Despite the broad legislative and supervisory authorities vested in Islamic City Councils within Iran’s public law framework, their civil liability remains conceptually ambiguous and legally underdeveloped. Existing literature on the liability of public institutions predominantly focuses on governmental and municipal bodies, often neglecting the unique legal status of city councils or addressing it in a fragmented, non-systematic manner. This article adopts an analytical-critical approach, drawing on principles of legal philosophy, distributive justice, the rule of law, and risk-based liability, to elucidate the theoretical and normative foundations for imposing civil liability on Islamic City Councils. By conducting a comparative analysis of conflicting judicial decisions from the Administrative Justice Court, General Courts, and the Supreme Court of Iran, the study reveals significant fragmentation in judicial reasoning, inconsistencies in identifying competent forums, and structural weaknesses in distinguishing between sovereign and managerial functions. The findings underscore the necessity of legislative reform, the enhancement of institutional accountability, the recognition of strict liability for certain council actions, and the facilitation of causal proof for claimants. This research contributes to the doctrinal development of council liability, advocating a recalibration of the legal framework to strengthen civic protection and promote equitable redress in the face of injurious or unlawful collective decisions made by local councils.