Tehran, Iran – India and Iran have reportedly reached an agreement on the legal terms for the development of the deep-sea Chabahar Port in southeast Iran. The agreement marks a breakthrough in their long-standing negotiations and could potentially pave the way for a long-term deal between the two nations.
The breakthrough was achieved during discussions between India’s Prime Minister Narendra Modi and Iran’s President Ebrahim Raisi at the recent BRICS Summit in Johannesburg. Both sides have agreed to expedite infrastructure collaboration, particularly emphasizing the Chabahar project. They also engaged in dialogues concerning regional developments, including the situation in Afghanistan.
The strategic Chabahar Port has been a focal point of cooperation between India and Iran for several years. The two countries have been working on a comprehensive agreement that would grant India the rights to develop the Shahid Beheshti Terminal at the port. This agreement is reportedly on track to be finalized before the Global Maritime India Summit 2023, scheduled for October in New Delhi.
An obstacle that had hindered the conclusion of a long-term contract was a dispute over the arbitration clause. However, recent reports indicate that India and Iran have overcome this hurdle by agreeing to resolve potential disputes through arbitration based on the rules set forth by the UN Commission on International Trade Law (UNCITRAL). This compromise is expected to provide a framework for settling disputes between users and operators of the Chabahar Port, eliminating the need for commercial foreign arbitration.
Prior to this breakthrough, India and Iran had been renewing one-year contract extensions for the development and operation of the Chabahar Port terminal. India’s insistence on a more extended commitment from Iran is rooted in its desire to provide greater assurance to potential investors. As part of the ongoing negotiations, a delegation from India’s Ministry of Port and Shipping is scheduled to visit Iran in September. Their objective is to finalize the terms of engagement and the specifics of the arbitration process.
The culmination of these negotiations is poised to bolster the economic ties between India and Iran, enhance regional connectivity, and potentially open up new avenues for investment and trade.