A Comparative Study of the Impact of Economic Sanctions on Obligations in Iranian Law and International Trade

As a confrontation tool, economic sanctions are applied by the developed states against the developing states in order to make the state under sanctions adjust to demands imposed by the states sponsoring sanctions. The sanctions produce a variety of economic, social, legal and other effects, including an effect on contractual commitments. Whereas no specific law has been devised with regard to the effect of international sanctions on contractual commitments in Iran’s legal system, the issue has been addressed in international arbitration and judicial procedures of other countries. The main question addressed in this study, is that what approach Iran’s legal system and international trade law adopt towards the effect of economic sanctions on commitments. The findings of the present study note considerable differences. To begin with, in international trade law system, the effects are examined, using three doctrines of hardship, frustration and force majeure, while no particular approach is observed in Iran’s legal system in this regard. Secondly, in international trade law system, a single approach, considering economic sanctions as a force majeure, hardship or frustrating event, is not observed. However, most procedures tend toward the frustration doctrine. In the meantime, Iran’s judicial systems for the most part seems to gravitate towards considering international sanctions as force majeure.