Ethiopian Courts’ Stance on Pathological Arbitration Clauses




Let alone in countries with less developed arbitration industries such as Ethiopia, pathological arbitration clauses are common in countries like the Switzerland, UK, Singapore, and France as well. As stated here, “[a]t least 30 percent of cases have a threshold dispute over arbitrability due to poor drafting of the arbitration clause”.


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Arbitration and Ethiopian National Courts

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.

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Whose interest should an arbitrator serve first? Ethiopian Perspective

The case between Salini Costruttori S.p.A v. AAWSA, ICC Case 10623, is very interesting. What makes the case appealing is Ethiopian Supreme Court’s interference in the proceeding and the consequent explanation given by the arbitrator tribunal. By the application of AAWSA, the Ethiopian party, a respondent in the case, the Ethiopian court was apparently convinced that the international arbitral panel is partial; hence, the court ordered to the tribunal to cease the proceeding. 


After receiving the injunction, the arbitration tribunal said that the primary duty of the arbitral tribunal is owed to the Parties. As an arbitral tribunal is constituted by a contract, it follows that “the tribunal has the duty vis a vis the parties to ensure that their arbitration agreement is not frustrated” (Para 121 et seq). Of course, any contract drives its binding force from the legal system, but at the same time it is necessary to uphold the parties’ dispute settlement agreement.   


Before trying to answer the question I posed, I want to put forward another case law: in a case law between Mesfin Industrial Engineering and Tana Transport P.L.C (Cassation No. 36213/2001) it was decided that an arbitrator’s duty is not owed to the parties, but to law, the ethics and moral. The arbitrator chosen by Tana Transportation: “was persistently absent from the proceedings, which made him look partial.” The chair person decided to continue the proceeding with himself and the other arbitrator.

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Arbitration in Ethiopia Law and Practice

Dispute settlement modalities, other than judicial litigation, were known even before the era of codification. They were continuously practiced as a traditional form of settling grievances. It had different names, like shimgelina, giligil. Irrespective of the nomenclature, each of these institutions sought to reach at amicable solution between the disputants.

The growing interdependence of intra and interstate trade in Ethiopia, the need to modernize the legal system demanded an institutionalized dispute settlement method. People were already aware that the judiciary is entrusted in resolving disputes, but they did not want to bear the costs, wait for a long time, frustrate in the process of execution. The expedition to modernity, the necessity to save time and money, the intention to preserve future business relationships brought arbitration into the picture.

The enactment of the Civil Code and Civil Procedure Code /CPC/ of Ethiopia had a significant impact in the introduction and development of modern arbitration. The Civil Code, which was enacted in 1960 govern the substantive aspect of arbitration; whereas, the Civil Procedure Code of 1965 contained provisions regarding procedural part of the process.

In the case of Ethiopia, arbitration proceedings resemble to regular court litigation. In a case between Mr. Gebru Kore v. Mr. Amadeyiu Federeche the court articulated that according to Art 3345 of the Civil Code and 317/1/ of CPC, the procedure to be followed by arbitration tribunals is the same as ordinary court litigation. It went on to add: “but this does not mean that arbitration /ye gilgil dagnenet/ needs to follow rigid court procedure or nonflexible litigation style.

Ethiopia’s arbitration law seems to be designed for domestic arbitration. This can be attributed to the fact that Ethiopia has not yet ratified New York Convention and International Convention for Settlement of Investment Disputes, commonly known as Washington Convention; the arbitration law is not drafted in accordance with UNICTRAL Model Law. The pertinent provisions of the CPC do not make a difference, except in cases of execution of foreign arbitral awards, between domestic and international arbitration.

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FERQE - Agency and Arbitration Under Ethiopian Law

A principal-agent relationship is like a tripartite contract where the agent enters into any legal transaction on behalf of the principal. Art 2199 of the Civil Code defines agency as “a contract whereby a person, the agent, agrees with another person, the principal, to represent him and perform on his behalf one or several legally binding acts.” Such an authority can be conferred by court or by agreement of the parties.

If it is given by agreement of the parties, it can be either implied or express. The agent is expected to act in strictest good faith and diligently. He must avoid collusion with the third party to avoid conflict of interest. Art 2187(1) orders the cancellation of the agency contract if there is conflict of interest. The agent is accountable to the principal and must confine his/her acts with the scope of authority conferred. Art 2202(1) says that if the scope of the agency is not expressly known, it has to be fixed according to the nature of the transaction.

The scope of agency can be general (Art 2203 in conjunction with 2204) or special agency (Art 2205). An agent cannot sign bill of exchange, effect a settlement, invest capitals, alienate or mortgage real estate, make donations, bring/defend actions or sign arbitration agreement without special authority given to him/her.

For the services offered, the agent is entitled to contractual remuneration. Nevertheless, if remuneration is not stipulated in the contract, “the agent shall not be entitled to remuneration unless he carried out the agency within the scope of his professional duties or where such remuneration is customary” (Art 2220(1)).   

Needless to emphasize, the relation between the agent and the third party is based on the original contract between the principal and the agent. The main theme of this essay is not to talk about the agent-third party relation, but the principal-agent contractual agreement. It is unlikely that the principal-agent agreement will be signed without remuneration. Consequently, if the principal and the agent disagree on any matter, they can resolve their dispute by court litigation or arbitration.

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Cassation Number 2239/2003 and Party Autonomy in Ethiopian Arbitration Law

Parties’ freedom to agree on any matter extends to agree to resolve their dispute either judicial litigation or arbitration. Arbitration is a system of dispute settlement where by disputants takes their case before arbitrators of their own choice. The civil code defines it “as a contract 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.” (Art 3325(1)).

As any kind of consensual undertaking, the arbitral submission must adhere to the requirements under art 1678 of the civil code. The incapacity of the parties, the inarbitrability of matters, and the form in which it is signed might make the dispute settlement clause void. For instance, if an administrative agent enters into arbitration agreement, the dispute settlement clause will be voidable, as per art 315(2) of the civil procedure code. Also, for insurance contracts, the dispute settlement clause is expected to be in writing.

Recognizing parties’ interest to take their case to arbitration presupposes their autonomy. Party autonomy is an important pillar in any kind of contract agreement. The concept of party autonomy refers to the parties’ freedom to choose arbitration over judicial litigation, the venue of arbitration, the time limit in which the award can be given, substantive and procedural laws (in case of international arbitration). During signing of dispute settlement clause, the parties can insert arbitration final clause, i.e., a clause which aims to make the arbitral award final (non-appealable).

Ethiopian arbitration law allows appeal for those who are dissatisfied by the awards. Any party to arbitration proceeding may appeal under some specified conditions. However, they can waive the right of appeal but the waiver will not have any effect unless made with full-fledged consent (Art 350(2) of Civil Procedure Code).

Appeal is a procedure where by a party displeased by a decision of a lower court goes to a court of higher material jurisdiction. It can also be a process of asking a substantial change to a prior decision. Rober Allen Sedler, a renowned author on Ethiopian Civil Procedure, defines appeal as, “an application by a party to higher court to set aside or revise a decision of a subordinate court.” The court which is seized has the discretion to conduct de-novo hearing (re-hearing the case without any reference to the prior judgment.) However, Sedler argues that an appeal means a review of the case and not a retrial of the case by the appellate court. Does this exclude de-novo­ hearing? I will leave the question unanswered as the reader may be interested to read more about it. The grounds of appeal will involve errors of law and fact. Either party may appeal against any final judgment rendered in lower courts.

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ART 2121 Vs Anti-suit or Anti-arbitration Injuction 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.

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Ethiopia’s Arbitration Regime and the New York Convention

I say 1958 was a year the international arbitration world took a remarkable move. The UN and other parties interested in international arbitration embarked an international convention to recognize and enforce foreign arbitral awards. The convention was signed in New York, The New York Convention to Recognize and Enforce Foreign Arbitral Awards (NYC), and it became the most popular convention in the whole wide world. The major trading nations, those that appear to be antagonistic have signed it without any kind of reservation. Thus far, round about 150 countries have signed and ratified it. Even, it is hailed as the “successful convention drafted by the UN.”

NYC aims to create a favorable environment for the recognition and enforcement of foreign arbitral awards, seeks to put a uniform system for the enforcement of international arbitral awards, plan to craft a standardized and homogenous procedure for recognizing and enforcing foreign arbitral awards. NYC is applicable to both international and domestic arbitral awards: art I(1) says, “… it shall also apply to arbitral awards not considered as domestic awards where their recognition and enforcement are sought.”

Inevitably, the introduction of NYC has helped the international arbitration community to move one step higher. Prior to its enactment (the 1923 Geneva Protocol was the governing rule), nation states have had their own grounds and criterion for enforcing foreign arbitral awards.

Under NYC, states are under the obligation to recognize an agreement to arbitrate, though some questions like granting judicial provisional measure before the constitution of the tribunal. When the court of a nation state is seized of an action in matter in respect of which the parties have made an agreement, it has to refer decline jurisdiction and refer the parties to arbitration (art II(3)).

The specificity and main achievement of NYC is that it has adopted only 4 grounds enforcement of an arbitral award (art V of NYC): if the arbitration agreement is void, signed under incapacity; the award debtor was not given prior notice and was not heard; the issue was inarbitrable or the award contains decisions beyond the scope of the submission to arbitration; the composition of the arbitral tribunal was not in accordance with the parties’ agreement; the award is not yet binding on the parties or has been set aside by a compete authority; the subject matter of the dispute is incapable of being submitted to arbitration; and, the recognition and enforcement of the award is contrary to public policy.

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Appeal and arbitration under Ethiopian Arbitration Law

What would you answer if you are confronted with a question: is appeal a fundamental right? Would you say yes, no or neither? I think the argument leans towards yes, does not it? Art 20(6) of the constitution affirms the right of any person to “appeal to the competent court against an order”; yet, I do not aim to discuss appeal in courts, but its general perception in arbitration.

Before any arbitration proceeding is underway, it presupposes a valid dispute settlement clause. In the book prepared by FreshFields Law Firm, called The FreshFields Guide to Arbitration and ADR, a valid arbitration clause should include inter alia applicable law, arbitrating institution, whether or not the tribunal will grant provisional measures, exclusion of appeals, and language of arbitration.

The civil code and the civil procedure code aspire to govern arbitration proceeding from its beginning until an award is executed. Among the main issues that I find unanswered and perplexing is the question of appeal in arbitration. Art 350 et seq of Ethiopian Civil Procedure Code (CPC) is devoted about appeal, set aside of an award. The CPC looks more liberal than expected: it allows for parties to contractually waive their right to appeal, commonly referred as finality of arbitration clause. Appeal against arbitral awards is made in the same way as appeal from judgments is conducted. Art 352 specifies the court that has appellate jurisdiction: it is the “appellate court which would have had appellate jurisdiction” had the case been filed to a court.

Black’s Law Dictionary defines appeal as a proceeding undertaken to have a decision reconsidered by a higher authority; especially the submission of a lower court’s or agency’s decision to a higher court for review and possible reversal. Taking this definition into account, any civil procedure law lays down grounds of appeal. When it comes to arbitration, the conditions for making an appeal are stipulated under art 351. It remains debatable whether the conditions indicated under art 351 should be considered as a standard or ground of appeal. Art 350(1) of the code uses the term “condition”. I think the terminology chosen by the drafter makes the concept of appeal against arbitral awards vaguer.

It would have been better if the legislature differentiated between standard and ground as they did on art 356 of CPC. Leaving this discussion aside, which I hope to return to it in another post, I would like to frame a question for the reader: would Ethiopian law allow arbitrating parties to contractually limit or expand the “conditions” of appeal stated under art 351? To restate it, if parties are allowed to fully waive their right to appeal, would it be logical to assume that they can contractually limit the “conditions” of appeal?

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Interim measures of protection in international commercial arbitration in Ethiopia


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.

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