This article examines how US companies withdrawing from Iraq should address continuing software, warranty and customer access commitments. A company may stop taking new Iraqi business while customers still depend on its software licences, warranties or technical access. Ending local sales does not terminate those obligations, and the exit plan must distinguish activities that end from customer rights that continue under existing contracts or mandatory law.
The framework includes the Iraqi Civil Code No. 40 of 1951 on contractual obligations, assignment and transfer of debts; the Copyright Protection Law No. 3 of 1971 for software licences; the Consumer Protection Law No. 1 of 2010 where consumers are affected; the Companies Law No. 21 of 1997 and the Foreign Company Branches Regulation No. 2 of 2017 for corporate closure; the Labour Law No. 37 of 2015 and the Retirement and Social Security for Workers Law No. 18 of 2023; and the Income Tax Law No. 113 of 1982 for clearance.
Identifying obligations that survive the commercial exit
Licences, supply contracts, maintenance agreements and direct customer undertakings should be reviewed. The company should determine whether rights are perpetual, time-limited or subscription-based, and whether support is separate from the licence. A right to decline future renewals is different from a right to terminate a period already paid for.
An assessment of intellectual property arrangements in Iraq should identify the permissions customers need to keep operating lawfully. Owning equipment does not give unrestricted rights to embedded software, but the supplier’s ownership of software does not cancel a licence it has validly granted. Third-party components need separate attention, since their licences may end when the supplier’s relationship with the third party ends.
Giving customers an accurate transition proposal
The company should decide whether support will continue from abroad, move to a partner, or end through a lawful contractual process, and communicate the proposed date and affected obligations. A customer’s acceptance of a new contact is not consent to release the original supplier or reduce service levels. The transition plan should cover:
- Open warranty claims and the route for future notices.
- Access credentials, updates and operating documentation.
- Data retrieval and agreed migration assistance.
- Spare parts, service tools and authorised replacement staff.
- Contracts requiring consent before transfer or substitution.
For public customers, the authority and procedure needed to approve a replacement or amendment should be confirmed, as operational cooperation is not a binding waiver.
Separating transfer of performance from release of liability
A replacement provider may agree to perform support without discharging the US supplier’s original obligation. Under the Civil Code, assignment of rights, assumption of debts and novation have different requirements, and transfer of an obligation generally requires the creditor’s acceptance. The parties whose consent is needed, and whether accrued claims remain against the original supplier, should be stated.
An indemnity between supplier and replacement allocates cost internally but does not bind the customer. The replacement must also have the technical rights and permissions to perform; a promise of access to proprietary tools is ineffective if the licence prohibits it and no consent has been obtained.
Employees and local partners
Withdrawal usually ends local employment and agency relationships. Employees’ entitlements under the Labour Law must be settled and social security deregistration completed, and any registered commercial agency should be terminated in accordance with the Commercial Agency Law. Where former local staff will join the replacement provider, the arrangements should be documented to avoid disputes about continuity of service and responsibility for entitlements.
Aligning corporate closure with remaining commitments
Stopping marketing, closing a branch and liquidating a subsidiary are different legal steps. Questions of corporate closure requirements in Iraq should be reviewed with tax, social security, employee and creditor obligations, as deregistration typically requires clearances and cannot proceed while obligations remain open. Selling assets or closing an office does not eliminate liabilities already incurred by the legal entity.
The company should designate who keeps records, receives claims and authorises continuing expenditure. Local and electronic evidence relevant to disputes should be preserved, and transfers or deletion of customer information should respect confidentiality and retention obligations. Guarantees and insurance should stay under review until obligations are discharged.
Closing the operation through documented steps
A closing record should show which contracts have ended, which have transferred and which commitments remain with the US company. Access should not be cut off merely because an internal exit date has arrived if the contract still requires it.
Companies should also consider the reputational dimension of withdrawal. Iraqi customers, particularly public bodies, remember suppliers that leave without adequate support, and this can affect future opportunities if the company later wishes to return. Clear communication, honouring existing commitments and offering a credible transition path help preserve relationships even as the commercial presence ends.
Conclusion & how Etihad Law Firm can help
A well-managed withdrawal keeps customers operational, preserves the company’s reputation and avoids claims that surface after local capacity has gone.
Providing Iraq market exit legal services for American businesses, Etihad Law Firm reviews continuing obligations, negotiates transfers and releases with customers, handles employee and agency terminations, and manages tax clearance and corporate closure, structuring withdrawals so that software, warranty and access duties are properly addressed.