Arbitration and Ethiopian National Courts

Jun 15 2015

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.

The Ethiopian Civil Procedure Code gives equal status to arbitral awards, and allows their execution and appeal process to follow the same procedure as ordinary court decision. (Art 319/2/, 355/3/, 352 of Civ Pro Code). The national law seems to guard the private dispute resolution system from abuse.  For instance, Ethiopian law makes administrative contracts inarbitrable (Art 315/2/ of the Civ. Pro Code).

The judicial nature of the arbitration compels the state to control it through different avenues. Especially, when arbitrating under obsolete arbitration law, the judiciary feels like arbitration proceedings go against judicial sovereignty. Judicial sovereignty refers to the independence of the judiciary, and its ability to conduct judicial review of legislation and executive actionIt is a given fact that procedural laws aspire to maintain judicial sovereignty, and the judiciary, itself, retains sovereignty via appeal, setting aside and/or refusal procedure.  

In a recent decision from a cassation bench, 42239/2003, the court struck down the arbitration final clause that prohibited the parties from appealing their case. It referred to the constitution 80/3/, Proclamation 454/2005 and the purpose of arbitration to strike down the clause.

All in all, national courts have vested interest in arbitration because it a private quasi-judicial dispute settlement method. National procedural law exercises authority over contractually constituted arbitration panels for fear that it may be abused, and become a way to escape the law.

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Michael Teshome

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 on 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 Abyssina Law.