Reconsidering the Role of Stabilized Contracts in Economic Governance: A Novel Approach to Law and Legislative Policymaking

Abstract

The present study aims to reconsider the role of stabilized contracts in economic governance from a novel perspective on law and legislative policymaking. The research employs a descriptive-analytical method, analyzing data with reference to domestic legal instruments, international arbitral practice, and recent theoretical scholarship. The findings demonstrate that absolute stabilization clauses are clearly incompatible with fundamental principles of Iranian administrative law, including the rule of law, separation of powers, and the principle of alignment between the public interest and the exercise of public authority; consequently, such clauses are subject to fundamental legal objections. By contrast, the economic equilibrium clause was identified as the most effective mechanism, as it preserves national sovereignty and the state’s legislative authority while managing investors’ political risks through compensation or the adjustment of contractual obligations. The study proposes that contemporary economic governance requires a transition from static models toward a framework of dynamic stability, in which stability is understood as predictability and effective risk management rather than rigidity in the face of change. Furthermore, the use of smart technologies to enhance transparency and facilitate continuous dialogue is emphasized as an important safeguard for the implementation of this framework. The study offers policy recommendations for designing more flexible contracts that are responsive to contemporary requirements, thereby facilitating foreign investment while simultaneously safeguarding the public interest and national sovereignty.