A Review of the “Guideline for Preparing the List of Disqualified Parties in Transactions with the National Iranian Oil Company and Its Subsidiaries”: With a Glance at Corporate Veil Piercing

Habibirad, Amin; Jafari, Diba; Fateminia, Sayyedeh Fatemeh

doi:10.22050/pbr.2025.552366.1415

A Review of the “Guideline for Preparing the List of Disqualified Parties in Transactions with the National Iranian Oil Company and Its Subsidiaries”: With a Glance at Corporate Veil Piercing

Document Type : Original Article

Authors

Amin Habibirad ¹

Diba Jafari ²

Sayyedeh Fatemeh Fateminia ³

¹ Assistant Professor, Department of Industrial Management, School of Governance, Shahed University

² Private law department, Law faculty, Shahid Beheshti University, Tehran. Iran

³ Department of Oil and Gas Law, Faculty of Law, University of Tehran.Iran

https://doi.org/10.22050/pbr.2025.552366.1415

Abstract

The compilation of a list of disqualified entities by NIOC serves as both a supervisory and deterrent mechanism to prevent violations and mitigate legal and financial risks associated with high-risk contracts. This directive has been designed with the objective of enhancing the integrity of the tendering process, ensuring fair competition, enforcing regulations governing public procurement and governmental transactions, and guaranteeing that work is not repeatedly delegated to companies that have demonstrated an unsatisfactory performance history in prior projects. However, an exclusive focus on the legal personality of companies may reduce the deterrent effect, as offending entities may continue their activities under subsidiary or shell companies.
This study proposes the inclusion of the managing director and members of the board of directors—as the key natural persons influencing a company’s decision-making—alongside the legal entity itself in the blacklist of disqualified contractors, presenting this measure as a practical and low-cost approach to enhancing the effectiveness of the disqualification system. Using a descriptive–analytical method, the research reviews the current directive, outlines the legal foundations of managerial accountability, and evaluates both the feasibility and effectiveness of this proposed reform, while also addressing the practical and legal challenges associated with piercing the corporate veil. The findings indicate that extending the disqualification list to relevant individuals can meaningfully strengthen the deterrent function of the existing supervisory mechanism

Highlights

· The preparation of a list of disqualified parties, by identifying legal entities that have breached their obligations during the pre-contractual stage or within the contractual validity period, can reduce the likelihood of potential future disputes in contracts.

· The current guideline of the National Iranian Oil Company (NIOC) requires some revisions.

· The mere inclusion of a company’s legal personality in the list of disqualified entities may diminish the effectiveness and deterrent function of the measure.

Keywords

Disqualification from transactions

Exclusion from transactions

National Iranian Oil Company tender

tender Committee

Subjects

Law Studies

Abramovaite, J., Bandyopadhyay, S., Bhattacharya, S., & Cowen, N. (2022). Classical deterrence theory revisited: An empirical analysis of police force areas in England and Wales. European Journal of Criminology, 20(5), 1663–1680. https://doi.org/10.1177/14773708211072415

Bakaria, C. (1368/1989). Jormhā va mokhālefāt [Crimes and punishments]. Shahid Beheshti University Press.

Barber, W. (1981). Parent-subsidiary veil piercing: Factors and legal analysis. Journal of Corporate Law, 6(3), 372–398.

Becker, G. S. (1968). Crime and punishment: An economic approach. Journal of Political Economy, 76(2), 169–217.

Blumberg, P. I. (1989). The law of corporate groups: Problems of parent and subsidiary corporations under statutory law of general application. Little, Brown.

Bojko, J., & Puto, M. (2020). Exclusion of a contractor from participation in a public procurement procedure as a result of contract termination for reasons attributable to them. Transportation Overview – Przegląd Komunikacyjny, 30–36. https://doi.org/10.35117/A_ENG_20_11_04

Cheng, T. K. (2011). The corporate veil doctrine revisited: A comparative study of the English and the U.S. International Company and Commercial Law Review, 22(5), 153–170.

Damavandi, M. R., Pirouzi, P., Namdar, S., & Tabatabai, M. S. (2022). Mafhūm va mabāni-ye qāʿede-ye rafʿ-e ḥejāb-e shakhṣīyat-e ḥoqūqī va āsār-e ān dar ḥoqūq-e Englestān va Īrān [Concept and foundations of the corporate veil piercing rule and its consequences in UK and Iranian law]. Legal Studies, 21(51), 359–389. https://doi.org/10.48300/jlr.2021.300815.1747

Dentons. (2021). Guide to self-cleaning in European public procurement procedures. https://www.dentons.com/-/media/pdfs/insights/2021/april/self_cleaning_gpp_guide.pdf

Dixon, O. (2020). The efficacy of Australia adopting a debarment regime in public procurement. Federal Law Review, 49(1), 122–148. https://doi.org/10.1177/0067205X20973478

Farahmand, R., Sadiq, H., Asgharian, M., & Rahimi, F. (2023). Naqsh-e dākterīn-e rafʿ-e ḥejāb-e shakhṣīyat-e ḥoqūqī dar towseʿe-ye ḥoqūq-e beynolmelal [The role of corporate veil piercing doctrine in the development of international law]. Quarterly Journal of International Studies, 19(4), 219–243. https://www.isj.ir/article_123456.html

Ghorbani-Lajvani, M., Ghorbani-Lajvani, Z., & Ghorbani-Lajvani, J. (2020). Nezārat-e jāmeʿ bar bāzār-e pūl az tarīq-e rafʿ-e ḥejāb-e shakhṣīyat: Maḥdūdīyat yā refʿ-e ḥoqūq-e sahmdārān-e moʾasser [Comprehensive supervision of the money market through corporate veil piercing: Restriction or removal of effective shareholder rights]. Research and Development in Comparative Law, 3(8), 145–174.

Härginen, K. (2022). The duty of diligence of a tenderer in EU public procurement law. Juridica International, 31, 111–124. https://doi.org/10.12697/JI.2022.31.08

Hovenkamp, H. (1992). Rationality in law and economics. George Washington University Law Review, 60, 293–338.

Macey, J. R., & Mitts, J. (2014, March 27). The three justifications for piercing the corporate veil. Harvard Law School Forum on Corporate Governance. https://corpgov.law.harvard.edu

Mahmoudi-Jangi, F., & Aghaei, S. (2009). Barresi-ye nazariye-ye bazdarandegi [A study on deterrence theory]. Private Law Studies, 38(2), 151–172.

Medina, T. (2006, September). Grounds for exclusion in public procurement: Measures in the fight against corruption in European Union. In International Public Procurement Conference Proceedings.

Mohibi, M., & Ziaei, Y. (2012). Masʾūliyat-e takāfoli va nazariye-ye sarmāye-gozāri-ye jāygozīn dar rafʿ-e ḥejāb-e shakhṣīyat-e ḥoqūqī [Vicarious liability and the substitute investment theory in corporate veil piercing]. Journal of Private Law, 9(1), 123–145.

Mohibi, M., & Ziaei, Y. (2013). Hadaf az rafʿ-e ḥejāb-e shakhṣīyat-e ḥoqūqī beh onvān-e darmān-e nāʿadālati [The purpose of corporate veil piercing as a remedy against inequities]. Legal Research Quarterly, 16(62), 10–35.

Na’imi, S. M. (2015). Tahlīl-e eqtesādi-ye raftār-e jormī va bāzdārandegī-ye mokhālefāt [Economic analysis of criminal behavior and deterrence of punishment]. Criminal Law Research, 6(2), 203–229.

Organisation for Economic Co-operation and Development. (2015). Serial collusion in context: Repeat offenses by firm or by industry? (DAF/COMP/GF (2015)12). https://www.oecd.org

Organisation for Economic Co-operation and Development. (2022). Director disqualification and bidder exclusion in competition enforcement: OECD competition policy roundtable background note. http://www.oecd.org/daf/competition/directordisqualification-and-bidder-exclusion-in-competition-enforcement-2022.pdf

Posner, R. A. (2003). Economic analysis of law (6th ed.). Aspen.

Razavi, M., & Salari, M. (2019). Rafʿ-e ḥejāb-e sherkatī dar ebtezāʾ-e sherkat-hā-ye tabʿī-ye Sherkat-e Melli-ye Naft-e Īrān dar dūre-ye tahrim [Veil piercing in relation to NIOC subsidiaries under sanctions]. Oil and Gas Law Review, 12(47), 89–112.

Shiravi, A. H. (2014). Hoqūq-e naft va gāz [Oil and gas law]. Mizan Publications.

Stevens, E., & Payne, B. K. (1999). Applying deterrence theory in the context of corporate wrongdoing: Limitations on punitive damages. Journal of Criminal Justice, 27(3), 195–207. https://doi.org/10.1016/S0047-2352(98)00060-0

Tátrai, T., Vörösmarty, G., & Juhász, P. (2023). Intensifying competition in public procurement. Public Organization Review, 24, 237–257.

Thompson, R. B. (1991). Piercing the corporate veil: An empirical study. Cornell Law Review, 76(5), 1036–1074.

Werden, G. J. (2015). Sanctioning cartel activity: Let the punishment fit the crime. European Competition Journal, 5(1), 19–36. https://doi.org/10.5235/ecj.v5n1.19

Yaghoubi, F., Khajehzadeh, A., & Bagizadeh, M. J. (2024). Āsār-e rafʿ-e ḥejāb-e shakhṣīyat-e ḥoqūqī bar sherkat-hā-ye mādar va modirān-e masʾūl dar Īrān va Īyālāt-e Mottahede-ye Āmrīkā [Effects of corporate veil piercing on parent companies and responsible managers in Iran and the USA]. Comparative Research in Law, 5(6), 311–330.

Yukins, C., & Kania, M. (2019). Suspension and debarment in the US government: Comparative lessons for the EU’s next steps in procurement (GWU Legal Studies Research Paper No. 39). SSRN. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3080396