A Comparative Review of the Right of Suspension and Withholding under Iranian Municipal Law With FIDIC Standard Contract Forms

The right of suspension entitles a contracting party to suspend the performance according to rules of law, contractual terms or as a result of force majeure. The same right may also be established as withholding the performance, according to the provisions of civil law in connection with contract of sale or other exchange contracts, until such time as the other party shows willingness to perform. Both rights are based on reciprocity of the contractual obligations and interconnection of the reciprocal obligations. The right of suspension of the performance has been recognized under the provision of the standard general conditions of contracting, as well as under some of Iranian multinational contracts. The suspension as a result of force majeure although is not expressly been envisaged under Iranian law of contracts, it is recognized by necessary implication of contract law rules. The right of withholding which is recognized under Iranian civil and commercial laws is mainly related to contracts with single performance, while the right of suspension is recognized in contracts that need to be performed during a gradual process. At the same time the legal standing of suspension was not clearly discussed under Islamic law literature but it had certainly been contemplated by Islamic law jurists in relevant situations. On the contrary the right of withholding has been expressly discussed. There are similarities between suspension provisions under FIDIC and the general contracting form. However, the differences are regarding the fact that under general conditions of contracting the right of suspension is mainly a unilateral right while under FIDIC form of the terms and conditions of exercising the right, Its duration, extension and damages arising out of suspension are contractually provided for. Consequently except for the difference in terms of contracts with one time performance or gradual performance, the legal nature of withholding and suspension is the same and one may apply the reasons and legal basis of withholding to suspension, admitting the fact that suspension is an independent legal concept.