Feasibility of Bringing Counterclaims in Arbitration-Based Dispute Resolution: An Analysis with Reference to International Instruments and Practice

Abstract

Arbitration, as one of the alternative methods of dispute resolution, has gained widespread acceptance in the field of private law—particularly in international commercial relations—due to its private nature, flexibility, and in some cases, procedural efficiency. In the course of arbitral proceedings, the respondent may raise claims against the claimant which, from a legal perspective, may be characterized as counterclaims. While counterclaims enjoy a clear and well-established legal status in judicial proceedings, their position in arbitration is considerably more complex. This complexity arises from the fact that the arbitral tribunal’s jurisdiction is confined to the scope defined by the arbitration agreement, and the introduction of new claims may fall outside this agreed framework. Employing a descriptive-analytical methodology, this article examines the feasibility of bringing counterclaims in arbitral proceedings, with a focus on the Iranian legal system and international arbitration rules. The findings indicate that, under Iranian law, despite the absence of an explicit statutory provision addressing counterclaims in arbitration, it is possible—by relying on general principles governing jurisdiction and the unity of the cause of action—to accept the admissibility of counterclaims in many cases. In international arbitration law, counterclaims are likewise regarded as permissible, provided that they are closely connected to the principal claim and are brought within the jurisdiction of the arbitral tribunal. Finally, by identifying existing gaps in the Iranian legal framework, the article proposes recommendations for improving arbitral practice and legislative reform.