership shall not measure less than 51%.

2-4 The Iranian-foreign joint ventures established in the form of civil partnership which shall be willing to take part in the tender shall be required to submit to the executive organization a copy of their letter of agreement or understanding, simultaneous with the production and submission of their bids.

2-5 It shall be authorized to assign work exclusively to the bidders who shall propose to execute and implement 51% of the value of the work utilizing the equipment, accessories and services which are already produced and rendered in Iran or which are capable to be provided in Iran. It shall be authorized to assign works to the bidders who shall either propose or undertake to execute inside Iran less than 51% of the value of work, only after having obtained the required authorization and approval of the Council of Economy (mentioned in Note 1 under Article 3 of the Law on Maximum Use).

2-6 In order to gain thorough knowledge as for the contractual value of the work to be executed and performed inside Iran, the executive organizations shall be required to clearly and unequivocally mention the following items in the tender documents, requesting the bidders to provide unambiguous and clear marks in response.

2-6.1 Concerning engineering and procurement (EP) projects or engineering, procurement, construction and management (EPCM) projects, it shall be required to mention the amount and contractual value of the engineering work to be performed inside Iran by Iranian entities.

2-6.2 Concerning the amount, value and supplier of the commodities, raw materials or bulk materials, it shall be required to mention the standardized items which are manufactured in Iran and which shall be utilized in the course of implementation of the project.

2-6.3 It shall be required to mention the amount and value of the equipment the manufacture or fabrication of which shall be assigned to Iranian manufacturers or producers, together with a list of Iranian vendors to which the manufacture or fabrication of such equipment shall potentially be assigned.

2-6.4 The amount and value of the work which shall be executed in Iran directly by the Iranian company being a party to the contract (either independently or in the form of an Iranian-foreign joint venture).

2-6.5 The amount and value of the equipment and machinery which are not manufactured in Iran but the foreign partner shall undertake to make the necessary arrangements in order to have such equipment and machinery manufactured in Iran by foreign manufacturers (either independently or jointly with Iranian manufacturers).

2-6.6 A thorough list of what shall be developed and what shall eventually remain in Iran as benefit for Iran, upon assignment of the work to the Iranian-foreign joint venture, and after implementation of the subject of the contract.

2-7 If it shall not prove possible and practical to acquire the license and to assign the basic engineering to the nominated license holder through Iranian companies or institutes, it shall be authorised to do so through foreign companies, upon approval of by the highest ranking authority of the ministry or the executive organisation concerned.

3- It shall be required to obtain the authorisation to be issued by the Council of Economy under the following circumstances:

3-1 To assign work to an Iranian-foreign joint venture provided that the value of the share and participation interest of the Iranian partly shall not be less than 51%.

3-2 To assign work to an Iranian company or institute and/or an Iranian-foreign joint venture which shall undertake to perform and execute inside Iran less than 51% of the value of the contract.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions