ARTICLE REVIEW - Seyoum Yohannes, the Normative Basis for Decision on the Merits in Commercial Arbitration: the Extent of Party Autonomy
Seyoum Yohannes, the Normative Basis for Decision on the Merits in Commercial Arbitration: the Extent of Party Autonomy, Mizan Law Review, Vol. 10, No.2, December 2016, p. 341 - 365 (You may download this article from Here)
The arbitration agreement is an indispensable precondition for domestic and international commercial arbitration. This is due to the fact that an arbitration contract is a process through which parties in dispute freely appoint their own private judge in lieu of a state judge to settle their dispute. Nonetheless, whether the parties are at liberty to set all matters as they like, including the law(s) that will be applied to their case, is an issue. On the other hand, whether the arbitrators could settle as per the principle of laws or according to law and whether they have full autonomy to revise or rewrite the arbitration agreement to settle the parties’ dispute is also an issue. Seyoum’s article examines Ethiopian laws from hereinabove mentioned issues’ perspective.
Including the abstract, introduction, and concluding remarks, the author’s work is structured into eight sections. The author used abstract and introduction to introduce readers to his work's content, particularly the article's central focus, the issue targeted to be examined, and to declare his stand. Accordingly, the article's target was to explore the extent of parties’ autonomy in determining the norms that will be applied to the substance of a commercial dispute in arbitration. Particularly, it is aimed to analyze whether or not the parties to the arbitration are at liberty to mandate the application of foreign law, rules of law, and equity.
With this endeavor in mind, in section one, the author discussed the etymological definition and relevance of ‘arbitration agreement’. Thus, an ‘arbitration agreement’ is defined as a contract by which two or more parties undertake to resolve their dispute by arbitration. It is aimed to ouster a court that would otherwise have jurisdiction to resolve the dispute, to empower an arbitral tribunal to resolve the dispute in lieu of courts and to choose law(s) that governs the substance of their contract, usually in the contract itself.
The author thoroughly classified the concept of arbitration agreement into arbitration clause – to settle future disputes, and submission agreement – to settle already occurred disputes. Moreover, he argued that most commercial arbitration results from arbitration clauses. Regarding Ethiopian law, he adds that the issue of an arbitration agreement is covered in articles Articles 3325 to 3346, particularly in Article 3328 of the code. Thus, generally, he argued that on this point, Ethiopian law had kept pace with global developments in arbitration law and the definition is also at par with or even relatively more specific than modern arbitration laws.
Section two of the article is devoted to assessing whether dispute resolution through arbitration agreement is based on principles of law or according to law in Ethiopia. The author tried to address that there is, in the face, incongruence between the civil code and the civil procedure code. He indicates the incongruence stating while article 317(2) of the Civil Procedure Code requires the arbitral tribunal to decide an issue in arbitration ‘according to law’, article 3325 of the Civil Code provides the settlement of the dispute ought to be in accordance with the ‘principles of law’. He argued that arbitrators are not required to decide ‘according to law merely’. Rather, they may decide ‘in accordance with principles of laws’. He reached to this conclusion arguing that (a) the Civil Code is a special law than civil procedure code as far as the nature of arbitration is concerned, (b) while the civil code is a substantive law, civil procedure cod is a procedural law which is limited to govern the procedural conduct of arbitration rather than the norms applicable to the substance of the dispute, and (c) because civil code is proclamation whilst civil procedure is a decree, the former supersedes the latter. He summed it up by stating Ethiopian law allows arbitrators to decide based on principles of law without the need for specific authorization by the parties to that effect, and this makes it very liberal compared to jurisdictions that require arbitrators to decide based on law only. Linked to this, the author argued that the Civil Code of Ethiopia does not authorize arbitrators to apply lex mercatoria in its entirety as this notion includes trade usages and customs that do not necessarily qualify as principles of law.
Section three of the tract assesses whether foreign laws and rule of laws are applicable to settle dispute via arbitration. In this section, the author raised issue whether it is the freedom of parties to arbitration to choice substantive law that is applicable to settle their dispute or they are without this freedom. As a matter of fact, pursuant to his assessment, so many jurisdictions, including Ethiopia, didn’t settle this matter clearly in their laws. However, taking article 3325 of civil code, the author argued that the law leaves this matter to the parties to the arbitration agreement. In a way it buttresses this argument, the newly issued Ethiopian arbitration and conciliation working procedure proclamation gives full freedom to parties entering to an arbitration agreement to choose law applicable to settle their dispute.
Section four of the article examines whether the arbitral tribunal could settle the parties' disputes to an arbitration agreement based on equity, particularly from an Ethiopian law perspective. To appraise the issue, the author examined the concept of equity by classifying it into weaker and stronger equity. As per the author, the former refers to a situation when a decision based on equity is taken in light of the law and in accordance with the legal directions emanating from the strict legal rules in force. Whereas stronger equity submits a situation in which the equity is applied, not only based on the law, to resolve a disparity that arises when the morally accurate, abstract, and general norm conflicts with the moral evaluation of the specific circumstances subject to decision-making. Having discussed the concept of equity in this approach, on the subject of Ethiopian law, the author argued that arbitrators in Ethiopia could go beyond principles of law and decide cases on the basis of equity either in the weaker or stronger sense of the term.
In section five, the author takes his readers to the discussion of whether it is possible for arbitrators to base their decisions on parameters outside rules of law, principles of law, and even equity, particularly whether a tribunal with such powers may modify or rewrite the contractual terms between the parties to a dispute. To answer this issue, the author assessed judicial jurisprudence, especially Ethio-Telecom v. PTE International and Mukemil Mohammed v. Miftah Kedir cases that Federal Supreme Court Cassation Bench finally decided. Then the author argued that an arbitral tribunal, per Ethiopian law and practice, may revise the contract between the parties to a dispute, at least so long as the parties have authorized it to do so and if the parties have undertaken to be bound by the resultant decision.
Finally, as a conclusion, the author stated that Ethiopian law is more liberal than many arbitration-friendly laws such as the UNCITRAL Model Law, particularly regarding parties’ autonomy to determine norms applicable to the substance of a dispute, and it is flexible as regards norms applicable to the substance of a dispute in arbitration.
Nonetheless, the author doesn’t forward any recommendations that the conserved organs will consider. Thus, one can opine that Seyoum’s work is explanatory work. It tries to explain the status of Ethiopian laws from the normative basis for decisions on the merits of commercial arbitration in general and the extent of parties’ autonomy in particular. Therefore, it is good to work for both practitioners and academicians for an in-depth understanding of the issue under discussion, even under the newly issued Ethiopian arbitration and conciliation working procedure proclamation.
 However, this part of the civil code is repealed by Arbitration and Conciliation Working Procedure Proclamation, 2021, art.78, Proclamation No. 1237, Federal Neg. Gez., Year 27, No. 21
 See articles 10, 29, 41, 53, Proclamation No. 1237/2021
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