I am a Corporate law and arbitration expert. I am very, very much fascinated by international arbitration: commercial, maritime, and investment. The more I read about arbitration, the more I want to know. I would also like to specialize in the subject matter which I think is helpful to Ethiopia in the future. In my personal life, I like to hang out with my friends and have fun. After all, I think life is short.

Moreover, I like to read books, watch movies, travel a lot, which has become recent addiction, and learn new things. I also want to learn how to make a good documentary, which I want to develop as a hobby. I also like to blog here at Abyssinia Law. 

ART 2121 Vs Anti-suit or Anti-arbitration Injuction in Ethiopian Arbitration Law

It will be unwise to begin the essay without introducing the reader about injunction in Ethiopian Civil Procedure Code (CPC). Injunction is one form of provisional measure ordered by a competent judicial organ to the requesting party. Robert Allen Sedler, a famous author on Ethiopian civil procedure, says that it may be necessary to make provision for the protection of the parties and the maintenance of the property in dispute pending the final determination of the case. The court is vested with exclusive power to issue provisional measures until the final judgement.

Provisional measures serve many purposes inter alia allow the requesting party to satisfy his claim at the stage of execution. The CPC recognizes different kinds of provisional measures: attachment before judgment, arrest before judgement, temporary injunction, interlocutory orders, and habeas corpus. The claimant requires such measures if there is reason for him to believe that the defendant may obstruct the execution, delay the normal course of litigation, the property in dispute is in danger of being wasted, damaged or alienated. The court reserves the right to issue such measures pending litigation.

From the acknowledged provisional measures, I will focus on the widely known, temporary injunction, and try to correlate it with arbitration. Sedler defines temporary injunctions as an “order restraining a party from doing a particular act or requiring him to do such an act, and the plaintiff may ask for injunctive relief as part of the final decree.”

The code bestows power to courts to issue injunction in matters of property (Art 154) and in matters of contract (Art 155). If the litigation is in matters of property, the plaintiff has to “prove” with an affidavit that the property in dispute may disappear, in danger of being wasted, damaged or alienated, it may ask the court temporary injunctions to restrain such acts.

The court can also give injunctions where there is persistent breach of contract and it is prejudicial to the plaintiff. The code further underlines that provisions contained in art 155 do not affect what is contained in art 2121 of the civil code. Art 2121 says: “the court may grant an injunction restraining the defendant from committing, from continuing to commit or from resuming an act prejudicial to the plaintiff.

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Cassation Number 2239/2003 and Party Autonomy in Ethiopian Arbitration Law

Parties’ freedom to agree on any matter extends to agree to resolve their dispute either judicial litigation or arbitration. Arbitration is a system of dispute settlement where by disputants takes their case before arbitrators of their own choice. The civil code defines it “as a contract whereby the parties to a dispute entrust its solution to a third party, the arbitrator, who undertakes to settle the dispute in accordance with the principles of law.” (Art 3325(1)).

As any kind of consensual undertaking, the arbitral submission must adhere to the requirements under art 1678 of the civil code. The incapacity of the parties, the inarbitrability of matters, and the form in which it is signed might make the dispute settlement clause void. For instance, if an administrative agent enters into arbitration agreement, the dispute settlement clause will be voidable, as per art 315(2) of the civil procedure code. Also, for insurance contracts, the dispute settlement clause is expected to be in writing.

Recognizing parties’ interest to take their case to arbitration presupposes their autonomy. Party autonomy is an important pillar in any kind of contract agreement. The concept of party autonomy refers to the parties’ freedom to choose arbitration over judicial litigation, the venue of arbitration, the time limit in which the award can be given, substantive and procedural laws (in case of international arbitration). During signing of dispute settlement clause, the parties can insert arbitration final clause, i.e., a clause which aims to make the arbitral award final (non-appealable).

Ethiopian arbitration law allows appeal for those who are dissatisfied by the awards. Any party to arbitration proceeding may appeal under some specified conditions. However, they can waive the right of appeal but the waiver will not have any effect unless made with full-fledged consent (Art 350(2) of Civil Procedure Code).

Appeal is a procedure where by a party displeased by a decision of a lower court goes to a court of higher material jurisdiction. It can also be a process of asking a substantial change to a prior decision. Rober Allen Sedler, a renowned author on Ethiopian Civil Procedure, defines appeal as, “an application by a party to higher court to set aside or revise a decision of a subordinate court.” The court which is seized has the discretion to conduct de-novo hearing (re-hearing the case without any reference to the prior judgment.) However, Sedler argues that an appeal means a review of the case and not a retrial of the case by the appellate court. Does this exclude de-novo­ hearing? I will leave the question unanswered as the reader may be interested to read more about it. The grounds of appeal will involve errors of law and fact. Either party may appeal against any final judgment rendered in lower courts.

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FERQE - Agency and Arbitration Under Ethiopian Law

A principal-agent relationship is like a tripartite contract where the agent enters into any legal transaction on behalf of the principal. Art 2199 of the Civil Code defines agency as “a contract whereby a person, the agent, agrees with another person, the principal, to represent him and perform on his behalf one or several legally binding acts.” Such an authority can be conferred by court or by agreement of the parties.

If it is given by agreement of the parties, it can be either implied or express. The agent is expected to act in strictest good faith and diligently. He must avoid collusion with the third party to avoid conflict of interest. Art 2187(1) orders the cancellation of the agency contract if there is conflict of interest. The agent is accountable to the principal and must confine his/her acts with the scope of authority conferred. Art 2202(1) says that if the scope of the agency is not expressly known, it has to be fixed according to the nature of the transaction.

The scope of agency can be general (Art 2203 in conjunction with 2204) or special agency (Art 2205). An agent cannot sign bill of exchange, effect a settlement, invest capitals, alienate or mortgage real estate, make donations, bring/defend actions or sign arbitration agreement without special authority given to him/her.

For the services offered, the agent is entitled to contractual remuneration. Nevertheless, if remuneration is not stipulated in the contract, “the agent shall not be entitled to remuneration unless he carried out the agency within the scope of his professional duties or where such remuneration is customary” (Art 2220(1)).   

Needless to emphasize, the relation between the agent and the third party is based on the original contract between the principal and the agent. The main theme of this essay is not to talk about the agent-third party relation, but the principal-agent contractual agreement. It is unlikely that the principal-agent agreement will be signed without remuneration. Consequently, if the principal and the agent disagree on any matter, they can resolve their dispute by court litigation or arbitration.

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Arbitration in Ethiopia Law and Practice

Dispute settlement modalities, other than judicial litigation, were known even before the era of codification. They were continuously practiced as a traditional form of settling grievances. It had different names, like shimgelina, giligil. Irrespective of the nomenclature, each of these institutions sought to reach at amicable solution between the disputants.

The growing interdependence of intra and interstate trade in Ethiopia, the need to modernize the legal system demanded an institutionalized dispute settlement method. People were already aware that the judiciary is entrusted in resolving disputes, but they did not want to bear the costs, wait for a long time, frustrate in the process of execution. The expedition to modernity, the necessity to save time and money, the intention to preserve future business relationships brought arbitration into the picture.

The enactment of the Civil Code and Civil Procedure Code /CPC/ of Ethiopia had a significant impact in the introduction and development of modern arbitration. The Civil Code, which was enacted in 1960 govern the substantive aspect of arbitration; whereas, the Civil Procedure Code of 1965 contained provisions regarding procedural part of the process.

In the case of Ethiopia, arbitration proceedings resemble to regular court litigation. In a case between Mr. Gebru Kore v. Mr. Amadeyiu Federeche the court articulated that according to Art 3345 of the Civil Code and 317/1/ of CPC, the procedure to be followed by arbitration tribunals is the same as ordinary court litigation. It went on to add: “but this does not mean that arbitration /ye gilgil dagnenet/ needs to follow rigid court procedure or nonflexible litigation style.

Ethiopia’s arbitration law seems to be designed for domestic arbitration. This can be attributed to the fact that Ethiopia has not yet ratified New York Convention and International Convention for Settlement of Investment Disputes, commonly known as Washington Convention; the arbitration law is not drafted in accordance with UNICTRAL Model Law. The pertinent provisions of the CPC do not make a difference, except in cases of execution of foreign arbitral awards, between domestic and international arbitration.

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The Invisible Hand - Why Ethiopia Needs Anti-Unfair Competition

The Wednesday’s news report, on Reporter News Paper Amharic version, about insurance companies restricting the commission paid to insurance agents is a dreadful, despicable thing. It shows what happens once a government fails to effectively and successfully to restrain firms.

I deliberately make this short essay provocative. I want the concerned parties to sit down and devise a long term plan to regulate unfair competition. Silence from all governmental bodies has a dire consequence in the future; everybody must be wary of its outcome: paralyzing the economy, huge amount of public and private corruption, suffocating entrepreneurs and new entrants, and creates unaccountable, strange and ill-transparent but powerful corporations.

Everything will be made behind the curtain and under the table. Invisible hands, to use the terms of Adam Smith, will pop out from every angle. Then, what is left for you and me? Nothing! We will be an escape goat to greedy people. The ambition to create a multi-cultural, consumer, middle income society will be like chasing a flying bird or following a wind.    

My readers should not be carried away by my sentiments. They must give me a chance to explain. However, I am always open for rebuttal. Firstly, competition law aims to eradicate abuse of dominant position, get rid of collusion/cartels, eliminates concentration of undertaking/mergers (modern competition laws intend to remove state aid and administrative monopolies.)

Fundamentally, competition law proposes fair society. Competition laws watches over economic efficiency and consumer welfare. For example, Article 1 of Chinese Anti-Monopoly law states:

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The Horse and International Commercial Arbitration

In an old English case [Richardson v. Melish, 2Bing. 228(251) Court of Common Pleas, England (1824)] Judge Burrough stated that public policy is “unruly horse and once you get astride to it, you do not know where it will carry you.”  This judge has sufficient reason for saying public policy is unruly horse: case law and scholars have tried to define public policy; but none succeeded in giving a concise, precise, and short definition. Its concept remains controversial.

In English case law from 1853 [Egerton v. Earl of Brown, 4HL 1], House of Lords (the former English supreme court) said that what is denominated is, public policy is the obligations to perform all the duties which men owe to society; and anything having tendency to operate in opposition to that is void.

One scholar articulated that “public policy constitutes general principles of a state that exists in all legal systems, even in the absence of specific rules or judicial precedents to that effect and a principle which may be opposed to the application of any law…” (Pierre Lalive “Transnational (truly international) public policy and International Arbitration” VIII International Congress on Arbitration, New York, May 1986, Congress Series no. 3, Kluwer Law International, 261)

Public policy is held to be superior as it reflects the fundamental interest of the society. When a case is presented before a judge, and if it presumed to violate public policy, then the otherwise applicable law, whether or not foreign, will be disregarded. For example, in case of contracts, contracts that go against morality and law cannot be executed. The standard of morality can be related to public policy that ties the society together.

However, the application of public policy becomes controversial in case of international arbitration. This means that an arbitral tribunal seated in Switzerland may be forced to consider Ethiopia’s public policy. Nevertheless, the criterion for applying public policy of a certain state is ill-defined. The controversy that emanates from public policy gets its shape from the nature of international arbitration.

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Whose interest should an arbitrator serve first? Ethiopian Perspective

The case between Salini Costruttori S.p.A v. AAWSA, ICC Case 10623, is very interesting. What makes the case appealing is Ethiopian Supreme Court’s interference in the proceeding and the consequent explanation given by the arbitrator tribunal. By the application of AAWSA, the Ethiopian party, a respondent in the case, the Ethiopian court was apparently convinced that the international arbitral panel is partial; hence, the court ordered to the tribunal to cease the proceeding. 

 

After receiving the injunction, the arbitration tribunal said that the primary duty of the arbitral tribunal is owed to the Parties. As an arbitral tribunal is constituted by a contract, it follows that “the tribunal has the duty vis a vis the parties to ensure that their arbitration agreement is not frustrated” (Para 121 et seq). Of course, any contract drives its binding force from the legal system, but at the same time it is necessary to uphold the parties’ dispute settlement agreement.   

 

Before trying to answer the question I posed, I want to put forward another case law: in a case law between Mesfin Industrial Engineering and Tana Transport P.L.C (Cassation No. 36213/2001) it was decided that an arbitrator’s duty is not owed to the parties, but to law, the ethics and moral. The arbitrator chosen by Tana Transportation: “was persistently absent from the proceedings, which made him look partial.” The chair person decided to continue the proceeding with himself and the other arbitrator.

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Arbitration and Ethiopian National Courts

I was reading an article on Oromia Law Journal about the degree of court’s control on arbitration under the Ethiopian Arbitration Law. The writer divided the control into three parts: control via appeal (Art 351 of Civ.Pro.Code), set aside (Art 356 of Civ.Pro.Code) and homologation (Art 319(2) of Civ.Pro.Code). He said that courts unfairly arbitration via the avenue of appeal; set aside seems narrow and homologation isn’t included in the Amharic Version of the code, which is senseless; and must be redefined to set the standards of homologation under the Ethiopian Arbitration Law.

But few questions crossed my mind: why do courts have vested interest in arbitration proceedings? Can parties contractually limit the standards of appeal under Art 351 of the Civil Procedure Code? How can a party set aside an award alleging in capacity? Should she/he use grounds to set aside an award or appeal?

I may address those questions at a later time, but I want to confine myself to the question why national courts have a vested interest in arbitration proceedings. Art 317(1) of the Civil Procedure Code say that the procedure before an arbitration tribunal, including family arbitrators, shall, as nearly as possible, be the same as in civil court- summon, evidence gathering, hearing of witnesses, trial, pre-trial, presenting claim and statement of defense must correspond to ordinary court proceedings. The Ethiopian Civil Procedure Code precludes informality of proceedings. Why? I believe the answer emanates from the nature of arbitration.

Art 3325 of the Civil Code says: “arbitral submission is a contract whereby the parties to a dispute entrust its solution to a 3rd party, the arbitrator, who undertakes to settle the dispute in accordance with the principles of law.” Dispute settlement clauses of a contract allow parties to choose ADR, arbitration or court litigation.

In any legal system, arbitration serves as private system that gives a right to parties’ to resolve their disagreement. Every arbitration tribunal’s constitution remains the same: the contract between/among the parties. It is a truism that an arbitration tribunal decision doesn’t bind third parties. A national law, which is presumed to be autonomous, needs to regulate a privately established quasi-judicial authority. Procedural laws acknowledge the freedom the parties have to contract on anything they please; however, nothing will allow arbitration be a way to escape the law.

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Legal Orientalism

I will try to make this short essay as perceptive as possible and I will try to avoid legal jargon. Legal jargon is thought to make a writer’s essay water-tight, however, I think this is a misperception, and such language should only be used when it is necessary to describe something accurately- with the right context, meaning and empirical reference. I do this because I do not want my reader to feel alienated by merely looking at the title. I think it is better to address the question: why am I tempted to write about ‘Legal Orientalism’?

Since colonization the West has convinced us of thinking that cultures which do not resemble “the West” are obsolete; and hence, do not deserve equal treatment. Consciously or unconsciously, we submit ourselves to the appeal of movies, media outlets, and literature, which share one thing: the identity and strength of the West. At the end of the day, we end up comparing one thing with the West and, perhaps, hastily generalize. Thus, we should be skeptical in what we see, read, listen and compare.

Orientalism came with colonization. During that era, the colonizer made itself so powerful that it deemed the colonized as illiterate, living in the dark and backward. For the colonizer, the only way to escape from this trap was to accept that the colonized was backward and for the colonized to submit to its autonomy. The colonizer used many techniques to this effect.

For example, they took one social dispute and compared their ways with the ways of the colonized to resolve it. They presented the dispute settlement mechanisms of the colonized as non-sense, which needs immediate rectification. In the mean time, text books were written to paint the picture of the colonizers’ power. They were distributed in schools; children were forced to learn it. Hence, the colonizer confined the way the colonized thinks culminating in Orientalism, i.e, a pre-established system that doesn’t correspond to the colonizer is uncivilized.

The above two paragraphs might give the reader a vantage point to understand Orientalism. Nevertheless, before discussing Legal Orientalism, it would be simpler to explain about Orientalism itself. In short, the renowned scholar in this field of study, Edward Said stated that “Orientalism is a discourse: a manifestation of power and knowledge.” The need to emphasize knowledge is because knowledge is always a matter of representation, and in turn, representation is a process of giving concrete form to ideological concepts, making certain signifiers stand for the signified.

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