Research and development in private law

Research and development in private law

Analysis of the Insolvency of a Legal Entity Litigation Costs in Iranian Law and Judicial Procedure

Document Type : Original Article

Author
Ali Yarinejad
PhD student in private law, University of Judicial Sciences and Administrative ServicesTehran, Iran.
10.22034/jpl.2025.2053164.1191
Abstract
In the Iranian legal system, the recognition of legal entities right to file for relief from litigation costs -especially non-commercial legal entities- there is disagreement and it has been less subject to legal analysis. The dispute centers not on insolvency concerning a judgment debt, but rather on the inability to afford litigation expenses. Although Article 15 of the Law on the Enforcement of Financial Judgments ostensibly prohibits the acceptance of insolvency claims by legal persons, a careful interpretation of its language, coupled with a principled legal analysis, reveals that the prohibition pertains exclusively to the enforcement of financial judgments and not to procedural costs associated with accessing justice. From a legal standpoint, the institution of insolvency is not inherently exclusive to natural persons. Its foundational purpose is to safeguard litigants who lack financial means—a protection that logically extends to legal persons, especially those lacking steady revenue streams. Further, relevant provisions of Iran’s Civil Procedure Code do not contain any express prohibition against legal persons filing for insolvency. The rejection of such claims by non-commercial legal entities, such as charitable organizations and public-interest foundations, conflicts with fundamental principles including access to courts and procedural justice. Denying them the opportunity to seek cost exemption risks undermining their legal rights and contravenes public order. Through a descriptive-analytical methodology and grounded in library-based research, judicial rulings, and advisory opinions, this article argues that the prohibition on accepting exemption from litigation costs by non-commercial legal entities lacks a strong argumentative basis and conflicts with general legal rules and principles, including public judicial protection. It is concluded that non-commercial legal entities should be granted the ability to file for insolvency regarding court fees, based on their specific financial circumstances.
Keywords
Insolvency of a legal entity
Exemption from litigation costs
Government insolvency
Non-commercial person
Subjects
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