The lifting of sanctions over the weekend has spurred a ‘slew of deals’ from Western companies wanting to do business in Iran. The reopening of the second most populous country in the Middle East to international markets presents opportunities, but any company considering working in the Islamic Republic needs to consider Iran’s human rights record as a major risk factor when assessing the individual business case for engaging there.

Iran’s human rights framework 

The Iranian Constitution establishes six fundamental principles, including the principle of dignity and honour of human beings and their freedom, attended by responsibility toward God. From a religious and Islamic point of view, the Constitution considers man as free but yet responsible toward God.

In the Iranian human rights model, human rights are consequently an inherent part of human dignity. In this setting, Iran considers that the principle of freedom figures prominently and it is strongly protected in the Constitution, which explicitly contains a list of people’s rights.

Iran has signed the Universal Declaration of Human Rights, as well as the Cairo Declaration of Human Rights in Islam from 1990. Iran is also party to many of the major international conventions on human rights, including the Convention on the Rights of Persons with Disabilities and the Convention on the Rights of the Child.

The Convention on Elimination of all forms of Discrimination Against Women and the Convention Against Torture are, however, notable exceptions.

Iran has also ratified five of the eight fundamental International Labour Organization (ILO) conventions (except the Freedom of Association, Right to Organise and Collective Bargaining as well as the Minimum Age Conventions).

Accordingly, Iran recognises the different categories of rights such as civil and political rights as well as economic, social and cultural rights.

In addition to these two, Iranian scholars also operate with a third category of rights identified as solidarity rights, for example the right to development, and environmental rights.

A fourth category concerns protection of human dignity against scientific abuse. Iran has ratified the UN Convention on Biological Diversity, but not the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, nor the Espoo Convention.

On this basis, Iran considers itself as a country where promotion, protection and respect for human rights are well-anchored. Nevertheless Iran has been criticised for many years by the UN and other international actors for its human rights violations. With regard to economic, social and cultural rights, Iran has shown progress, and is therefore less criticised.

Differences on human rights

It is clear that it is the national interpretation of human rights that often triggers international criticism of Iran. The individual rights contained in the international instruments are generally recognised by Iran, although the scope of the individual rights is interpreted differently and more narrowly by the Iranian authorities than by the international community of human rights experts.

Equally, Iran appears to apply restrictions on human rights more broadly and to interpret the scope of human rights more narrowly.

It should also be noted that if the law is silent on a matter in Iran the judge has to apply general Islamic principles to determine the matter, and not attempt to interpret the matter in light of the spirit of the legislation in question.

This may also impact on the understanding of the individual human right and its scope. However, as many Iran analysts will attest, the issue in Iran is not the existence of law, but the actual implementation of laws and regulations. This contributes to ongoing challenges for Iranian citizens and businesses.

Adaptation in legislation and policies

In recent years Iran has adopted a number of new laws or amendments to existing legislation in order to adjust to some of this international criticism.

A new Islamic Penal Code (2013) has been drafted and concepts such as mitigation, postponement of sentencing, alternative sentences, imprisonment substitutes, parole, pardon, juvenile justice as well as criminal responsibility of legal entities has been introduced.

The Criminal Procedure Code (2014) has also been amended with a number of human rights inspired changes. One of these changes is the recognition of the need to respect citizens’ rights by all judiciary officials, court officers and others involved in the prosecution.

Another amendment is the recognition of human rights non-governmental organisations (NGOs) in the court proceedings. The code allows NGOs whose statutes concentrate on children, women or juvenile protection, environmental conservation, natural resources, cultural heritage, public health and civic rights to approach the court to indict offenders (including legal entities).

Other measures are the Family Protection Law (2013), the establishment of the Vice Presidency Bureau for Women and Family Affairs, the Women’s Employment Fund, the Women’s Entrepreneurship and Self Employment Grant Scheme and the Vice Presidency for Ethnic Affairs.

Iran has also highlighted in international reports that women have been provided with additional protection against violence and abuse. Iran also regards the Law on Organisation and Support for Home-Based Businesses Act (2010) and the Act to Amend Articles 1 and 7 of the Women’s Part-time Employment Act (2010) as improvements in the rights of women.

Other laws such as the Consumer Protection Act (2009) and the Improved Transparency of the Bureaucratic System and Anti-Corruption Act (2011) have been introduced.

Iran has also introduced a concept of citizens’ rights. In 2004 the Charter of Women’s Rights and Responsibilities in the Islamic Republic of Iran was introduced. This charter concerns, for example, the economic rights of women, including the right to equal wages, privileges and work conditions.

Another set of citizen’s rights, the Protection of Legal Freedoms and Citizens’ Rights Act, was introduced the same year through the Judiciary and concerns guarantees for citizens in their interaction with all agencies of the Judiciary.

Finally, in December 2013, President Hassan Rohani’s administration introduced the draft Citizens’ Rights Charter, which intends to promote and protect the people’s rights. This charter can be seen as a step in the right direction for Iran to formulate a national human rights action plan, which the country has confirmed on several occasions is now in the making.

In general, labour conditions are thoroughly regulated in the Labour Act and directives pertaining to labour health and safety. For instance, the law stipulates a 44-hour working week and the High Labour Council determines the minimum wage every year for workers in different sectors, industries and regions of the country. The labour laws are generally seen as pro-employee and offer protection to the labour force.

The legal framework is supplemented by a number of policies such as Iran’s Five-Year Development Plans that complement the 20-Year National Development Vision Plan 2025. The development plans integrated the Millennium Development Goals and in the future they will probably also integrate the Sustainable Development Goals.

Other policies, for example, address access to and inclusion in the labour market, and establishing schemes to increase job opportunities for women as well as improving their job and employment status.

National Infrastructure for protecting human rights

The Iranian system for protection of human rights starts with several national bodies responsible for coordinating or entertaining human rights complaints.

The country has repeatedly informed the international community that it is in the process of establishing an independent national human rights institution in accordance with the so-called UN-adopted Paris Principles on National Human Rights Institutions. Until such institution is established, the High Council for Human Rights remains under the judiciary.

One of this council’s duties is to address complaints about human rights and provide practical operational solutions in line with Iran’s law. Another option is to submit the matter to parliament, if the complaint concerns the work of the national assembly, the executive or judicial powers.

The central supervisory body under the Judiciary investigates complaints concerning the respect of citizens’ rights according to the Protection of Legal Freedoms and Citizens’ Rights Act.

Other human rights actors are the National Focal Point on the Convention on the Rights of the Child established in 2012, and the General Inspectorate serving as a kind of Ombudsman institution.

Otherwise, the ordinary courts or the administrative tribunal system handle human rights related matters. The courts system, with more than 8,000 judges, covers the entire country (10% of the judges are women and mostly prepare cases or work within the family or juvenile court).

The court system has 3 levels: Basic Courts, Appellate Courts and the Supreme Court. The minimum requirement for basic court judges is that they have at least a Bachelor of Law degree. The Constitution also provides for the existence of Revolutionary Courts that deal with political and security cases. The law establishes a number of other courts (chambers of the individual court), including a juvenile court and a family court.

Before a case is handled by the court, the judge may refer the matter to a mandatory reconciliation and dispute resolution council. This council may handle the matter by including other actors than the parties, e.g. family members, in order to find a solution.

The justice sector system is not characterised by a number of specialised court or quasi-judicial bodies except for matters that are referred by the judge to reconciliation. However, there are on-going discussions whether to establish other specialised courts, e.g. concerning commercial or oil and gas matters.

For those considering conducting business in Iran, the quality of the judicial system and the judicial processes in general is important for the business environment and even though the country has the basic infrastructure in place there is still some room for improvement and there are some risks related to dealing with the judicial system.

One of the aggregate indicators on this matter is the Word Bank doing business indicators where Iran scores relatively low on the quality of judicial processes in general: it scores 6.5 out of 18

This means that that are still constraints, in particular when it comes to court structure and proceedings and case management.

Doing Business in Iran: human rights-related risks and opportunities

Once a company has concluded that the overall human rights situation in Iran does not prevent actual business activities in the country, which is clearly the case in relation to the standards that are generally applied by companies, management must commission a human rights due diligence study in relation to the actual activity.

From a theoretical point of view, the rights included in all the major human rights instruments are recognised by Iran. Controversy often relates to the understanding of the scope and contents of the individual rights and their implementation, including what constitutes permissible state interference.

Consequently, the human rights due diligence investigation is not necessarily more complicated than in many other countries, especially for a company with its own production, or a very short domestic supply chain based in Iran.

Iranian legislation does not generally seem to prevent a private company from mitigating negative impacts or establishing processes for handling complaints that involve relevant stakeholders.

If the supply chain is longer, business relations more complex or the supplier is a state-owned company, then there are certain risks that such local companies will not interpret human rights in the same manner as an international company.

However, reaching a common understanding through dialogue is not necessarily impossible. In fact, one can determine certain standards in contractual frameworks which are also endorsed by law as long as they do not clash with other legal and moral norms.

If the business activity includes production that may have a negative impact on, for example, local communities, the environment or local business, then the company is expected to engage with stakeholders/ rights holders in assessing impacts, formulating impact and mitigation strategies as well as providing access to remedies.

In many cases, the authorities also expect an environmental impact study for a specific project. Iranian legislation does not prevent such engagement, but it might sometimes be a challenge to identify the relevant representatives.

If the business activities include the sale of products or delivery of services to private clients, for example through the company’s own representative or stores, the risks are to a large extent also manageable. Issues such as labour and employment rights, including the right to privacy or equal access to the services without discrimination could be addressed within the existing framework.

If the activities include providing services or products to state entities that somehow enforce or contribute to the enforcement of corporal punishments or are regarded as a means for oppression, then the company risks being implicated in such activities. Such risks would be difficult to manage as the gap between the company’s and the State’s understanding of human rights might be unbridgeable.

Corruption

When considering business in Iran, corruption is an unavoidable issue to consider. Iran is ranked as a country with a high level of corruption (ranking 136 out of 175 countries in the Transparency International annual Corruption Perception Index).

Corruption is linked to the cost of doing business but it is also inherently linked to human rights as corruption impacts on the respect for, and realisation of, human rights. It is therefore essential for companies and investors to consider the risks associated with corruption in Iran and in their particular sector and to develop relevant and meaningful anti-corruption strategies in order to avoid corrupt practices.

Finally, it should be noted that business activity often contributes to positive human rights developments and the possibilities for companies doing business in Iran to aid developing human rights are multiple.

In general, Iranians are interested in conducting discussions on internationally recognised human rights, their contents and scope. Companies that already have the capacity to integrate human rights into their business, based on a clear human rights policy, could easily be engaged in fruitful discussions with their Iranian counterparts.