This article considers how performance tests should be structured when German machinery is installed in Iraq and the Iraqi buyer is responsible for supplying electricity, water, raw materials or operators. These cases often end in a dispute about whether a shortfall comes from the equipment or from the inputs, and Iraqi law answers that question through the obligations the parties actually agreed.
Iraq has no special statute on industrial acceptance testing. The legal framework comes mainly from the Iraqi Civil Code No. 40 of 1951, which governs contract formation, performance, defects and compensation; the Commerce Law No. 30 of 1984, which applies to commercial dealings between traders; and the Evidence Law No. 107 of 1979, which shapes how test records and expert findings are assessed. Where the buyer is a state entity, the Instructions for the Execution of Government Contracts No. 2 of 2014 also govern acceptance committees and approvals.
Turning technical assumptions into contractual obligations
A German production line may pass every factory test and still miss its output targets once it is installed at an Iraqi plant. Voltage fluctuations, cooling-water quality, ambient temperature and the grade of feedstock all affect results. Under the Civil Code, a contract binds the parties to what they agreed and must be performed in good faith, so the operating envelope behind each guarantee needs to sit in the contract itself rather than in an engineering proposal annexed without legal effect.
The parties should distinguish a binding buyer obligation from information given only for guidance. If the buyer must deliver raw material of a defined specification, the contract should say how and when conformity will be checked. If the manufacturer has accepted responsibility for adapting the equipment to local conditions, a broad exclusion for local utilities may conflict with that undertaking. A clear order of precedence between the technical schedule, the commercial terms and the tender documents helps a court or tribunal resolve inconsistencies.
Designing a test that can allocate responsibility
A useful acceptance protocol defines both the commercial threshold and the evidence needed to show whether it was met. In practice, the protocol should set out:
- The production rate, product quality and permitted rejection level to be measured.
- The sampling method, calibrated instruments and access to underlying operating data.
- The period of stable utilities and compliant raw materials required before the test starts.
- Retesting arrangements where equipment faults and unsuitable inputs occur together.
Jointly signed test records carry significant weight as written evidence under Iraqi evidential rules, but the authority of the signatory matters. A site technician who is authorised to record measurements should not be able to waive contractual remedies or move a payment milestone. The protocol should therefore separate technical witnessing from legally binding acceptance, and name the representatives who can give each.
Interrupted tests and deemed acceptance
Repeated power failures can make a valid test impossible without proving that the machinery is defective. The contract should set notice requirements, correction periods and the allocation of additional attendance costs when tests are interrupted. Any deemed acceptance mechanism should rest on objective conditions, adequate notice and a clearly defined effect. It should not be drafted in a way that excuses safety defects or obligations which the Civil Code treats as mandatory.
Commercial use during the trial period also needs attention. Production may demonstrate partial functionality without establishing that every guaranteed parameter has been reached. The parties should record whether use amounts to provisional operation, partial acceptance or final acceptance, and keep payment consequences, including any documentary credit conditions, consistent with that classification.
Linking remedies to the proven cause
Contractual liability under the Civil Code depends on breach, causation and loss that can actually be proved. A capacity shortfall caused by defective equipment raises different questions from one caused by contaminated buyer-supplied material. The manufacturer should keep its warnings and diagnostic data; the buyer should retain samples, utility logs and maintenance records. Where both sides contributed, the courts can apportion responsibility, and a simple statement that the test failed will rarely be enough.
Repair, replacement, price reduction and termination should each be assessed against the contract and the conditions the Civil Code attaches to them. Agreed compensation clauses remain subject to judicial review, and an Iraqi court may reduce an amount it considers excessive in relation to the actual harm. Any settlement should state whether it resolves only the failed test or also releases wider warranty claims.
Public buyers and approval procedures
Where the purchaser is a ministry or state company, acceptance is normally carried out by a formally appointed committee, and contract changes follow the approval routes in the government contracting instructions. An informal arrangement with a plant manager may not amend the public contract or release retentions. Suppliers should confirm who has authority to accept, reject or vary before the first test date is fixed.
Disputes, experts and the choice of forum
When test results are contested, Iraqi courts usually rely on court-appointed experts, and the Evidence Law gives the court discretion in how it weighs their reports. Parties that have kept calibrated measurements, signed attendance sheets and contemporaneous utility logs are in a much stronger position than those relying on reconstructed explanations. Test data should also be stored in a format that can be translated and presented in Arabic without losing technical meaning.
German suppliers often prefer arbitration, and Iraq’s accession to the New York Convention through Law No. 14 of 2021 has made foreign awards more readily enforceable. That route depends on a valid arbitration agreement signed by persons with authority, and for public contracts any arbitration clause must be consistent with the rules that apply to state entities. The dispute clause should be reviewed alongside the test protocol, because the evidence the protocol creates will be the evidence the chosen forum examines.
Conclusion & how Etihad Law Firm can help
Performance testing in Iraq works best when technical assumptions are converted into clear obligations, test records are built to establish cause, and acceptance authority is settled before commissioning begins. Working as Iraq contract negotiation lawyers for German businesses, Etihad Law Firm reviews supply agreements, test schedules and remedy provisions under Iraqi law, advises on public-sector acceptance procedures, and supports clients when test results become contested. Please contact us if you are preparing to install equipment in Iraq or facing a dispute over acceptance.