Review of the President’s Legal Deputy Document

Challenges in Implementing the “Legal Guide for Economic Actors” Amidst Conflicting Regulations

The document titled “Legal Guide for Economic Actors in Facing Regulations,” recently issued by the Legal Deputy of the Presidency, is introduced as a step toward supporting economic actors and enhancing regulatory transparency. However, in practice, it has faced criticism. This document has failed to adequately address challenges such as jurisdictional overlaps and limited access to legal information. Topics like cryptocurrencies exemplify the complexities of implementing this guide due to unclear oversight and overlapping authorities, continuing to create confusion for stakeholders in this sector.

On 30/07/1403, the Legal Deputy of the Fourteenth Government issued a document titled “Legal Guide for Economic Actors in Facing Regulations,” addressing all ministries, institutions, state-owned companies, provincial administrations, and other executive bodies. From a legal standpoint, this document does not introduce new provisions but compiles and announces the rulings of previous laws and regulations in fourteen clauses. However, the publication of this document can be analyzed in light of the government’s and the Legal Deputy‘s stance toward economic actors. The document’s clauses are as follows:

1. The right to be informed about regulatory authorities and their jurisdiction.
2. The right to access regulations.
3. The right to distinguish between valid and invalid regulations.
4. The right to regulatory transparency.
5. The right to request clarification and interpretation of regulations.
6. The right to propose, amend, repeal, or enact regulations related to the business environment.
7. The right to invite government officials and their obligation to attend meetings.
8. The right to participate in the drafting of regulations.
9. The right to access draft regulations before their approval.
10. The right to disregard unpublished regulations in the business database.
11. The right to protect acquired rights against new regulations.
12. The right to a reasonable grace period to comply with regulations after publication.
13. The right to report regulations that contradict laws.
14. Monitoring and evaluation.

A review of legal documents indicates that legislators have attempted to establish provisions within various laws and regulations to ensure participatory, transparent, fair, and equitable regulation-making. While this shift in legislative approach is commendable, the document has fundamental critiques, which will be examined further. Another critical issue is the organizational culture prevailing in executive bodies, where personal interpretations of laws and regulations often take precedence over the actual provisions. In practice, law enforcement is largely dependent on the opinions and interpretations of executive officials. Additionally, legal procedures to challenge the personal decisions and interpretations of these officials are so time-consuming and costly that individuals are often discouraged from pursuing them, rendering any resulting outcomes ineffective or futile.

In the legal system of the Islamic Republic of Iran, where the Islamic Consultative Assembly (Parliament) has constitutional limitations as a legislative body, the ambiguity regarding the jurisdiction and authority of regulatory institutions is an inevitable issue. Currently, entities such as the Supreme Council of the Cultural Revolution, the Supreme National Security Council, the Supreme Economic Coordination Council of the Heads of Government Branches, and the Expediency Discernment Council effectively legislate. The Parliament cannot repeal, amend, or modify its resolutions, and the Administrative Court of Justice does not accept annulment cases for some of these bodies’ decisions.

The multiplicity of regulatory bodies has resulted in various entities issuing regulations on the same subjects, complicating the determination of jurisdiction and authority. A controversial example is the establishment of the Regulatory Organization for Audiovisual Media in Cyberspace (SATRA) and its legal authority to oversee VOD platforms.

Another notable example of conflicting responsibilities and powers is evident in cryptocurrency regulations. While the Judiciary considers the Central Bank of Iran responsible for regulating cryptocurrencies, and the Chief Justice has repeatedly emphasized the Central Bank’s duty in this regard, the Secretary of the Supreme Council of Cyberspace insists that any cryptocurrency regulation must be approved by the Council.

Mohammad Javad Asadpour, CEO of Nik Pardakht, commented in Blockchain Research Journal: “Supervision is necessary, but parallel activities by different authorities determining policies for a single business create confusion and discourage entrepreneurs.”

Abbas Ashtiani, Chairman of the Blockchain Commission of the Iranian Computer Trade Organization, also addressed the issue of unclear jurisdiction among different entities in an interview with the Blockchain Research Journal: “Over the years, I have gained extensive experience in financial technology, especially blockchain and crypto-assets, revealing severe challenges in defining the jurisdiction of relevant institutions. Many times, the exact boundaries of authority among institutions were unclear, leading to confusion. For example, due to the presence of the term ‘cryptocurrency’ in this field, various governmental bodies expected the Central Bank to regulate it. However, many of these expectations fell outside the Central Bank’s legal authority, leading to unfair criticisms against it. Additionally, we have witnessed extensive parallel activities mainly caused by unclear legal jurisdictions. The debate over defining institutional jurisdictions has always been a serious challenge, resulting in uncoordinated and opaque actions in this domain.”

Even if different authorities declare their jurisdiction over regulatory matters in the business regulation database, conflicts in jurisdiction remain unresolved. Moreover, such declarations may not always be legally valid, further exacerbating confusion among business operators.

Setareh Ayoubi, a senior attorney and business legal consultant, believes: “The multiplicity of licensing and supervisory authorities has led to parallel actions in the business sector. This means businesses must obtain multiple permits, while judicial bodies lack sufficient information on the matter. It seems to be the responsibility of the legislature and the Legal Deputy of the Presidency to consolidate laws and regulations and resolve jurisdictional conflicts, ensuring full transparency.”

Access to and awareness of regulations is one of the challenging issues in the legal system of the Islamic Republic of Iran. The persistence of the “current sensitive situation” and the dominance of a security-oriented approach over the economic space and information dissemination have led governing bodies to adopt a conservative stance towards publishing information and facilitating citizens’ access to regulations. The Law on the Publication and Free Access to Information also contains multiple ambiguities and lacks sufficient enforcement guarantees, to the extent that the absence of an independent body separate from the government and governing institutions has rendered this law ineffective.

Currently, multiple institutions enact resolutions that create rights and obligations for citizens, but due to the confidentiality of these resolutions, access to them is practically impossible. Moreover, even filing complaints with the Administrative Justice Court or other legal authorities to annul these resolutions is not feasible.

On the other hand, accessing such confidential documents may have criminal consequences, creating a flawed process that allows economic decisions to be made behind closed doors. For example, it has been reported that the confiscation of cryptocurrency mining devices and the failure to lift their confiscation over a certain period was based on a confidential resolution issued by one of the high-level institutions. Abbas Ashtiani has shared his experiences regarding access to and awareness of regulations, highlighting the sudden restrictions imposed on financial markets. He explains that these actions are attributed to the resolutions of the Central Bank’s executive board or the Money and Credit Council, access to which is impossible.

Another ambiguous aspect of this document is the authority of the National Legal and Regulatory Information Base at the address dotic.ir. According to Article 30 of the Law on Continuous Improvement of the Business Environment, enacted on 16 Bahman 1390 (February 5, 2012), with subsequent amendments and additions, one year after the enforcement of this law, regulations are only valid if registered in the National Legal and Regulatory Information Base. Based on Resolution No. 17976 of the Council of Ministers, effective from 28 Ordibehesht 1402 (May 18, 2023), the enforcement of regulations is contingent on their registration and publication in the mentioned base. Additionally, Article 6 (Repeated) of the Anti-Smuggling Law also anticipates the creation of a “Commercial Regulations System,” indicating the legislator’s interest in establishing such a system.

Interestingly, the amendment to the Anti-Smuggling Law was enacted on 10 Bahman 1400 (January 30, 2022), and the Law on Facilitation of Business Licensing was enacted on 24 Esfand 1400 (March 15, 2022), meaning such provisions were adopted within less than two months. According to Note 2 of Article 6 (Repeated) of the Anti-Smuggling Law, “After the operation of the system mentioned in this article (Commercial Regulations System), the enforcement of commercial regulations is contingent on their notification in this system and public dissemination, and for laws, it is subject to compliance with the provisions of the Civil Code. Religious regulations are exempt from this article, and its notes, and their enforcement in commercial matters does not require inclusion in the system. Once the system becomes operational, the Ministry of Industry, Mines, and Trade is required to announce its availability through the Official Gazette.”

How should this apparent contradiction be resolved? Are commercial regulations enforceable after being announced in the “Commercial Regulations System” and publicly disseminated, while other regulations related to the business environment are valid only after registration in the National Legal and Regulatory Information Base? If so, what distinguishes commercial regulations from those related to the business environment? Moreover, this base is frequently inaccessible to users who experience various technical issues that require updates.

The right to be informed about valid and invalid regulations can be equated with the right to access and be aware of relevant regulations, which is only realized through proper access. Abbas Ashtiani describes the mandatory 72-hour retention of users’ first purchase on cryptocurrency exchanges as one of his bitter experiences. This restriction is announced by the Cyber Police of the country. However, there is legal ambiguity regarding the Cyber Police’s authority to impose such a requirement, and the notification and awareness process has not been conducted in accordance with the law. According to Ashtiani, “This requirement was interpreted and enforced differently by various institutions. In some instances, it was declared applicable to all users, in others, it was limited to the first transaction, and in some cases, it was extended to all transactions. This inconsistency in interpretation and enforcement indicates serious distortion among law enforcement bodies.”

Among the most critical provisions of this document are “the right to preserve acquired rights of citizens against new regulations” and “the right to have a reasonable period to comply with a regulation after its publication.” These rights have become more apparent recently with the closure of cryptocurrency payment gateways, an issue protested by digital economy activists, including Hossein Selahvarzi, the head of the National Entrepreneurship Organization of Iran, who addressed this concern in a letter to the President.

Reza Ghorbani, the head of the Fintech Commission for the fifth and sixth terms of the Tehran ICT Guild Organization, stated: “I was pleased to see this guide, yet saddened that I had not been aware of these matters until now. While I had scattered information on these issues, I had never seen such a comprehensive and structured document. Given my activities in the banking sector, one area that requires more transparency is the matters that do not fall under the jurisdiction of the Presidential Legal Affairs Department and remain unclear to me. The question that arises here is: despite the Central Bank’s contradictory approach in this regard, what responsibilities does it have in setting, notifying, and enforcing regulations?”

It should be noted that the legal provisions and regulations referenced in the document from the Presidential Legal Affairs Department are mandatory, meaning all governmental organizations and institutions, including the Central Bank of the Islamic Republic of Iran, are obliged to comply with them unless exempted by other laws. For example, Article 11 of the new Central Bank Law, enacted on 30 Khordad 1402 (June 20, 2023), defines disclosure and confidentiality rules for the Central Bank. Therefore, the Central Bank has its own specific regulations in this area. Moreover, the Central Bank has blocked cryptocurrency payment gateways based on Article 42 of the Central Bank Law. However, while referring to the law may be correct, its implementation must consider aspects such as “the right to preserve acquired rights of citizens against new regulations” and “the right to have a reasonable period to comply with a regulation after its publication.”

Final Words

Ultimately, while publishing a guide for economic actors on dealing with regulations is a positive step, it is not sufficient. Violations of these rights should be pursued by the Presidential Legal Affairs Department in various forums. Furthermore, economic actors are not only unaware of their legal rights but also lack knowledge of the legal methods to challenge unlawful actions by governmental bodies and institutions. Instead, they often react through formal and informal lobbying or media activities.