What are the legal bases for buy-back transactions in Iran ?
The Law of the First Five-year Economic, Social and Cultural Development Plan of the Islamic Republic of Iran has sanctioned buy-back transactions as a method of attracting foreign investment . Note 29 of the law of the First Five-Year Plan permit the government to resort to buy-back transactions as a means of partially meeting its industrial and mineral needs in connection with exports, production and investment. Note 22 of the Law of the Second Five-Year Plan has empowered the government to enter into buy-back deals through the country's banking system in order to meet some of its needs in connection with substructural projects, and increasing the export-oriented production capacity of Iran. The Council of Ministers has approved executive rules for buy-back transactions and the central Bank of the Islamic Republic of Iran has issued the necessary directives in this respect.
How does Iranian law define a buy-back transaction ?
Generally speaking, a buy-back transaction is a form of counter trade whereby plants, machinery, production equipment and technology are supplied, in exchange for the goods which will be produced directly or indirectly by means of such facilities . However, the buy-back transaction has acquired a broader meaning under Iranian law. As defined by Article 2 of the executive rules approved by the Council of Ministers, a buy-back transaction refers to a deal in which the supplier wholly partially, puts the needed goods and services for the establishment, expansion, reconstruction, improvement or continued production of manufacturing enterprises of the country at the disposal of the producer. The price of the said goods and services, after deducting the amount of down payments plus the related costs dispersed on the basis of the concluded contract, is paid to the supplier or buyer through the delivery of goods or services of the producer and/or through delivery of other industrial and mineral goods and services produced in Iran.
What exactly is meant by the terms Supplier and Buyer ?
The Supplier is any natural person or legal entity who provides the Iranian producer with goods or services in a buy-back transaction. The Buyer refers to any natural person or legal entity who, by receiving goods and services from the Producer or Exporter, pays up the claim of the supplier from the producer. The Exporter refers to any Iranian natural person or legal entity who pays the price of goods and services, received by the producer, to the supplier by delivery of his goods or services to the supplier or buyer.
What guarantees are provided in buy-back contracts for their