Article 2121 of the civil code Vs Anti-suit or Anti-arbitration Injunction 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.

The standards for granting injunction are high according to the civil procedure code. The requesting party must either “prove” or has to show “good reasons” and the imminent danger “cannot be redressed by an award of damages.” Provisional measures are not grounds of appeal unless they concern arrest of a person, transfer of property from one person to another or refuse the writ of habeas corpus (Art 320(4).

Now, what makes injunction captivating issues is arbitration. Requesting courts for temporary injunction is fairly common in the case of international arbitration. Mind you, due to the parties’ involvement or the place of arbitration arbitration proceeding can be international. An Ethiopian party sued by its Italian counterpart before an arbitral tribunal seated in Paris, the Ethiopian party may want to stop the arbitration proceeding for various reasons.

In Ethiopian case law, the case between Salini Construction v. Addis Ababa Water and Sewerage Authority (ICC Case 10623), AAWSA, went to Federal Supreme Court (Case No. 6298/83) to ask for an anti-arbitration injunction restraining the defendant from pursuing the arbitration proceeding. The respondent in the arbitration case, AAWSA, claimed that the tribunal is so partial that the outcome of the case would be prejudicial to its interest. The court granted the anti-arbitration injunction and decided stay of proceeding according to art 332 of CPC.

From this point, we can logically ask what an Ethiopian court can do if either of the parties applies for an anti-arbitration injunction pending litigation and the arbitral tribunal refuses to adhere to the decision? Or what would a court do if an arbitral tribunal issued an anti-suit injunction international arbitration. Ironically, Ethiopian law does not prohibit Ethiopian courts from asserting jurisdiction on a case founded on the same cause of action (Art 8(2) of CPC). This means a party can seize a court with a case while the arbitration is pending elsewhere.

The arbitral tribunal’s refusal to refrain from entertaining the case emanates from the nature of arbitration. As a consensual undertaking, the party who enters into arbitration agreement “enters into a contract to entrust a 3rd party, the arbitrator, who undertake to settle their dispute.” An arbitral panel derives its power from the parties’ agreement; whereas, a court is a constitutional entity established with the sole purpose of settling disputes. Arbitration tribunal wants to retain its independence and courts want to hold on to judicial supremacy.

Internationally, the case of anti-suit injunction is widely known. In the case between Generali Assicurazioni Generali SpA (an Italian Insurance Firm) v. West Tankers Inc., commonly referred to as West Tankers Case (C‑185/07 (The claimant and respondent, who had litigation in tort, because a vessel owned by West Tankes collided with a jetty owned by a firm called Erg and caused damage; the charter party contained arbitration clause to be governed by English Law with London as seat of the arbitral tribunal. Erg claimed compensation from its insurer Generali Assicurazioni Generali SpA. The insurer subrogated itself and proceeded with arbitration in London against West Tankers. The respondent went to House of Lords and sought anti-arbitration injunction. The court had to refer the case to European Court of Justice, the highest judicial organ in the EU, whether or not anti-arbitration injunction comply with Brussels 1 convention, a convention on jurisdiction and the recognition and enforcement of judgments civil and commercial matters inside the EU), ECJ said that for a court of a Member State to make an order to restrain a person from commencing or continuing proceedings before the courts of another Member State on the ground that such proceedings would be contrary to an arbitration agreement. The court found that the Regulation applies to anti-suit injunctions granted to give effect to arbitration agreements.

This decision has been widely criticized. The case was referred to ECJ from House of Lords, the then Supreme Court of the UK. The question that was framed by the court concerned if “anti-suit injunctions are compatible with Brussels I Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 44/2001?”

ECJ decided that “if because of the subject matter of the dispute, that is, the nature of rights protected in the proceedings, such as a claim damages, the proceedings will come with the scope of Regulation 44/2001, though the regulation precludes arbitration.” According to John GaffneyO'Flynn Exhams, who wrote on the case, the decision is a misgiving on arbitration as anti-suit injunctions favor arbitration agreements.

However, in Ethiopia the case about anti-suit and/or anti-arbitration injunction is not clear. There are neither an adequate researches nor sufficient amount of case law dissecting the issue or trying to understand the relationship between anti-suit injunction and anti-arbitration injunction. Thus, it will be inevitable to rely on my own opinion.

Practically, Ethiopian courts are superior to arbitral panels. Even, our arbitration law upholds supremacy of courts. Yet, this still does not mean that the arbitral panel would not refuse to comply with an anti-arbitration injunction. The arbitration panel is constituted by the will of the parties and must be treated autonomously (an arbitral tribunal’s duty is to deliver an enforceable award and is accountable to the parties).

If the parties decide to litigate their case before arbitral body, then the arbitration tribunal is not bound by any law, unless the proceeding comes against public policy. An arbitration tribunal has to make sure that the arbitration agreement is not frustrated. Of course, the arbitration agreement gets its validity from the legal system, but this would not give the right for courts to interfere whenever they want.

Frustrating an arbitration proceeding will create huge amount of uncertainty in the legal system. The refusal of the arbitral tribunal to comply with the anti-arbitration injunction should not be considered as contempt of court. Based on the given facts, if the arbitral tribunal finds the injunction to be unreasonable, it must be allowed to proceed with the litigation. Instead of frustrating the proceeding, what courts can refuse to execute the award.

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Saturday, 25 May 2024