Iraq’s economy depends on conducting business with foreign partners, yet these partnerships are subject to strict legal frameworks. Any foreign entity’s company registration in Iraq is a necessary prerequisite for legal validity and is not only a formality. Any contract with a foreign corporation that has not been properly registered is deemed void ab initio—null and void from the beginning—as confirmed by a recent historic decision from the Iraqi Federal Supreme Court(4113)issued in(2024/10/24).

The Foreign Companies Branches System: What Does It Say?

Referring to Article 14 First: “It is prohibited for a foreign company to practice any commercial activity or open a headquarters in Iraq if it has not been granted a registration license according to the provisions of this system…”

This language is not optional; it is required. Parties cannot agree to waive this criterion since it is an issue of public policy (public order).

The Position of the Federal Supreme Court of Iraq

A Jordanian business that entered into an unregistered contract with the Iraqi General business for Ports is the subject of the case summary included in the documents.

The Court’s Holding: The Court upheld the contract’s complete nullity due to its violation of a mandatory public order requirement.

For authority and credibility, include the court judgment number (judgment 4113/Exceptional Body/2024, for example).

Why is “Absolute” and “Incurable” the nullity?

Article 146 of the Iraqi Civil Code states: “Any interested party may invoke the nullity of a contract, and the court may rule for it on its own motion.” Ratification later on cannot restore nullity.

In practice, this means that a foreign company’s registration after executing a contract does not “cure” or confirm the previous agreement. A contract that was null and void from the start is still null and void.

Useful Suggestions for the Iraqi Organization (The Local Partner)

Pre-Contractual Due Diligence “You must verify, before signing any contract with a foreign party, that they are registered in Iraq under the Foreign Companies Branches System.”

The Price of Negligence: “Failure to conduct this due diligence exposes the contract to annulment and causes the Iraqi party to lose its right to demand performance or claim compensation.”

Useful Suggestions for the International Business

The Initial and Most Important Step: “You must initiate the process to formally register a branch with the Iraqi Company Registration Department before engaging in any commercial activity.”

A Serious Warning: “Avoid entering into any agreements before registering. There is a serious financial and legal danger because the nullity in this scenario is absolute and cannot be fixed later.

In conclusion, adherence to the Foreign Companies Branches System is a fundamental component of legitimate business operations in Iraq. The Iraqi Federal Supreme Court now firmly maintains the notion that contracts with unregistered entities are completely null and void, which is a potent legal tool intended to safeguard national economic sovereignty and stop unlicensed business practices. Not only is proper legal due diligence advised, but it is necessary.