India and Iran reached an agreement on the international arbitration clause in regards to the Chabahar Port disputes

India and Iran have a long history of diplomatic and economic ties. India has an interest in developing the Chabahar port in Iran, which provides access to the Indian Ocean while bypassing Pakistan, which is currently blocking India and Afghanistan’s commercial access to each other. India’s plans to invest in and develop the port have been stalled for a while due to various disagreements, specifically over an arbitration clause.

Recently, India and Iran have extended their Chabahar port development contract for one year. However, India has asked Iran to commit to a long-term pact, providing the necessary assurance for India’s investment and development plans. This long-term contract can be automatically renewed for another 10 years. India and Iran have been struggling to reach a mutual understanding when it comes to the arbitration clause in the contract. Iran has previously resisted clauses on international arbitration due to its constitutional limitations on litigating disputes in foreign courts.

To ensure the success of the Chabahar project, India and Iran are expected to reach a settlement that would allow cases of potential disputes to be taken to international arbitration courts settled in neutral locations such as Singapore and Dubai. India had previously suggested that arbitration matters be heard in Dubai or Mumbai. This proposed clause would have to be discussed and mutually agreed upon by both sides.

It is clear that reaching a successful conclusion to the contract negotiations is paramount for India and Iran to reach their respective objectives. A ten-year contract would ensure that India’s investment and development needs are met for the long-term, while providing Iran the necessary protection from external arbitration. It is hoped that both sides can find the right balance of mutually beneficial principles that would ensure a long-term partnership between the two countries.

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