Legal Requirements in Electronic Commerce Between Iranian and Chinese Companies

Over the past decade, electronic commerce has become one of the principal forms of international trade. Iran and China—two dynamic economies within the Eurasian region—have rapidly transitioned their commercial relations from traditional frameworks to digital environments.

Although technology now enables fast and efficient communication between companies, the legal and regulatory requirements governing electronic commerce remain complex and multilayered.

Understanding these requirements is essential for Iranian companies engaged in export, services, or collaboration with Chinese partners, in order to prevent legal, financial, and contractual disputes.

Legal Framework for Electronic Commerce in Iran and China

Electronic commerce between companies is not merely an economic or technological activity; it is fundamentally based on a set of legal, technical, and regulatory rules, which may differ from one jurisdiction to another.

For Iranian companies intending to engage with Chinese partners in digital environments, a clear understanding of the legal framework of both countries is the first step toward avoiding legal risks, contractual conflicts, and enforcement problems.

Primary Laws in Iran

The legal framework for e-commerce in Iran rests upon three main categories of regulations:

The Electronic Commerce Law (2003)

This law serves as the cornerstone of virtual commercial activity in Iran and establishes several key principles:

Validity of electronic data and documents: Electronic data (including emails, online messages, and digital contracts) are legally equivalent to paper documents, provided they meet statutory conditions.
Electronic signatures and digital authentication: Valid electronic signatures or certificates must be issued by intermediate certification authorities recognized by the E-Commerce Development Center of Iran.
Consumer rights in online transactions: Vendors are obligated to provide complete product or service information before any transaction, respect the consumer’s right of withdrawal, and avoid deceptive or misleading advertising.
Data confidentiality: Any unauthorized use or disclosure of personal or commercial data is prohibited.
Executive Bylaw on Electronic Signatures (2007)

This bylaw governs the issuance, validation, and revocation of digital signature certificates.
Companies intending to execute contracts digitally must use a certified electronic signature for such contracts to be legally enforceable.

Complementary Regulations

Several other sets of rules directly affect online activity:

The Computer Crimes Law (2009): Establishes criminal provisions against unauthorized access, electronic forgery, and online fraud.
Tax regulations on digital activities: The Iranian Tax Administration considers online sales or services subject to value-added tax (VAT), except in cases of foreign currency exemptions.
Personal Data Protection Draft Bill: Although not yet enacted as a standalone statute, principles of privacy protection and data transfer are being developed through directives of the Supreme Council of Cyberspace and judiciary initiatives.

In general, Iran’s e-commerce legal regime is based on the principles of equal validity between electronic and traditional documents, transactional transparency, and consumer protection.

Primary Laws in China

China’s e-commerce legal system is extensive, multilayered, and continuously updated—particularly to regulate major online platforms and protect user data.
Iranian companies intending to operate in or with China must be familiar with the following key laws:

E-Commerce Law of the People’s Republic of China (2019)

This is China’s first comprehensive legislation on digital commerce, applicable to all online platforms and sellers, both domestic and foreign. Its main provisions include:

Registration and identification of online sellers: All business entities in China, including foreign companies, must register officially with government systems and obtain relevant permits.
Platform liability: Online platforms (such as Alibaba, JD.com, etc.) are responsible for preventing the sale of illegal goods and ensuring the confidentiality of user data.
Transparency in information and pricing: Sellers must provide accurate, complete, and non-misleading information about products and services.
Dispute resolution and consumer protection: Platforms must establish effective mechanisms for complaint handling, refunds, and mediation.

Data Security Law (2021)

One of the strictest data security laws worldwide, it mandates that:

Companies classify their data based on importance (ordinary, important, sensitive).
Data related to national security or sensitive information may not leave Chinese territory without central government approval.
Breaches of data security may result in heavy fines or suspension of business operations.

Personal Information Protection Law (PIPL) – 2021

China’s equivalent of the EU’s GDPR, the PIPL applies to all companies—including foreign ones—that process Chinese users’ personal data. Under the PIPL:

Companies must obtain explicit consent from users before collecting or transferring their data.
Cross-border data transfer is permitted only after official security assessments and registration with supervisory authorities.
Foreign companies must appoint a local representative in China to liaise with regulators.

Other Supplementary Regulations

Cybersecurity Law (2017): Defines network security obligations and operator responsibilities.
Regulations on Cross-Border Data Transfer (2022): Establishes conditions for transferring data outside China.
Tax Regulations for E-Commerce (2019): Defines VAT and corporate income tax obligations for international sellers on Chinese platforms.

Comparative and Practical Considerations for Iranian Companies

China’s legal system is highly regulatory and enforcement-oriented, whereas Iran’s framework is more general and interpretive. Iranian companies must therefore comply precisely with China’s registration, licensing, and reporting requirements.
Data transfer from China is highly sensitive. Iranian companies engaged in software, digital services, or online education must avoid transferring Chinese user data abroad without official authorization.
Bilingual contracts (English–Chinese) are recommended. In case of disputes, designating a neutral arbitration center—such as the Iran-China International Arbitration and Legal Center—is the best option.
Tax and commercial registration on Chinese platforms are prerequisites for lawful activity; otherwise, accounts or seller pages may be suspended.

Contractual Requirements in Online Transactions

In Iran-China e-commerce, the online contract serves as the foundation of commercial relations.
Such contracts, regardless of digital form or geographic distance, are legally binding to the same extent as traditional agreements—provided legal and technical requirements for formation, signature, and recordkeeping are met.

The validity of an online contract depends not on its form, but on the authentication of parties, informed consent, and provability of obligations.

Validity of Electronic Signatures

Both Iran and China legally recognize electronic signatures, though structural differences exist between their systems.

In Iran

Under Articles 10 and 12 of the Electronic Commerce Law, a valid digital signature is enforceable if created through the Public Key Infrastructure (PKI) and issued by a certification authority accredited by the E-Commerce Development Center.
Any agreement executed via data messages that meets the general conditions of contract validity (capacity, consent, and lawful subject matter) has full legal effect.
In commercial disputes, data messages and digital signatures are admissible as evidence before courts or arbitral tribunals.

In China

Pursuant to the Electronic Signature Law (as amended in 2019), digital signatures are legally recognized.
Only signatures issued by licensed domestic certification authorities approved by the Ministry of Industry and Information Technology (MIIT) have full evidentiary validity.
Signatures generated through foreign or international systems (e.g., DocuSign, Adobe Sign) typically require supplementary validation documents.

Practical Recommendations

To mitigate legal risks, Iranian companies should:

Use digital signature systems compliant with Chinese standards.
Store encrypted and time-stamped copies of all signed documents.
Archive complete signature and transmission records for potential presentation in arbitration or litigation.

Contract Language and Dispute Resolution Jurisdiction

Given differences in language, legal systems, and evidentiary procedures, precise determination of the contract language, governing law, and dispute resolution forum is crucial.

Language of the Contract

It is recommended to prepare two official versions (English and Chinese), and where necessary, a Persian version for internal use.
The contract must specify which version shall prevail in case of interpretive discrepancies.

Governing Law

If the contract is performed in China, Chinese E-Commerce and Civil Law (Civil Code 2021) generally apply.
For reciprocal or online services provided from Iran, the parties may choose Iranian law or a neutral law (e.g., Swiss law).

Dispute Resolution

Arbitration is the most suitable method for resolving disputes because:

It is faster, more specialized, and confidential compared to court proceedings.
Arbitral awards are enforceable in China under the 1958 New York Convention, to which both Iran and China are parties.

Sample Arbitration Clause:

“All disputes arising out of or in connection with this contract shall be resolved by arbitration before the Iran-China International Arbitration and Legal Center in accordance with its arbitration rules. The arbitral award shall be final and binding upon both parties.”

Proof of Transactions and Service Delivery

A recurring challenge in digital trade is proving performance, payment, and delivery of goods or services—where traditional written evidence may not exist. To reduce risks, Iranian companies should observe the following:

Record and document all transactions:

- Every stage—from quotation to final confirmation—should be recorded with accurate date and time stamps.
- Emails, invoices, and payment receipts must be retained as admissible electronic evidence.

Use certified digital certificates and encryption:

- Certificates issued by recognized authorities (in Iran or China) ensure data integrity during transmission.
- Employ SSL/TLS encryption to prevent forgery or data tampering claims.

Define “delivery” precisely:

- The contract should specify whether delivery means file transmission, platform access, account activation, or buyer confirmation.
- Utilize automated delivery confirmation systems or buyer e-signatures upon receipt.

Maintain secure records:

- Store all payment, invoice, correspondence, and contract copies in retrievable electronic form.
- Such records serve as valid electronic evidence in arbitration or judicial proceedings.

Data Protection and Privacy in Iran-China Online Cooperation

The cross-border transfer of user and business data is one of the most sensitive areas of e-commerce law. Both Iran and China have established frameworks for data protection, though China’s regime is considerably stricter.

Chinese Legal Obligations (PIPL and Data Security Law)

Under these laws, any collection, processing, or transfer of personal data must:

Be based on explicit user consent;
Serve only the specific and disclosed commercial purposes; and
Obtain official security assessment approval before cross-border transfer.

Moreover, foreign companies operating in China or processing Chinese users’ data must:

Appoint a local Data Representative within China;
Publish a Chinese-language Privacy Policy accessible to users; and
Report any data breaches promptly to relevant authorities.

Non-compliance may lead to substantial financial penalties, suspension of operations, or blocking of websites and corporate accounts.

Iranian Data Protection Regulations

Although Iran has not yet enacted a comprehensive Data Protection Law, several related provisions exist:

Articles 58–61 of the Electronic Commerce Law (2003) obligate confidentiality of trade secrets and user data.
The Computer Crimes Law criminalizes unauthorized disclosure of user information.
Banking and tax regulations also ensure confidentiality of customer financial data.

Accordingly, Iranian companies operating in China’s digital market must align their internal data protection policies with Chinese standards to avoid legal liability.

Tax and Customs Obligations in Digital Trade Between Iran and China

Taxation of Digital Services and Products

In digital commerce, services may be delivered without physical exchange of goods (e.g., software design, online education, or remote consulting).

In Iran, exports of services paid in foreign currency to non-resident clients are exempt from VAT.
In China, imports of digital services from foreign companies may be subject to VAT and, in some cases, Corporate Income Tax (CIT).

Thus, online contracts between Iranian and Chinese companies should explicitly define tax responsibilities and calculation methods to prevent fiscal disputes.

Foreign Exchange Control and Payment Transfers

Given the banking restrictions between Iran and China, commercial payments often occur through indirect or intermediary channels.

To mitigate risks:

Payments should be made through licensed and traceable accounts.
Payment records, invoices, and digital receipts should be stored and electronically signed.
Where possible, authorized financial institutions or licensed exchange houses in China or Hong Kong should handle settlements.

Detailed documentation of transactions and digital financial records provides strong evidentiary value in arbitration or court proceedings.

Dispute Resolution in Iran–China E-Commerce

As online trade between Iranian and Chinese companies expands, disputes arising from electronic transactions are also increasing.
Common issues include failure to deliver goods or services, breaches of intellectual property, data security violations, or invasion of user privacy.

Selecting an appropriate dispute resolution mechanism is therefore critical.

Role of International Arbitration in Online Disputes

Arbitration is widely recognized as one of the most effective and reliable methods of resolving international commercial disputes.

Unlike litigation, arbitration offers:

Speed and avoidance of procedural formalities;
Confidentiality, preventing public disclosure of business information;
Neutrality and the ability to appoint arbitrators with expertise in technology and international trade;
Global enforceability of arbitral awards under the 1958 New York Convention, to which both Iran and China are parties.

Iran-China International Arbitration and Legal Center

This specialized institution, jointly serving both countries, provides the following services:

Arbitration and mediation in disputes arising from digital contracts;
Technical and legal assessment of electronic documents and signatures;
Drafting and revision of arbitration clauses in e-commerce contracts;
Enforcement of arbitral awards in Iran, China, and other New York Convention member states.

These services offer companies a formal, reliable, and efficient channel for resolving disputes.

Advantages of Arbitration in Iran–China Trade

Neutrality and technical expertise: Arbitrators well-versed in both legal systems and digital commerce deliver fair, informed decisions.
Cross-border enforceability: Awards from reputable arbitration centers are enforceable in over 160 countries, including China.
Confidentiality: Sensitive commercial and financial information remains protected from public disclosure.
Procedural flexibility: Arbitration allows for virtual hearings, electronic documentation, and digital signatures—consistent with the nature of e-commerce.

Conclusion and Practical Recommendations for Iranian Companies

E-commerce with China presents a major opportunity for expanding exports of services, digital products, and technological cooperation. However, without a sound understanding of the legal requirements and contractual risks, this path can be challenging.

For success in digital collaboration with Chinese partners, Iranian companies should observe the following:

Draft precise bilingual contracts (Persian–Chinese or English) specifying governing law and arbitration forum.
Use legally valid electronic signatures and securely store all electronic records (invoices, communications, transactions).
Understand and comply with Chinese data laws (PIPL and Data Security Law), obtaining necessary permits for user data processing.
Clearly define tax and currency responsibilities in digital contracts, particularly for software exports and online services.
Seek legal and arbitration counsel before contract execution and upon any dispute.