Arbitration is crafted in a way that can satisfy parties’ interest from the beginning until final award is rendered. In each step, decisions rendered by arbitrators may potentially affect the interest of adversarial parties. Any one closely following the evolvement of international commercial arbitration will not be surprised to see interim measures of protection become a centre of debate. From the publication of scholarly articles until the amendment of UNICTRAL model law, the international arbitration community is making various efforts to adopt uniform application and enforcement of interim measures of protection in international commercial arbitration.
Yet, Ethiopia’s arbitration law is not lucky enough to share from this chalice. Ethiopia’s arbitration law is currently regulated by the 1960 Civil Code (CC) and the 1965 Civil Procedure Code (CPC). Form the close reading of both codes, it is easy to notice that there is huge involvement of national courts in arbitration proceedings. This sentiment towards arbitration tribunals is manifested through the broad construction of the provisions found in the codes.
This paper aims at dissecting the anatomy of interim measures of protection in international commercial arbitration in Ethiopia. The application and enforcement of interim measures of protection in Ethiopia is better fleshed out through closer examination of provisions in CPC. It also seeks to argue that Ethiopia needs to become party to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (NYC) and enact new arbitration law. This and other similar moves will help the arbitration regime to become firmer, party friendly, modern and stable.
This essay will have three sections: the first section will give a short overview of how arbitration works in Ethiopia followed by a legal and case law analysis of the application and enforcement of interim measures of protection in international commercial arbitration in Ethiopia. The last section is dedicated to propose solutions to solve the existing conundrum in relation to application and enforcement of interim measures of protection in international commercial arbitration in Ethiopia.
I. A Short Overview of Arbitration in Ethiopia
It is reasonable for a party, desiring to resolve his or her dispute more expeditiously through arbitration, to expect remedies from arbitrators, because commercial arbitration as parallel and a comprehensive dispute resolution mechanism contains almost all the dimensions present in litigation. The introduction of arbitration into Ethiopia’s dispute settlement system is not new to Ethiopia. Though arbitration is a form of out-of-court dispute settlement mechanism, an Amharic term Shimgelena is often used as an equivalent term with arbitration. However, after the enactment of the CC, arbitration was identified as a discipline with its own unique features and defined as a process 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.
According to the civil code, parties can submit their dispute to entrusted arbitrators who will be in charge to undertake the settlement of disputes in accordance with the law; the arbitral submission has to be valid, enforceable. The arbitral submission cannot be subject to special form and does not apply where the CPC clearly says an issue is not arbitrable.
After the arbitral submission agreement, arbitrators can be appointed by the parties or court if the parties fail to do so within 30 days. The appointed arbitrators can be disqualified on the ground of capacity (conviction by court, insanity or absence), impartiality or independence. The application for disqualification and must be made before the award is given and as soon as the party knew of the grounds of disqualification- if the application for disqualification is dismissed, such decision can be appealed against in court within 10 days.
After an award is rendered, the parties will either enforce or seek to change the award by appeal or set aside as prescribed in the CPC. The appeal, enforcement, set aside of domestic and foreign arbitral awards relies on the civil procedure law.
A party can appeal to a court which would have had appellate jurisdiction, had the dispute in which the award appealed from has been given not been to arbitration based on the specified grounds. The appellate court has the power to confirm, vary or reverse the award appealed from. Further, a recent cassation decision concluded that arbitral awards must be appealable even if parties’ have signed arbitration finality clause. In a case between National Mineral Corporation and Danni Drilling plc, the latter party argued in Cassation that the award cannot be appealed because it has signed arbitration finality agreement with the Claimant. However, the court rejected this argument and concluded that all agreements that exclude cassation court from entertaining the case are void.
The CPC also incorporates set aside procedure if arbitrators decided a matter not referred to them, they did not act together and the arbitrator delegated any of his authority to a third party. The cumulative reading of art 352 and 355(2) of the CPC will lead us to understand that the application to set aside an award will be made to a court which would have had appellate jurisdiction in which the award appealed from has been given not been referred to arbitration within 30 days. An award is deemed to be valid and enforceable if the application to set aside the award is dismissed, but will be null and void if the application is accepted.
The procedure of enforcing foreign arbitral awards is also guided by the CPC, as Ethiopia is not signatory party to NYC. Firstly, an application to recognize and enforce the foreign judgments/awards must be made in the Federal High Court. The application must be in writing and a certified copy of the judgment to be executed and a certificate signed by the President or the registrar of the court having given judgment/award to the effect that such judgment/award is final and enforceable must accompany the written translation.
Art 461 CPC contains grounds of recognition and enforcement of foreign arbitral awards inter alia reciprocity, arbitrability of the matter, public policy, valid arbitration agreement and legally constituted arbitration tribunal. Once the application to recognize and execute the foreign judgment/award, it will be executed as if it was rendered in Ethiopia, i.e. it will have a res judicata status.
II. Application and Enforcement of Interim relief in International Commercial Arbitration in Ethiopia
The application and enforcement of interim measures in international commercial arbitration in Ethiopia is open ended, because neither case laws nor clear provisions exist to guide us through the application and enforcement of such measures. Even if the CPC contains provisions about interim relief and attachment of property before judgment, it preferred to remain silent when it comes to arbitral interim relief.
The application and enforcement of interim measures in international commercial arbitration surrounds questions like the substantive type of the orders, the territorial scope of such orders, the jurisdiction of the tribunal to grant them, their availability in aid of proceedings on the merits of another tribunal, and the availability and enforceability of ex parte relief.
The fact of the matter is disputes between international traders can entail negative outcomes on the award creditor like evidences may be taken out of the reach of the tribunal and assets that are eventually important for the enforcement of the award may be hidden in a place where enforcement is quite difficult. Since arbitration proceeding may and frequently does take some time to be finally decided, it is necessary to make provision for the protection of parties and the maintenance of the property in dispute pending the final determination of the case.
Even if parties to arbitration anticipate every point of disagreement to be resolved by arbitration, situations can be found where national courts are preferable venues to apply interim relief. For example, if the arbitral tribunal is not constituted, is unable to act or is considered not to have authority to take appropriate measures like attachment.
It is evident that legal systems take different approaches to the issue of interim measures in support of arbitration and the institution that may be empowered to issue such measures. These approaches can be divided into three: legal systems that reserve the authority only to courts; those that mandate arbitral tribunals to issue interim measures; and, those that validate concurrent powers between national courts and arbitration tribunals.
In Ethiopian arbitration law, neither CC nor CPC grant arbitration tribunals the jurisdiction to order interim measures of protection during arbitration proceeding, authorize the tribunals to give ex parte relief, but the leading arbitration institution in the country Addis Ababa Chamber of Commerce and Sectoral Association Arbitration Institution (AACCSA), institutional rules indicate that an arbitration tribunal can issue interim, interlocutory and final award.
The question therefore becomes are courts precluded from granting interim relief when the parties have signed arbitration agreement? One argument to this question is the literal interpretation of art 244(2(g)) of CPC. From the reading of the provision, we can understand that if the parties have given arbitration tribunal the power to order interim measure, one of them can raise it as preliminary objection in a court of law, eventually; it can be argued that courts are excluded from giving the interim measure when parties have signed arbitration agreement authorizing the tribunal to order interim measure.
In contrast, it can soundly be argued that nothing in the CPC indicates the intention of the legislature to exclude courts from granting interim relief, though there is an agreement authorizing arbitral tribunals to order interim relief. To this effect, nothing prevents a party from going to court to apply for interim relief.
Interim relief is defined as a relief granted on a preliminary basis before an order finally disposing of a request for a relief. The role of interim or protective measures is to protective measures is to protect and preserve a factual or legal situation so as to safeguard where from the court having jurisdiction as to the substance of the matter. Interim relief is ordered for the purpose of maintaining the status quo of the parties or to preserve evidence during litigation.
In Ethiopian arbitration law art 154 CPC articulates that if any property in dispute is in danger of being wasted, damaged or alienated, wrongfully sold in execution the court can grant injunction to restrain such act, or make an order for the purpose of staying and the wasting, damaging, alienation, sale, removal or disposition of the property. The party requiring such order must bring his application to the court supported by an affidavit.
Where the plaintiff has brought suit to restrain the defendant from committing a breach of contract or other act prejudicial to him, a temporary injunction to restrain the breach or the commission of the act may be granted. The defendant will be restrained from breaching the contract or committing the act pending the determination of the plaintiff’s claim. An injunction granted as part of final decree would supersede the temporary injunction.
In general, it seems both courts and arbitration tribunals are mandated to order interim relief, but nothing in the CPC is mentioned to prohibit courts from granting such reliefs when parties apply, despite the existence of arbitration agreement. Interim reliefs are not often ordered by arbitration tribunals. Even if they are given by arbitration tribunals parties seek court’s assistance to enforce arbitral ordered interim measures. The enforceability of foreign arbitral interim measures is an undecided matter too. As aforementioned Ethiopia is not a signatory party to NYC; hence, the local civil procedure law would be applicable when a party seeks to enforce interim measures.
Ethiopian courts are hesitant to enforce foreign arbitral interim measures based on “finality of the award” argument. Based on art 461(f) and 458(d) of CPC an award, order, decision cannot be recognized and enforceable unless it is final and enforceable under Ethiopian law. We can find one condition under art 357(1) of CPC that says: “if the application to set aside an award is dismissed, then the award will be deemed to be valid and enforceable.” Therefore, an award will be enforced in Ethiopia if and only if it has not been set aside in another country.
Another ground to seek enforcement of foreign arbitral awards is finality. In a case between Mrs Alemnesh Abebe v Mr Tesfaye Gesese, the court defined finality as something that gives the decision, award, order a res judicata status, as per art 5 and 244(2) of CPC. The court/arbitral tribunal loses its jurisdiction to entertain the case again once it reached the status of finality. In the case between Mrs Alemnesh Abebe v Mr Tesfaye Gesese, the claimant applied for division of property found in Ethiopia in Federal First Instance Court, but the respondent argued that the case has attained res judicata status, because a foreign judgment regarding divorce and division of patrimony has been rendered by a court in Montgomery County Court, Maryland, USA in 1994. Based on the decision, the parties have divided their property among themselves. The Claimant’s application was dismissed by the First Instance and High Court. Then, she moved to Cassation and applied for error of law.
Her application was duly accepted and the court decided that the parties can apply for the division of property in Ethiopia; the judgment rendered abroad does not constitute to be final, though they have already divided their property in the US. The decision in America cannot affect the property found in Ethiopia because the American judgment is not final regarding the immovable in Ethiopia. As per the court, finality of a decision means a relief requested by the claimant, denied, directly or indirectly admitted by the defendant and a judgment has been rendered accordingly.”
The other argument that is raised against enforcement of interim measures given by international arbitral tribunal in Ethiopia is based on art 158 of CPC. Art 158 says that an order for injunction may be discharged, or varied, or set aside by the court, on application made thereto by any party dissatisfied with the order. From this provision, we can infer that if interim measures are not final for the mere reason that they can be changed anytime before judgment is rendered.
However, those that support the enforcement of interim measures of protection given by international arbitral tribunals rely on art 320 of CPC, and conclude an order or judgment will be final after appeal has been made. In this line of argument, interlocutory matters can be considered final because they can be appealed independently. As per art 320(4) of the code, the attachment, transfer of property from the hands of one party into hands of the other before a judgment is given is appealable. The injunction, interim measure can be appealed if a remedy has been exhausted in the court that gave the order as per art 320(2) of CPC.
III. Solutions to Application and Enforcement of Interim Measures in International Commercial Arbitration In Ethiopia
a. Decrease courts’ involvement in arbitration proceedings and grant autonomy to arbitration tribunals
In Ethiopian arbitration system, more mandates are given to national courts than arbitration tribunal. A recent article has put forward that from the beginning until a final award is rendered arbitration proceedings are under the control of national courts. For example, in a case between Salini Costruttori S.p.A v Federal Democratic Republic of Ethiopia Addis Ababa Water and Sewage Authority, the tribunal seated in Paris, France, refused to abide by the injunction given by Supreme Court of Ethiopia. The arbitrators decided that State courts cannot frustrate arbitration proceedings by giving injunction or a State cannot rely on its own law to renege on an arbitration agreement.
In another instance, the cassation court ruled that arbitration finality agreement is illegal; though, arbitration finality agreement is signed; parties can still appeal against an award given by the tribunal. The reason for this rigid and traditional perception against the autonomy of arbitration tribunals is unclear. The arbitration legislation of Ethiopia does not authorize arbitration tribunals to give interim relief rather parties open file asking for interim relief and for the case to be directed to arbitration. To this day, courts remain reluctant to enforce interim relief given by arbitration tribunals.
b. Ethiopia should accede to NYC
Ethiopia is not party to any international commercial arbitration convention in particular. This hesitation has led parties to arbitrate under obsolete arbitration law. To this day, foreign arbitral awards are enforced on the grounds found in the CPC. As aforementioned, reciprocity serves as one ground to enforce foreign arbitral awards and judgments; however, it remains vague as to how reciprocity can be used as a ground of enforcement in case of international arbitral awards. In Paulos Papassinous case, the Federal Supreme Court of Ethiopia decided that
“The only way to prove that another state allows execution of Ethiopian judgments is by showing a treaty of judicial assistance signed between Ethiopia and that state. If such treaty does not exist, then the requirement of reciprocity is not satisfied.”
The application of reciprocity in foreign judgments is based on the existence of judicial treaty. Thus far, Ethiopia has signed judicial treaty with Djibouti. It is submitted that the decisions by the Federal Supreme Court and the Federal High Courts in the Paulos Papassinous case that only a treaty of judicial assistance shall prove the existence of reciprocity is erroneous. As international arbitral tribunals are not an organ of the state in which they have their seat in the same way that a court of the seat would be.
Therefore, if one requirement to recognize and enforce foreign judgments/awards is judicial treaty, and if international arbitral tribunals are not affiliated to a single legal system, then Ethiopian law should answer how reciprocity will be used as a ground of enforcement. At this juncture, it is clearly seen how enforcing foreign interim reliefs can become very, very difficult. Becoming a party to NYC will help Ethiopia to adopt more modern recognition and enforcement grounds.
c. Enacting new and modern arbitration legislation
Ethiopia’s arbitration legislation was enacted in the 1960s. That is why most of the provisions enshrined under the CPC and CC do not go along with the modern approach towards arbitration. Either the CC or CPC do not prohibit national courts from giving interim measures of protection even if parties have signed arbitration agreement, which can potentially undermine the tribunals’ ability to act autonomously, independently and separately. Taking into account the interest of business men and women, Ethiopia must be able to avoid this kind of unyielding perception towards arbitration. If new arbitration legislation is enacted, it is in the writer’s opinion that, it will be easy to apply and enforce interim measures of protection given by arbitration tribunals.
The application and enforcement of interim measures in international commercial arbitration in Ethiopia is governed by CPC. Parties to arbitration can ask national courts or, as per AACCSA’s institutional rules, the seized arbitration tribunal to order interim measures of protection. However, nothing is found in CPC or CC to prohibit courts from giving interim measures of protection even though there is a valid arbitration agreement. The enforceability of interim measures of protection is another debated issue. The underlying question is, can these measures be enforced like a final judgement or what mechanisms do Ethiopian courts adopt to enforce them, especially if they come from foreign arbitral tribunals? Two arguments exist to answer the question: the first one argues that interim measures of protection are not enforceable as they lack finality and do not give res judicata status to the case; while, the second group contends that they must be enforceable because, as per the CPC, they can be appealed anytime before the judgement.
The application and enforcement of interim measures of protection in international commercial arbitration can improve if courts’ involvement in arbitration proceeding decreases, accede to NYC and enact new arbitration law.