It is widely accepted that a contract of private international law is governed by the law chosen by the parties. Nevertheless, the most general rule of Iranian law, i.e. article 968 of civil code, which has been adopted more than 77 years ago, provides for application of the law of the place where the contract is made. That is why in the silence of courts’ decisions the Iranian authors are divided to those who accept this mandatory “judgment” of legislator and those who try to interpret it in a compatible sense.

  So it seems that we need to re-establish the concept and the extension of the principle of autonomy of the parties and explain why the different legal systems adopted this theory. We shall try finally to explain why the legislator could not impose the rules contrary to the general principles of law.

  The main objective of this article is then to demonstrate that the determination of the law on contract is not an option among different options but a mandatory rule.

  Finally, this article tries to present a “principle-its” interpretation of article 968, emphasizing its necessary” reform”.