On 2 April 2021, Ethiopia enacted a brand new arbitration regulation, referred to as the Arbitration and Conciliation Working Process, Proclamation Quantity 1237/2021 (the “Proclamation”), to use to business home arbitrations and worldwide arbitrations whose seat is in Ethiopia.1
The brand new regulation is a part of bigger efforts within the nation to modernize its legal guidelines and place Ethiopia as business-friendly, thereby attracting extra international funding. Ethiopia is the second most populous nation in Africa, with a inhabitants of over 112 million, and the fastest-growing financial system within the area according to the World Bank.2
Previous to the enactment of the brand new regulation, underneath the earlier authorized framework for arbitration in Ethiopia, there was a limitation on the scope of the competence-competence doctrine, which permits arbitrators to rule on their very own jurisdiction. Whereas the Civil Code permits arbitrators to rule on their jurisdiction, Article 3330(3) of the Civil Code barred arbitrators from deciding the validity of an arbitral submission (arbitration settlement).3 Thus, earlier than the issuance of the Proclamation, challenges to the validity of arbitration agreements have been determined by the courts. The Proclamation has addressed the difficulty by offering that arbitral tribunals “have the ability to find out the existence or non existence of a legitimate arbitration settlement between the contracting events together with as as to whether it has jurisdiction to listen to the case or not.”4
The Proclamation is partly based mostly on the UNCITRAL Mannequin Legislation and incorporates many provisions embracing worldwide arbitration finest practices. It additionally incorporates some attention-grabbing provisions regarding the finality of awards, non-arbitrability, res judicata, confidentiality, and the institution and regulation of arbitral establishments. Nonetheless, a couple of potential challenges stay.
The Scope of Utility
The Proclamation applies to home and worldwide arbitration seated in Ethiopia,5 and arising out of arbitration agreements signed after the approaching into pressure of the Proclamation on 2 April, 2021. Arbitration agreements signed earlier than the Proclamation will proceed to be ruled by the previous regime, besides if the events agree for such agreements to be ruled by the Proclamation.6 Likewise, “proceedings initiatedbefore the approaching into pressure of the Proclamation or instances of arbitration pending earlier than courts, ongoing proceedings and execution of choices” will proceed to be ruled by the regulation in pressure earlier than 2 April, 2021.7 The Proclamation additionally applies to home conciliation instances pursuant to its Articles 54-76.
The finality query
Underneath the earlier recognition and enforcement regime ruled primarily by the 1960 Civil Code and the 1965 Civil Process Code, there have been questions relating to the finality of arbitral awards in Ethiopia, ensuing from the appliance and interpretation of Article 350(2) of the Civil Process Code, which presumes a proper of attraction from any arbitral award except events comply with waive the fitting of attraction “with full data of the circumstances”.8 The issue was highlighted within the recent case between the Federal Democratic Republic of Ethiopia and the Republic of Djibouti (represented by Chemin de Fer Djibouto-Ethiopien) and Consta JV,9 the place the Federal Supreme Court docket Cassation Bench relied on its precedent within the case of Nationwide Mineral Company v. Dani Drilling10 to carry, in essence, that the waiver provision of Article 350 doesn’t preclude the Bench from reviewing arbitral awards for basic errors of Ethiopian regulation.
Not like the Civil Process Code, the Proclamation adopts a presumption that arbitral awards are last and never appealable except the events agree in any other case of their arbitration settlement.11 Nonetheless, Article 49(2) of the Proclamation permits events to use for cassation “the place there’s a basic or fundamental error of regulation”, however events could waive the fitting of attraction. Thus, except the events are capable of comply with waive judicial overview for errors of regulation, the potential for second-guessing last arbitral awards nonetheless exists via the attraction course of. That is separate from the set-aside provision of Article 50, which mirrors the UNCITRAL Mannequin Legislation’s grounds for setting apart arbitral awards and thus requires that judicial overview of arbitral awards12 be restricted to slim and well-defined conditions.13
The non-arbitrability of ‘administrative contracts’
The Proclamation incorporates a listing of issues that aren’t arbitrable underneath the regulation, much like the legal guidelines of most arbitration-friendly jurisdictions.14 Nevertheless, the regulation supplies that “administrative contracts” – that are contracts concluded between administrative authorities and people or corporations to hold out the actions of public companies,15 akin to public provide contracts and contracts of public companies16 – are non-arbitrable.17 The supply of the Proclamation on the non-arbitrability of administrative contracts mirrors the Civil Process Code, which supplies that “[n]o arbitration could happen in relation to administrative contracts as outlined in Artwork. 3132 of the Civil Code or in some other case the place it’s prohibited by regulation.”18 With this provision, invoking arbitration agreements in opposition to companies of presidency underneath Ethiopian regulation could also be difficult. Nevertheless, Ethiopian courts, significantly the Federal Supreme Court docket,19 have typically been constant in nonetheless implementing arbitration agreements and awards ensuing from administrative contracts. For instance, in Zemzem Plc v. Ilu Abbabor Academic Bureau,20 the Supreme Court docket relied on Article 1731 of the Civil Code, which supplies that “[t]he provision of a contract lawfully fashioned shall be binding on the events as if they have been regulation” to override the supply of the Civil Process Code. It’s hoped that this development will proceed underneath the brand new regulation.
Interim and precautionary measures, confidentiality and res judicata
The Proclamation incorporates pro-arbitration provisions which can be designed to strengthen the arbitral course of and improve the utility of arbitration in Ethiopia. For instance, along with embracing the complete Mannequin Legislation provision on interim measures,21 the Proclamation permits a tribunal to “order precautionary measure with out notifying the opposite occasion if it believes with enough trigger that such notification would hinder the implementation of the interim measure.”22 The Proclamation additionally supplies that arbitral proceedings and awards have to be stored confidential.23 Moreover, underneath the Proclamation, any choice rendered by the tribunal is deemed to be a choice of a courtroom and creates a res judicata impact, stopping the events from initiating an motion based mostly on a “comparable matter” between the identical events.24
Previous to the issuance of the Proclamation, the present arbitration facilities – such because the Addis Ababa Chamber of Commerce and Sectorial Affiliation, Ethiopian Arbitration and Conciliation Middle, and Ethiopian Mediation and Arbitration Middle – have been established by numerous legal guidelines as non-profit establishments.25 Not like underneath the previous regime, the Proclamation permits non-public organizations to determine arbitration facilities. The Lawyer Basic of the Federation is empowered to difficulty and renew licenses, present the factors for establishing new arbitration facilities, and supervise the operation of such facilities.26 Given the importance of Ethiopia as the most important financial system in East Africa, the quickest rising financial system in Africa and the headquarters of the African Union, and the drive to make Addis Ababa the air transport hub of the area, it’s anticipated that different impartial worldwide arbitration facilities will emerge sooner or later.
In all, the Proclamation primarily aligns with basic finest follow in worldwide arbitration, apart from a couple of provisions that could be problematic, as highlighted above. Nevertheless, the success of the regulation, as is all the time the case, might be decided in its software by the Ethiopian courts.
1 The Arbitration and Conciliation Working Process Proclamation Quantity 1237/2021, Article 3(3). The enactment of the Proclamation follows the Ethiopian Parliament’s ratification of the 1958 Conference on the Recognition and Enforcement of International Arbitral Awards on 13 February 2020, and its formal accession on 24 August 2020, changing into the one hundred and sixty fifth State and the fortieth African state to accede to the Conference. See, https://www.newyorkconvention.org/news/ethiopia+ratifies+the+new+york+convention; https://uncitral.un.org/en/texts/arbitration/conventions/foreign_arbitral_awards/status2.
3 The 1960 Civil Code of Ethiopia, Article 3325(1) defines an arbitral submission as a “contract whereby the events to a dispute entrust its answer to a 3rd occasion, the arbitrator, who undertakes to settle the dispute in accordance with the ideas of regulation.”
4 The Arbitration and Conciliation Working Process Proclamation No. 1237/2021, Article 19.
5 The Arbitration and Conciliation Working Process Proclamation No. 1237/2021, Article 3(1).
6 The Arbitration and Conciliation Working Process Proclamation No. 1237/2021, Article 77(1) and (3).
7 The Arbitration and Conciliation Working Process Proclamation No. 1237/2021, Article 77(2).
8 The 1965 Civil Process Code of Ethiopia, Article 350(2): “The events could waive their proper of attraction however any such waiver shall be of no impact except made with full data of the circumstances.”
9 Consta Joint Enterprise v. Chemin de Fer Djibouto-Ethiopien, Federal Supreme Court docket Cassation Bench, File quantity 128086, 12 months 2018. The case resulted from award issued by the Everlasting Court docket Arbitration in case No. 2013-32 (Consta JV v. Chemin de Fer Djibouto-Ethiopien). The arbitration was ruled by Ethiopian regulation whereas the arbitration continuing was carried out underneath the Procedural Guidelines on Conciliation and Arbitration of Contracts Financed by the European Growth Fund (“EDF Guidelines”). See, https://www.iarbafrica.com/en/news-list/17-news/660-the-ethiopian-supreme-court-annuls-a-%E2%82%AC-20-million-euro-international-arbitral-award-in-favor-of-an-italian-contractor-under-the-european-development-fund-rules-edf.
10 Nationwide Mineral Company Plc. v. Dani Drilling Plc., Federal Supreme Court docket Cassation Bench, File Quantity 42239, 12 months 2010.
11 The Arbitration and Conciliation Working Process Proclamation Quantity 1237/2021, Article 49 (1).
12 United Nations Fee on Worldwide Commerce Legislation Mannequin Legislation on Worldwide Business Arbitration (1985), with amendments as adopted in 2006, Article 34.
13 P. Ortolani, Article 34: Utility for Setting Apart as Unique Reourse in opposition to Arbitral Award, in UNCITRAL Mannequin Legislation on Worldwide Business Arbitration: a Commentary, eds. I. Bantekas, et al., 2020, 859.
14 The Arbitration and Conciliation Working Process Proclamation Quantity 1237/2021, Article 7.
15 M. M.Bulto, Arbitrability of Administrative Contracts underneath Ethiopian Authorized System: Important Appraisal, in Journal of Legislation, Coverage and Globalization, Vol.105, 2021, p. 9.
16 The 1960 Civil Code of Ethiopia, Articles 3132, 3297-3306; 3244-3296.
17 The Arbitration and Conciliation Working Process Proclamation Quantity 1237/2021, Article 7(7).
18 The 1965 Civil Process Code of Ethiopia, Article 315(2).
19 See, Zemzem Plc v. Ilu Abbabor Academic Bureau, File no.16896, 1998. In Imperial Freeway authority v. Solel Boneh Ltd (Supreme Imperial courtroom civil Attraction No. 670/57), the Supreme Court docket of Ethiopia affirmed the choice of the Excessive courtroom ordering the federal government company to adjust to a clause of its contract with Solel Boneh Ltd. that supplied for the submission of all disputes underneath the contract to arbitration, Each instances as cited in The Role of Ethiopian Courts in Commercial Arbitration, in Mizan Legislation Evaluate, Vol. 4, No. 2, 2010, out there at https://www.ajol.info/index.php/mlr/issue/view/7894.
20 Zemzem Plc v. Ilu Abbabor Academic Bureau, File no.16896, 1998. The dispute arose out of a contract for the development of an elementary college, which falls underneath contracts of public works pursuant to article 3344 Civil Code. The Federal Supreme Court docket reversed the decrease courtroom’s choice and held that the arbitration settlement was binding on the events underneath Article 1731 of the Civil Code.
21 United Nations Fee on Worldwide Commerce Legislation Mannequin Legislation on Worldwide Business Arbitration (1985), with amendments as adopted in 2006, Articles 9 and 17.
22 The Arbitration and Conciliation Working Process Proclamation Quantity 1237/2021, Article 22(2).
23 The Arbitration and Conciliation Working Process Proclamation Quantity 1237/2021, Article 39.
24 The Arbitration and Conciliation Working Process Proclamation Quantity 1237/2021, Article 44(6).
25 See, the Basic Discover No. 90/1947; Chambers of Commerce and Sectorial Associations Institution Proclamation No. 341/2003; Civil Code and Authorized Discover No. 321/1966; and Civil Societies Organizations Proclamation No. 1113/2019.
26 The Arbitration and Conciliation Working Process Proclamation Quantity 1237/2021, Article 18.
Isobel Blakeway-Phillips (White & Case, Authorized Assistant, Paris) contributed to the event of this publication.