Iran and India have agreed to not turn to commercial arbitration for disputes that may arise between users and operators at Iran’s Chabahar Por t, Indian outlet Mint reports, citing two sources it says have knowledge of the matter. The countries will instead examine other modes of dispute settlement or investment arbitration.

What’s the dilemma? The countries have been relying on short-term one-year agreements for the developing and running of the terminal at Chabahar Port, and recently India has been wanting Iran to commit to a longer term, self-renewing 10-year agreement, which ultimately will provide certainty for investment and development for the India-designed port, the outlet writes. The delay in reaching a long term agreement is a result of Iran’s constitutional restriction on arbitration in foreign courts, and disagreements over the arbitration clause.

What’s next? Indian Port and Shipping Ministry officials are expected to visit Iran next month to come to an agreement over the rules of engagement and mode of arbitration that will be implemented by the countries, the sources told the outlet. The parties have agreed to pursue arbitration under the UN Commission on International Trade Law — which does not push for designated courts in specific jurisdictions, the outlet writes. Upon agreement, the countries will come to a formal arrangement for the long-term operation of the port. While India has initially suggested that arbitration matters be carried out in Dubai or Mumbai, the Port and Shipping Ministry did not give any further indication, the outlet writes.

Background: The long-term agreement covers the development of the port and will allow India to develop the Shahid Beheshti Terminal in the port.

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