Bahrain is the smallest of all members of the Gulf Cooperation Council, with a population of a hair over 1.5 million – just more than half the population of the next-smallest GCC state, Qatar.

Like most of the region’s oil-dependent nations, Bahrain has long fought to diversify its economy and free itself from the volatility of global oil prices. Despite being the first country in the Middle East in which oil was found (1932), Bahrain has struck oil only once more since then and, with a portfolio of merely two oilfields, the need to diversify has always been particularly pressing for the country. As reserves have dropped, the leadership in Bahrain has taken great pains to pivot the economy away from oil and toward diversity.

This background informs the Bahraini approach to business today: innovation and doing more with less. It is no surprise, then, that the country’s in-house community has grown into a vibrant, mature, and business-critical component of a constantly changing business environment.

Bahrain’s trusted advisers

Today, the in-house role enjoys a high profile in Bahrain: many of its general counsel also enjoy senior positions either sitting on the board outright, or advising it directly in a secretarial capacity. Understandably, this high position gives the legal function more teeth than they otherwise might have.

‘Historically, it is not very common for large financial institutions, as it is difficult to find someone who is able and experienced enough to perform both roles,’ explains Jawad Zabar, group general counsel and board secretary at BFC Group Holdings. ‘However, in recent times, I have seen it slowly becoming more and more common as organisations also start looking at reducing cost.’

‘It is very important to involve the board on every research-critical matter. Having access to the board as well as directly interfacing with the CEO and CFO really helps, because I report to the CFO and, by extension, the CEO. This helps things move faster and more effectively,’ adds Bharat Kumar Mehta, general counsel and board secretary for APM Terminals in Bahrain.

‘It is very important that I, as legal person have knowledge about important activities in the business. This can only be possible if one is involved from the start of the process, and given the senior position; it really enables me to get that information across to the board, and it’s easier to get information from others, as there is less pushback.’

The argument in favour of having a legal adviser at board level can be made anywhere in the world but, in Bahrain, the need is particularly pertinent.

‘In Bahrain the regulatory environment is rapidly evolving. Bahrain is coming up with many more laws – every two months there is a new law. For example, we just came out with a new data protection law in line with GDPR, we’ve come out with a new competition law, a new economic standards law in July, then we have also come out with an online marketplace or ecommerce law. So, they are coming out with so many laws that, I don’t anticipate how a business can work without in-house legal departments.’

National innovation

In addition to the same general legislative and regulatory changes faced by any rapidly evolving nation, there is another reason why the legal environment in Bahrain is moving as fast as it is. Despite its size, the country has been able to carve out a name for itself as an innovator in areas where other, more prominent countries have lagged behind.

The Central Bank of Bahrain, for example, formally established a FinTech and Innovation Unit to ensure that the country was properly catering for and nurturing the development of its burgeoning fintech industry. Involved in this push was the establishment of a ‘regulatory sandbox’, in which fintech companies are enabled to develop their offerings in a virtual space. The Central Bank of Bahrain has also established the Global Financial Innovation Network, which is designed to help firms interact with regulators and navigate between different frameworks across multiple countries when looking to expand globally.

‘Bahrain is unique due to its small geographical size and its important role in the region as a financial and commercial hub,’ explains Zabar.

‘It is ever evolving, especially with the introduction of disruptive technologies. However, Bahrain is always looking to take a welcoming stance on these technologies and adapt to add value to the country, and simplify or foster frictionless transactions while promoting business growth.’

These latest innovations are only the latest entries in a long record of Bahrain leading the way in the region. Particularly in the financial sector, Bahrain is renowned for being ahead of the curve, and such long-term thinking enabled Bahrain to establish itself as a banking hub as early as the 1970s. It was among the first in the region to draft and implement a trusts law, and was the first country in the GCC to implement an investment limited partnership law, long used around the world specifically for investment in collective investment funds.

This appetite for innovation trickles down to the in-house counsel working on the ground in Bahrain, and challenges them to step-up in their professional lives.

‘As a result, the depth of international exposure you experience as a legal counsel in Bahrain is a great opportunity. Bahrain is always at the forefront of adopting international best practices. Recent examples include being the first in the region to introduce the regulatory sandbox for fintech products, creating one of the first fintech hubs in the region, introducing personal data protection laws and groundbreaking electronic transaction laws,’ says Zabar.

‘Therefore, the unique challenge is being able to navigate the ever changing legal and regulatory landscape; however, as with every unique challenge, it is also a unique opportunity.’

Foreign investment

Bahrain’s tilt towards innovation has proved vital in moving the country beyond oil and towards other sources of economic prosperity. Progressive efforts on the part of the leadership – such as the regulations that led to Bahrain’s prominence as a financial centre – have gone a long way towards attracting foreign investment.

‘Bahrain has always tried to work toward a better regulatory environment. They want to be in line with all EU requirements, for instance, because they want to promote Bahrain as an investment centre,’ says Mehta.

‘To attract international investments or foreign investments, they will need to establish a proper legal regulatory environment, because if they don’t have, for example, a proper anti-corruption and bribery law, then the entities in Europe or other countries will not be able to invest in Bahrain. That is where they want to build the regulatory environment up to the speed of any developed country: in order to get the best rating, and in order to improve ease of business and compliance with international laws.’

Religiously competitive

Similar to many countries in the region, Bahrain’s official religion is Islam and, as such, Sharia law plays a large role in the country’s constitution. Article 2 of Bahrain’s 2002 Constitution declares Sharia as the primary source of legislation. Though Sharia courts typically handle matters of family law, the civil courts of Bahrain are required to look to Sharia in cases where legislation is unclear on a particular matter.

While the role of Sharia is limited in commercial matters, the fact that Bahrain is an overwhelmingly Muslim country means that lawyers still need to be cognisant of the religious law.

‘Having worked in an investment firm, we had investors who were Sharia and, to deal with Sharia investors, we had to ensure we had Sharia-compliant funds,’ explains Mehta. ‘Understanding Sharia concepts, coming from a non-Sharia country, was a new experience.’

The presence of Sharia law in Bahrain’s legal code also serves as yet another example of how Bahrain manages to gain a competitive edge in the international marketplace, maintaining its status as an attractive destination for foreign investment. In 2017, the Central Bank of Bahrain introduced some of the most advanced rules governing Islamic banks by requiring them to undergo independent and external audits in order to verify compliance with Sharia. Compare this to most banks in the GCC, which are typically free to rely on their own in-house religious scholars to ensure that products being offered are indeed Sharia compliant. The first audit reports, which are required to be made public, are expected in 2020.

‘Bahrain, along with Dubai and Kuala Lumpur, are as seen as leaders in the area of Islamic finance in particular,’ says one general counsel for a private investment fund in Bahrain. ‘For its size, Bahrain has a huge piece of the global Islamic banking market, at just under 2%.’

Visions for the future

Like many Gulf countries, Bahrain has set out its vision for the future in a 26-page document entitled Bahrain Economic Vision 2030. Launched in 2008, the vision marked the beginning of renewed reforms and liberalisation in Bahrain, and continues the country’s long arc towards a diverse, oil-independent economy. Increased volatility in global oil prices in recent years has only shone further light on the urgency of this diversification.

This vision has manifested in countless regulatory and legislative changes over the past few years and even decades. Most private companies enjoy tax-free status, and many sectors allow for 100% foreign ownership, such as in the technology and manufacturing sectors. The Kingdom has also reduced the minimum capital requirements for incorporating in Bahrain, specifically to open the door more widely to foreign investment.

In keeping with Bahrain’s tradition of being a first mover, in 2019 Bahrain became the first country to adopt the United Nations Commission on International Trade Law (UNCITRAL)’s model e-commerce laws. Among many other things, the laws puts electronic documents – bills of lading and promissory notes, for instance – on the same legal footing as their paper equivalents. Together with improving supply-chain efficiency throughout the economy, the law also paves the way toward a blockchain-backed future.

The New Arbitration Law in 2015 introduced UNCITRAL’s model law on international commercial arbitration into the Bahrain legal system, applying it to all arbitration cases, whether or not the arbitration takes place in Bahrain or abroad.

These are but a few of the reformations flowing down from Bahrain’s vision 2030, and the breakneck pace at which the Vision is being implemented is largely welcomed by the in-house community.

‘It gets difficult, keeping abreast of the legal changes in Bahrain, but business by and large understands the necessity. The changes that have been made have, to my knowledge, all been necessary and will, I think, be very positive for Bahrain,’ says one general counsel for a private investment fund in Bahrain.

Zabar is similarly optimistic: ‘In the next five years, the ever increasing prevalence of legal tech, and the continued roll-out of groundbreaking initiatives and laws and regulations governing electronic transactions and digitisation – as a result, Bahrain will continue to be a unique destination to attract foreign direct investment and sponsor business growth in the region.’

There are still creases yet to be ironed out. According to the World Bank, Bahrain ranks 62nd out of 190 countries in its 2019 Ease of Doing Business rankings.

‘One problem which we see is lack of precedence on basic matters,’ explains Mehta. ‘If the authorities are not very clear, then it can hinder business. They need to create that clarity across the authorities as well as across the entities or organisations in order to ensure the smooth implementation of such laws. It creates difficulty.’

One example that Mehta gives is the country’s labour laws relating to annual leave: a new law introduced in 2012 increased the minimum annual leave entitlement to 30 days, but a lack of clarity on whether this meant working days or calendar days left businesses in a state of confusion until further clarity was provided.

‘The company needs one answer. They need to know what they have to do. That is a challenge which an in-house counsel will face every day, and we have to come up with our right interpretation, what makes sense for the company, so we have to move ahead regardless,’ he says.

‘From the regulatory perspective, I think they still need to evolve quite a lot when compared to other developed or developing nations.’ n

I believe that in-house legal personnel now have to be a business partner, and not just a legal adviser. I try to partner with each department and establish good relationships with each stakeholder, be it internal departments or external parties – which include regulators, investors and vendors. Because everyone is a partner, without everyone’s support we will fall. So it’s important that everyone is speaking the same language and has the same objectives. We have to ensure stakeholder management and that is where I try to get buy-in from everyone and, accordingly, provide a solution that doesn’t create any unnecessary hassle for them, while also protecting the company.

In previous roles, I was doing standard commercial work, but it was mostly investment on the private equity side and therefore we were dealing with the Cayman Islands and private equity transaction documents. When I moved to APM Terminals, I had to deliver an IPO in a very short span, which is a different market all together – dealing with capital markets and so on. But getting to grips with a new set of laws was an exciting challenge.

Overall, my transition was fascinating, because once you get comfortable in a role, the excitement is gone. But, fortunately, that is where in-house legal roles usually get more and more exciting – every day is a new day. APM offers another challenge – being part of an international group. Being based in 200 countries, it did mean that it was a challenge to integrate their international policies within the APM brand locally – but it was one I felt I was able to rise to.

Also unique was the fact that the APMT brand had a very fresh legal department – it was only two years old. Before that, there was no legal department in APMT per se. APMT Bahrain has over 500 employees, so to establish the department and the right documentation across the different segments was in itself a great learning experience, and has developed me into a better professional.

In setting up the legal department here, the structuring was really a good experience in terms of deciding how and what we should do, what kind of communication we had with each department, and what kind of role we should play in helping each department.

In terms of supporting investment, I think Bahrain will succeed faster and faster. They have actually liberalised quite a lot of commercial laws and requirements in particular. For example, earlier, the minimum capital requirement for any small entity to be incorporated was 20,000 BD, which equates to around $55,000. Now, they have reduced this substantially to $300.

From a regulatory perspective, I think Bahrain still needs to evolve quite a lot when compared to other developed or developing nations – like for example, India, which has a robust regulatory environment or Europe, where they have a more robust regulatory environment still. But Bahrain is going in the right direction, at least. I would say they are getting closer to most developed regulatory environments, but it still needs some work. n

I underwent my higher education in London, before I moved into private practice briefly, then onto an in-house role in commercial banking. I acted as in-house legal counsel at one of the biggest banks in the region (Ahli United Bank). I was also the legal counsel for one of the largest Islamic investment banks in the region (GFH Financial Group formerly known as Gulf Finance House). I have over 10 years’ experience in banking overall. That is when I moved to BFC Group Holdings as group general counsel and board secretary.

At BFC Group Holdings, we are the holding company for (among others) Bahrain Financing Company (BFC) which is the largest exchange, global remittance and wholesale banknote trading company in Bahrain.

My day-to-day challenges include adapting my approach to advising the business in a way which promotes and facilitates achieving its commercial and strategic objectives, while also making sure that it is protected from all legal or reputational risks which could affect any of its business or operations.

Bahrain’s GC network is a vibrant community, with a range of opportunities for networking, connecting, and sharing experiences and ideas. Bahrain is unique, due to its small geographical size and its important role in the region as a financial and commercial hub. As a result, the depth of international exposure you experience as a legal counsel in Bahrain is a great opportunity.

Bahrain is often at the forefront of adopting international best practices. Recent examples include being the first in the region to introduce the regulatory sandbox for fintech products, creating one of the first fintech hubs in the region, introducing personal data protection laws and groundbreaking electronic transaction laws. Therefore, the unique challenge is being able to navigate the ever changing legal and regulatory landscape; however, as with every unique challenge, it is also a unique opportunity.

Historically, it is not very common for large financial institutions to have their general counsel serve as board secretary, as it is difficult to find someone who is able and experienced enough to perform both roles. However, in recent times, I have seen it slowly becoming more and more common as organisations also start looking at reducing cost. It makes it slightly harder to achieve your goals on decreasing budgets; however, we are making every effort to adapt to this, as it looks like it will be a continuing economic trend in the region.

Bahrain is unique due to its small geographical size and its important role in the region as a financial and commercial hub. It is ever evolving, especially with the introduction of disruptive technologies. However, Bahrain is always looking to take a welcoming stance on these technologies and adapt to add value to the country, and simplify or foster frictionless transactions while promoting business growth. n

Since its inception in 2006, the Central Bank of Bahrain (CBB) has relentlessly worked towards maintaining the monetary and financial stability in the Kingdom of Bahrain.

The CBB facilitates market innovation and encourages the use of training and technology to enhance the competitiveness in Bahrain’s financial sector.

One of the key recent developments in the financial sector has been the establishment of the Fintech & Innovation Unit by the CBB, which is dedicated to ensuring the best services to individual and corporate customers in the financial services sector by nurturing FinTech and innovation. The CBB’s FinTech & Innovation Unit is also responsible for the approval process to participate in the regulatory sandbox, supervision of authorised sandbox companies’ testing progress, monitoring technical and regulatory developments in FinTech – both regionally and internationally – in addition to taking the lead on strategic FinTech initiatives

The regulatory sandbox is a key tenet of this strategy and will allow FinTech firms and digitally focused financial institutions around the world to test and experiment with their banking ideas and solutions. The regulatory sandbox is a virtual space for both CBB-licensed financial institutions and other firms to test their technology-based solutions relevant to FinTech or the financial sector in general.

As part of the Global Financial Innovation Network, the Central Bank of Bahrain is inviting applications from firms wishing to test innovative financial products, services or business models across more than one jurisdiction.

Through initiatives like the regulatory sandbox, Bahrain has quickly become the Fintech hub of the Middle East. Bahrain FinTech Bay is the leading FinTech Hub in the Middle East and Africa. This is MENA’s most dynamic and diverse FinTech network, which provides a dedicated FinTech co-working space, with state of the art meeting rooms, innovation labs, acceleration programmes, curated activities and educational opportunities.

The CBB is continuously introducing initiatives to provide the right mix of policies and products to enhance the activity, funding, quality, and competitiveness of financial sector services. As a result of such initiatives, startup technology businesses, as well as leading-edge technology businesses are attracted to Bahrain as a domestic and regional base to pursue their FinTech strategies. This reflects positively on the availability of financial support services and thus, on the financial services sector in Bahrain.

A country mired in political football, Iran is still finding its feet again following years of tumult. With investors collectively holding their breath as the latest skirmish between the USA and Iran plays out, the country’s prospects for economic development are in a holding pattern. But behind the political theatre lies a country well placed to carve its own path to prosperity thanks to an enormous and highly educated population, robust economic and legal infrastructure, and a wealth of natural resources – all factors which, in the absence of political uncertainty, should be more than enticing to investors around the world.

Sanctions

Iran counts itself among a number of countries hit with targeted sanctions from the United States. At the heart of the current slate of sanctions is Iran’s insistence on pursuing a uranium enrichment programme, a move that some in the international community fear is serving as a precursor to the development of nuclear weapons. Negotiations between Iran, the US and the UN led to the limiting of Iran’s nuclear programme in exchange for reduced sanctions. But the so-called US-Iranian nuclear deal was famously collapsed by Donald Trump withdrawal of the United States from said deal and the reimposition of sanctions. The sanctions affect Iran’s automobile, gold and steel industries, as well as (most importantly) its oil industry.

While the sanctions, at least in the US, have been hailed as a political success and devastating to Iran’s economic capabilities, the reality is more nuanced. The chief effect of the sanctions it that the country’s oil output has declined, which has reduced the government’s revenues and, by extension, its ability to invest in much-needed infrastructure. Long touted as a ‘resistance economy’, Iran is undoubtedly feeling the pressure, though one only has to look as far as the other targets of the United States’ financial wrath – the likes of Venezuela – to see how much worse things could be. Still, the World Bank has ranked Iran towards the bottom of its projected economic growth rankings for 2019 – only being saved from the very bottom by Nicaragua – and the price of basic items has, in some cases, tripled in the past year, providing further cause for investor anxiety, as social discord can only increase under such conditions.

The effect of the older sanctions has been to stymie the overall development of Iran, at a time when other emerging markets have been able to pull ahead and enter a class of their own. Majid Sadjadi Nejad, founder and CEO of Iran investment firm Rostam Capital, compares Iran to another one-time emerging market: ‘China is celebrating its 70th year now, but until 20 years ago they were way behind the Iranian economy if you look at it as an investment destination. For Iran, it’s just a question of getting it done and accelerating it.’

The degree to which these latest sanctions have affected the Iranian economy depends on who is asked, but the indefinite nature of the sanctions and an apparent diplomatic stalemate between Iran and the US has investors holding their breath, awaiting some signs that the country is past the threat of further instability or worse, war.

‘Clearly, it’s a difficult market,’ says Richard Adley, CEO of First Frontier Capital. ‘There’s no way of getting around it – the sanctions aren’t making things any easier and yes people are turning away, but equally, that doesn’t mean there aren’t opportunities – companies still need financing, and the economy still goes on. Yes the currency is devalued, but the reality is it has stabilised and, for the moment, it isn’t getting worse. And it’s probably not going to get worse – it’s just a matter of how quickly it’s going to get better.’

Not like other economies

Like many economies in the region, Iran’s is largely built on oil and gas production – but the specifics of its construction mean that Iran may be better positioned than its close neighbours to take advantage when the doors to foreign investment finally open fully.

‘People always think of the country as oil-dependent, but around 70% of the GDP is non-hydrocarbon,’ explains Sadjadi. ‘The majority of the government revenues are hydrocarbon, so there’s always confusion. But it is a different economy to many of the others in the region – hydrocarbon is a minority part of it.’

It is this economic fact that has saved Iran from the fate of Venezuela, which is crumbling under US sanctions on oil due to the government’s reliance on oil exports for revenue.

Another factor that distinguishes Iran from past examples of emerging markets in the region, or current examples of emerging markets around the world, is that the country enjoyed a bustling economy long before the scandal and political animosity that has been present from the 70s onwards. Unlike others, there are decades of pre-established processes and infrastructure – physical and otherwise – to lean on.

‘Iran isn’t an emerging market – it’s a re-emerging market,’ says Sadjadi. ‘When we worked China, or countries in the former Soviet Bloc, you had to wait for industrial and economic infrastructure to be developed before you could do much. All of those exist in Iran – they just need to be brought up to international standards.’

‘You have foreign investor protections – legally, you’re very well protected,’ adds Adley. ‘It’s an economy and a country that is re-emerging, rather than emerging. It has had previous good relationships and development that has gone on, they have still maintained good relationships with parts of Asia and Russia.’

‘Some of the technology and technical infrastructure may be creaking at the seams or underinvested, but that’s more of a bandwidth problem rather than a functional, basic operational capacity.’

‘There are many enablers for the Iranian economy,’ argues Sadjadi. ‘It has 10% of the world’s crude oil reserves, along with gold, platinum, LNG – and all of this needs to be extracted efficiently. Iran had state-of-the-art technology 30 years ago, but very little new investment has been able to go into it because of the sanctions.’

It’s the holding pattern, imposed by the aforementioned sanctions and general uncertainty, which functions, in large part, as the true ceiling to Iran’s development in the coming years. While the UAE and Saudi Arabia are thinking about large-scale economic diversification and modernisation initiatives, Iran is still waiting to see how its complex diplomatic problems shake out before uniting behind a comprehensive vision for the future.

‘It’s very hard for them to have a long-term vision because they don’t even know where they are day-to-day or week-to-week. So you don’t have that big clear picture,’ says Adley.

Human capital

This uncertainty has meant that Iran has not enjoyed the influx of wealth and human capital into the economy that other Middle Eastern nations have; a factor that is economically limiting in and of itself. But, unlike certain other economies, Iran has a population of over 80 million, many of whom are highly educated – so there is already plenty for business to leverage off.

‘It’s a real economy,’ explains Adley. ‘80 million people with real domestic people – that 80 million is not like the UAE or Qatar, where it’s made up of expats. It’s a real, domestic, functioning economy. So there’s less of that need to follow the Saudiisation or Emiratisation that’s going on, because the nature of the demographics isn’t the same… it’s a real economy that functions and it has real exports and real production other than the hydrocarbon.’

‘The country needs to preserve its human capital,’ says Sadjadi. ‘It is one of the highest educated rates in the world, and much of that is in the science and tech areas. Ordinarily, you would need to wait a generation to produce that in a newly emerging economy, as opposed to Iran, which is a re-emerging one.’

Local human capital notwithstanding, there are things to be said for fostering a multicultural, international workforce.

‘The whole international business environment, it brings a lot of new learning,’ explains Mozhdeh Pourmand, managing partner at Andisheh Consultancy Firm in Tehran. ‘It’s not only technology – it’s the know-how: how to work, how to improve, how to develop. I have seen the difference – especially now I’m working with a state-owned holding and at the same time working with multinational companies – and I can see the difference in every inch of the business they are doing: the efficiency, the integrity, the transparency of the work. So as a personal wish, I think that would be a door for improving the whole country’s economy.’

Under sanction

In Iran, having a permanent in-house counsel isn’t common. Outside of the large, state-owned enterprises, many businesses choose to rely solely on external advice, or even make use of external in-house specialised advisory services. Mozhdeh Pourmand is the managing director at Andisheh Consultancy Firm, which provides external, in-house legal services.

‘In most companies, they do not have very much in the way of a legal department. The contract is usually handled by the procurement department, so unless they face really big issues, they do not have that intention to go to a lawyer. But, there is an exception – the state-owned companies, they do have an in-house department, all of them,’ she says.

‘I think it is because of the size of the businesses and the nature of the work they are handling. They’ve got the budget from the state and there are a lot of internal audits that come with that – one of the requirements for them is to have a legal department to be able to respond and cooperate with the auditing.’

Given the kinds of issues likely to be faced by companies operating in Iran, this may be surprising – especially given the increasing extra-territorial reach of anti-corruption, anti-bribery and data protection regulations, as well as the much-needed modernisation of legal infrastructure that is somewhat underway, but expected to boom if sanctions are lifted and Iran’s economy begins to improve.

‘There are increasing regulations in each sector, but that has a cost – so you have to see an economic benefit to that cost,’ says Sadjadi.

‘That’s what is being held up. Everyone knows it has to be done – the regulatory infrastructure has been out of touch for the past 30 years compared with international ones – so there’s a lot of catching up to do on the legal structures enabling trade, foreign ownership, and various things like protection of foreign investments.’

Given all of this, an underdeveloped in-house ecosystem is not ideal. Pourmand sees a shift on the horizon, however, one which she hopes will see increasingly educated and innovative law graduates push the profession in Iran forward.

‘One thing that comes first to my attention is the change in the fresh graduates becoming junior lawyers. In contrast with my time, many fresh graduates know English, so they try to use English and Arabic together with use of technology to access new concepts of law and, usually, these new legal concepts are linked to the business,’ she says.

‘What I am hoping and what I am seeing is that, maybe in the next ten years, we have more attorneys whose state of mind is more similar to the European lawyers or even others around our region – not that old-fashioned litigator working solo and not pursuing any self-improvement.’

Still, as with much of the business world in Iran, such change is stymied by the same factors: lack of maturity in the business environment, together with geopolitical uncertainties.

When to strike

While sanctions on Iran damaged the economic outlook for the country (the World Bank’s forecasted growth for Iran was revised down to -4.5% after the US reimposed sanctions), there is a sense that these will not last forever. If the pre-sanctions growth estimates are any indication, when the day comes that the sanctions are lifted, there are blue skies ahead for the country. Because of this, optimism is easy to find.

‘Firms who are already into Iran and that wanted to disengage, generally have disengaged a long time ago, and it was almost a knee-jerk decision. We certainly see that the rate of attrition is slowing down now, so it’s down now to a trickle of people leaving rather than a flood and, at the same time, people are now more receptive to the idea of business. So the mood has switched from negative to neutral, going toward the more positive end of neutral,’ says Adley.

‘Emerging markets, by their nature, are volatile. Historically, in emerging markets there was a continuous revolution or political changes and what you’re seeing is a certain stability, even if it’s autocratic rule, but at least the stability you’re getting. Whilst it may not be attractive to us in the West or what developed markets would call an ideal scenario, at least some of these markets have stability. And, with stability, you have a clear investment horizon.’ n

I’m one of the shareholders and partners at Andisheh Consultancy, a consultancy firm giving advice to both Iranian and multinational companies that are working in Iran. I work with companies that usually don’t have an in-house legal function, so we fill the role of in-house but on an external contract, doing the day-to-day business, general legal advisory, contract review, corporate restructuring – everything that an in-house lawyer would do for them.

In Iran, it’s not common for companies to have an in-house legal function – even for the big companies. Contracts are usually handled by the procurement department, so unless they face really big issues, they do not have that intention to go to a lawyer. But, there is an exception: the state-owned companies – they all have an in-house legal function. Because of the size of them, as well as the nature of the business they are handling, they are an exception. They receive the budget from the state to do so, but they also have to deal with internal audits by the government and it is a requirement that they have a legal department to be able to respond and cooperate with this.

When you are in-house, you become an employee, so there are other aspects of an employee-employer relationship – whereas working as I do, in my opinion, has a mutual benefit for both sides. The company does not have to have the financial burden and the overhead for having a full-time employee, so they will not have to deal with the employment contracts, social security obligations and so on, but at the same time, they are receiving an adviser. I think the best terminology for what we are trying to present to the clients, would be like an externalised or a shared service centre.

We are trying to match the culture in our country to the standards that the FCPA or the UK Bribery Act set out. That does tend to require a huge effort and time investment, in terms of training and investigating, to build up that culture.

I think I can say, in a very general way, attitudes do come from the culture of the region rather than the company. So I have experienced the ‘senior’ approach from companies based in Europe towards using in-house counsel, and their approach to any issue in disputes is more or less the same. Compared to our neighbouring countries, you see that the business culture is very much linked to the region they are coming from.

Arbitration is a new concept in Iran. I myself try to advocate that, and I try to promote it in the contracts. Arbitration is especially easier when one of the parties is not Iranian because, for them, it has a very significant privilege: they can choose their own arbitration rules and their own place of sitting, so for them it’s already very much accepted. But, for the local companies, the Iranians, we try to point out different reasons why the arbitration can be a better replacement for litigation.

For litigation, companies really try and see if there is any other settlement option, because it is time consuming, it’s expensive, and you can never predict the results – especially if the case is blurry; you cannot give clear advice on that. So they will try to make a settlement; if there is a debt collection, they will prefer to agree to receive it partially in cash rather than going through court procedure, even if it means they might receive it in four or five years. n