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“Formation of Arbitral Tribunals and Disqualification and Removal of Arbitration under Ethiopian Law” by Zekarias Kene’áa from Journal of Ethiopian Law 2007
FORMATION OF ARBITRAL TRIBUNALS
A. Appointment of arbitrators
One of the main characteristics of arbitration is that there would be private judges or references that would consider and resolve the dispute(s) between the parties as opposed to judges sitting in courts which are appointers of the sovereign. In other word arbitrates are appointees of the parties or disputants or as the case disputants or as the case may be the appointers of the parties /disputants through some kind of an appointing authority designated as such by the party themselves. As the reference is going to be considered and finally reserved by the arbitrators, their appointment becomes very important in the sphere of arbitration. It could in fact be said that with out the appointment of the arbitrators in one way or another, the arbitral tribunal cannot be formed and the agreement of to refer their existing or future disputes to arbitration cannot be executed. It would remain an agreement with out effect.
Primarily, the appointment of the arbitrators consisting the private dispute resolution tribunals is the right of the parties. How ever if the parties fail to agree on the appointment of their private judges, they may seek a court's assistance. Here below we will consider situations where both parties appoint their arbitrators, courts appoint them, when they are appointed by third party entrusted with such an appointment, and the role of arbitrators in appointing or choosing a chairman, a president, or an umpire as it may be called.
1. Appointment by the parties
Parties may appoint their respective arbitrators the moment they agree to submit their existing dispute to arbitration, or may agree on the proposal made by one of them. The same applies when parties agree to submit their future dispute to arbitration. The parties can, right from the moment they gave their free consent to submit their future dispute" arising from" or "in relation to" their main underlying contracts to arbitration, appoint their respective arbitrators or endorse the proposal of the appointment of arbitrators submitted by one of them which would be tantamount to appointing one's arbitrator(s) respectively.
The equality of the parties as under the provision of Article 3335 of the civil code, must however not be forgotten with regard to the appointment of arbitrators. The provision of Article 3355 is so strict that the agreement to arbitrate is rendered invalid where it places one of the parties in a privileged position as regarded the appointment of the arbiteratiors.3. This presupposed that there has been an agreement between the parties to the appointment but the agreement reached on cannot be valid if it puts one of the parties on a privileged position. Professor Rene David wrote:
A restriction on the freedom of the parties would seem to be imposed in all countries. it is imperative that parties should be ensured full equality in the constitution of the arbitral tribunal. a specific provision of the law in some countries, the general principles of law in other countries condemn a number of practices on the grounds that they result in s privileged position for one of the parties as regarded the consultation of the arbitration tribunal.(‘Arbitration in International Trade’, 1985)
The equality of the parties requirement imposed by Article 3335 of the Civil Code doesn't, however, prohibit the endorsement by one party of the list of would be arbitrators submitted by the other provided however, that the endorsing party's consent is freely given. what article 335 purports to guard against, is that it should not be acceptable where " all arbitrators are appointed by one of the parties only", or in case of a sole arbitrator, where his appointment was made by one of the parties with out securing the free consent of the sole arbitrator .
Appointment of arbitrators necessarily involves the naming of the arbitrators by the parties and hence the parties agreeing only on the procedures for appointment does not mean appointment in the sense it is used in the Civil code. The naming of arbitrators in the agreement to arbitrate is left to the discretion of parties. They may agree to appoint their arbitrators in the agreement for the number and procedure of appointment and leave the actual naming for future date but before a dispute has arisen between them. The simultaneity of agreement to arbitrate and naming of arbitrators then and there seem to be highly probable in the cases where the agreement to arbitrate is in reference to already existing disputes. It is, however, possible even for the parties to postpone the appointment of arbitrators until a future date. In agreements to arbitrate future disputes, the highly probable arrangement would be that the agreement provides for the procedure and number of arbitrators, but the likelihood would be that the agreement provides for procedure and number of arbitrators , but the likelihood would be that the naming of the arbitrators is left until after the dispute has arise between the parties . Nevertheless, the possibility that the appointment is made at the time of the agreement cannot be dismissed.
Both in compromise agreement i.e. the agreement to submit existing disputes to arbitration or in the clause compromisers i.e. the agreement to submit future dispute to arbitration, there may be advantage in leaving the appointment of arbitrators until after a dispute has arisen between parties. It is submitted, that awareness by the parties of the nature and extent of their disputes before they appoint their arbitrators would be advantageous to them. This is so particularly because it enables them to select the appropriate persons with the necessary qualification and expertise to facilitate the speedy disposal of their disputes and to avoid the trouble of re appointing in cases where the pre-dispute appointed arbitrators may have died or have become incapable.
Sub- article (3) of Article 3331 of the civil code provides “where the parties have failed to specify the arbitrators or the manner in which they shall be appointed, each party shall appoint one arbitrator”. This is intended to fill the vacuum left by parties in the event that they were not careful enough to fix the number of arbitrators or the procedure by which they shall be appointed, without, prejudice to provisions of article 3335 of the civil code.
Sub article (3) of article 3331 has three limbs. the first one is intended to cover the situation where the parties have agreed on the procedure of appointment of their arbitrators but failed to have provided for the number of arbitrators in which case they shall appoint one arbitrator each and if their agreement one the manner of appointment HAPPENS to be different from appointing one arbitrator each, without prejudice to Article 3335, it seems that such an agreement on the manner of appointment is overridden by the application of article 3331(3).If , for instance, the parties have agreed that the arbitrators were to be appointed by the Ethiopian chamber of Commerce but failed to provide for the number of arbitrators, and how many arbitrators each party should appoint, then they shall appoint one arbitrators each but party should appoint ,then they shall appoint one arbitrator each but their agreement that the arbitrators were to be appointed by the Ethiopian chambers of commerce is impliedly rendered ineffective unless one argues that the parties agreement as to the appointing authority should remain effective and only the aspect of Article 3331(3) dealing with the number of arbitrators should be given effect.
The second limb of Article 3331(3) would be that in the agreement to arbitrate the parties would have provided for the number of arbitrators but have failed to agree on how they are to be appointed and may be on who appoints them. In such a case again, the simple way out provided by Article 3331(3) would be that the parties should themselves appoint one arbitrator each. On the other hand, if the agreement of the parties provides that there shall be appointed five arbitrators, the parties should be able to appoint to arbitrators each.
The third aspect of Article 3331(3) would be that in certain circumstances the “or” in sub-article (3) of Article 3331 might need to be taken as an “and”. Parties may fail to provide for both the number of arbitrators and the manner or procedure of appointment in which case Article 3331(3) should again be of use to remedy the situation. The more likely applicability of sub-article (3) of Article 3331 is after disputes have arisen between the parties but in the circumstances where there is no recalcitrance of the parties to constitute the tribunal.
On the other hand, Article 3333 gives the procedure of appointment, which may be used by the parties to constitute the tribunal in cases that fall under Article 3331(3). As Article 3333 begins with “where necessary,” one would imagine that there is an implied pre-supposition that as far as possible, the parties should try to agree both on the number and procedure of arbitrators. Failing such agreement one would also imagine that “the party availing himself of the arbitral submission” may make use of the procedure under Article 3331(1). In such a situation, the concerned party shall have to specify the dispute he wishes to raise and appoint are arbitrator and has to give notice of his action to the other party or the parson entrusted with the appointment of the arbitrators in the arbitration agreement.
The notice receiving party, or somebody authorized by him, is given 30 days commencing from the date of reception of the notice under Article 3333(2) with in which he may appoint his arbitrator(s) falling which he loses his right of appointing his arbitrator and the right shifts over to the court.9. Sub-article (3) of Article 3334 may be taken as a provision of the law empowering the parties, in their agreement to arbitrate, to modify the rules of sub-article (1) and (2) of the same article. The parties can, among others, agree to shorten or elongate the thirty days limit or shift the commencement of the running of the limitation from date of reception to date of dispatch.
2. Appointment by the Court
(i) Of arbitrators
Where the parties fail to appoint their arbitrators either in the agreement to arbitrate or subsequently, the right of appointment shifts over to the court. This is so because at least one of parties, i.e. the one seeking to “avail himself of the arbitral submission” should, to set the arbitral justice in to motion, “specify the dispute he wishes to raise and appoint an arbitrator” as a corollary of which the other party or the person entrusted with appointment of arbitrator under the arbitration agreement shall be given notice of his willingness to avail himself of the agreement and his appointing an arbitrator. It is not until after the party or as the case may be the appropriate person in trusted with the appointment of arbitrator is put the right to appoint arbitrator shifts over to the court. Putting the notice – receiving parties in default would only materialize where thirty days have elapsed after he has received a notice specifying the dispute the other party whishes to raise in the fact of his having appointed his arbitrator. In circumstances where the parties may have agreed to modify the provisions of Article 3334(1) and (2) of the Civil Code, putting in default may materialize in shorter or longer time than thirty days after reception or dispatch of the notice.
If the notice receiving party or person wants to make use of his right of appointing his share of arbitrators after receiving the notification given by the other party, he can still proceed and appoint his arbitrator provided it is within the limitation period of thirty days or longer or shorter period of time if otherwise fixed by the parties. The court’s right of appointing an arbitrator becomes exercisable after it is made certain that the notice receiving party or person has failed to make use of the notification of the initiation of the arbitral justice.
(ii) Of presidents of tribunals
The right of the court to appoint “an arbitrator who shall as of right preside over the arbitral tribunal” becomes exercisable after the appointed arbitrators have failed to agree to appoint a chairman either from among themselves or somebody outside of themselves. Sub- article (1) of Article 3332 in this respect orders that in the situations where there is an even number of arbitrator, they shall, before assuming their functions, appoint another arbitrator, outside their own rank, who shall as of right preside over the tribunal. This provision presupposes between the arbitrators in appointing the umpire and it is when they fail to reach an agreement as to who shall chair the tribunal in its proceedings leading to an enforceable award, that the right to appointing the chair arbitrator passes over to the court. The right of appointment of presiding arbitrator passes over to the court. The right of appointment of presiding arbitrator however, doesn’t automatically passes to the court merely because the arbitrators have failed to agree to appoint such a president. Although it is not explicitly provided, it seems that the arbitrators whose number is even and who have failed o reach an agreement as to who should preside over the arbitral tribunal report back to the parties to the court for appointment of a president. Incidentally, even in the appointment of an ordinarily arbitrator, by the court, it should be noted that it is the party seeking to avail himself of the agreement to arbitrate that after putting the other party in default, applies to the court that rest of the arbitrators, presumably including the chairman, be appointed by the court.
The provision of Article 3332(1) applies where the number of arbitrators appointed either by the parties or as the case may be by the person authorized to appoint on their behalf is, to take the minimum, two, i.e. where the parties or the person entrusted with appointing appointed one each only. Staring from two, it could be any number as long as the number of appointed arbitrators is even.
Where the number of arbitrators chosen by the parties is odd, they have to appoint the precedent from among themselves.16 This could be taken as indication that despite the number of the parties being just two, there may be the possibility of their appointing more than one each arbitrator provided such an even appointment doesn’t violet the equality provision of Article 3335 of the civil code. One of the parties or one of the persons or authorities in charge of appointing the arbitrators can, therefore, agree to endorse the appointment of the arbitrators nominated by the other.
3. Appointment by the person Entrusted with the Appointment
It may be appropriate, at this juncture, to at least briefly deal with the appointment of arbitrators by a person who may be entrusted with the power of such an appointment by the parties. Ideally, it would be preferable if the parties themselves appoint their arbitrators by reaching agreement between themselves for “a major attraction of arbitration is that it allows parties to submit a dispute to judges of their own choice; and parties should exercise this choice directly rather than allowing it to be exercised by third parties on their behalf.” However, parties cannot, in all cases of appointing their arbitrators, among themselves reach agreement particularly in cases where they have opted for a sole arbitrator as distinguished from a collegial arbitral tribunal. It, therefore, becomes imperative that “in all types of arbitration, a method of appointing the arbitral tribunal should be available to break the deadlock which arises if the parties cannot agree on the composition of the arbitral tribunal”.
As has already been observed above, the law provides for the courts to appoint arbitrators where the parties fail to reach agreement where one of the parties fails to appoint his share of arbitrator where as the other wants to avail himself of the arbitration agreement and hence applies to the court after giving notice and waiting for the legally prescribed period of limitation. But the court’s involvement should be as a final resort and parties might want an intermediary third party to appoint their arbitrators before finally the court, in order to protect the interest of the party seeking to avail himself of the arbitral submission imposes some arbitrators on them.
As stated above, the right of appointment of arbitrators, however, may be entrusted to another person by the parties or may be one of them so that that other person “may exercise the right on behalf of him/them.” Such other person, who becomes a trustee of the parties, exercise his right before a final resort is made to the court. It, in fact, transpires from Article 3333(2) and 3334
Other Person “may exercise the right on behalf of him/them.” Such other person, who becomes a trustee of the parties, exercises his right before a final resort is made to the court. It, in fact, transpires from Article 3333(2) and 3334(1) that the trustee for the appointment of arbitrators plays the parties’ role whenever there happens to be one. Nonetheless, it could be that first the parties themselves try to appoint their arbitrators and if they fail entrust another person with the appointment, but it may as well be that the parties right from the beginning entrust the appointment of arbitrators to a third person. In Ethiopia, there is no guiding rule as to who may be entrusted with the power of appointing arbitrators on behalf a party. Any capable person may be entrusted with the power to appoint an arbitrator on behalf a party. Without the possibility of other persons being entrusted, and without losing sight of the fact that an arbitration may be ad hoc, the two recently formed institutions, i.e., The Ethiopian Arbitration and Conciliation Center and There Arbitration Institute of the Addis Ababa Chamber of Commerce and Sect oral Associations may be mentioned as well-posited persons (institutions t appoint arbitrators on behalf parties in Ethiopia. These two institutions keep their own rosters of competent arbitrators. For commercial arbitrations, the National and the Addis Ababa Chambers of Commerce may also be entrusted.
As is in use in very many countries the world over, particularly in relation to international commercial arbitrations, professional institutions may also be entrusted with the power to appoint arbitrators. Professional Institutions are, to mention just two of them, organization like the Institute of Chartered Arbitrators and the International Bar Association.
On the other hand, on the regional or international plane, there are arbitral institutions, which may assist in appointing arbitrators. Such arbitral institutions include, the International Chamber of Commerce (ICC), the LCIA (The London Court of International Arbitration) the LMAA (The London Maritime Arbitration Association), The Kuala Lumpur Regional Center for Arbitration, The Hong Kong International arbitration Center, The Cairo Regional Center for International Commercial Arbitration, The Spanish Court of Arbitration, The American Arbitration Association (AAA), and The Inter-American Arbitration Commission, and the International Center for the Settlement of Investment Disputes(ICSID).
The discussion above, might possibly lead to the view that “persons” entrusted with the appointment of arbitrators should only be a juridical one as opposed to a physical person. There is, nevertheless, no indication in the Civil Code that the “person” to be entrusted with the appointment of arbitrators need necessarily be juridical. There appears to be no reason why the p[arties, provided they agree, cannot entrust the appointment of their arbitrators to another third party who is a physical person.
4. Appointment by the Court in Cases of Default
It is not only in situations where the parties have failed in their submission to provide for the appointment of arbitrators or fail to agree on the appointment of arbitrators subsequently that the court’s assistance in appointing is sought. Article 3336 (1) of the Civil Code in a mandatory fashion provides that “where an arbitrator refuses his appointment, dies, becomes incapable, or resigns, he shall be replaced by procedure prescribed for his appointment in accordance with the provisions of the preceding articles.” According to this provision, appointment of an arbitrator in replacement of one who has already been appointed by the parties but because of the latter’s refusal to accept the appointment, death, post appointment incapacity, or resignation, the tribunal couldn’t have been formed though Articles 3331 and 3335 come into application to fill the gap created. On the other hand, a look at those Articles reveals that appointment in accordance to them is either by the parties arbitrators, the court or the person entrusted with the power of appointment of an arbitrator. Leaving aside appointment by the parties, by the arbitrators, and by the person entrusted with the power, it may be worthwhile, at this juncture, to look at the power of the court in appointing arbitrators in cases of refusal, incapacity, death or resignation of an already appointed arbitrator.
The parties to an agreement to arbitrate or even disputing ones may have agreed and named or appointed some persons who they believe would resolve their dispute. Unless one thinks of such naming of arbitrators after securing the consent of the would-be arbitrators, there may be the possibility that one of the named arbitrators may refuse to take the appointment. As a result, there may be created a vacancy that needs to be filled. Failing the agreement of the parties to fill such a vacancy or in case of impossibilities for the parties to dos so, it should be the court that should be given the power to fill the vacancy there by assisting in the constituting of the tribunal.
Where and arbitrator who presumably has been appointed by the parties dies, the incident automatically affects the constitution of tribunal. This could happen immediately after the appointment of their respective arbitrator by the parties but before a third arbitrator, who, as of right, will preside over the tribunal is appointed. In such a situation, the single left arbitrator cannot exercise his right under Article 3332(1). Under the provisions of the latter Article, the right is given to both arbitrators to be exercised simultaneously and jointly i.e., by reaching an agreement as to who should be presiding over the arbitral proceedings. It may also be that the death of one of the arbitrators appointed by the parties or by the court whose number is odd may occur before they have appointed a chairman arbitrator from among themselves in which case their number would definitely be reduced to and becomes even and consequently either Article 3332 (1) should come into application or a replacement appointment should be made in the section under consideration by the court although it could as well be made by the parties themselves.
The court’s assistance in appointing an arbitrator may also be sought when an arbitrator becomes incapable after he has been appointed. It should, however, be noted that there seems to be an overlapping between the application of Article 3336(1) on the one hand and that of Article 3340(1) cum 3336(2) on the other. According to Article 3336(1), it seems that where and already appointed arbitrator becomes incapable, his case comes under default. Hence, he could be replaced either by the parties or the arbitrators or the person entrusted with the appointing of the arbitrators. Failing agreement between the parties, the arbitrators, or persons entrusted with the power to appoint, then the power to appoint shifts over to the court at thee request of one of the parties or the party wishing to avail himself of the arbitral agreement. Pursuant to Article 3340 (1) cum 3336(2) on the other hand, the situation where and arbitrator becomes incapable constitutes a legal ground for disqualification and in such a case, the court may only make replacement appointment. Though sub-article (3) of Article 3336 may be modified by the agreement of the parties anyway, the court’s assistance could still be sought in appointing replacement arbitrators even if it is because of disqualification which is going to be considered later.
Where an arbitrator resigns after he has accepted his being appointed but before he has started discharging his duties or even after he has started discharging his duties as an arbitrator, a replacement appointment may be made by the court. Before summing up my discussion on replacement appointment of arbitrators by the court on default grounds, under Article 3336(1), it may be said that sub-article (1) of the Article deals with two voluntary and two involuntary grounds as causes for replacement of arbitrators. Accordingly, refusal to accept one’s appointment and resignation could be categorized as voluntary causes for replacement of and arbitrator whereas death and incapacity may be categorized as involuntary. It must not be forgotten that the provisions of Article 3336, in general, are not mandatory in the strict sense. They may be modified by the parties’ agreement as stated in sub-article (3) of the Article.
At this juncture, it may be necessary to consider the relationship between the provisions of Article 3336 and Article 3337. The latter Article in its first sub-article provides: “where the arbitrator has been named in the arbitral submission, and the parties do not agree on who is to replace him, the arbitral submission shall lapse.” What does this mean vis-a-vis the provisions of Article 3336? If the provisions of article 3337 were to be given effect, when would the provisions of Article 3336 come into application? In other words, if and if arbitrator has been named in the agreement to arbitrate and there arises ht need to replace him because of the taking place of one of the reasons under Article 3336(1), and the parties do not agree on who is to replace him, does the arbitral submission lapse in the absence of a modifying agreement between the parties? Or can one of the parties, more likely the one wishing t avail himself of the arbitration agreement, apply to the court for a replacement appointment? In sub-article (2) of Article 3337, the law makes it clear that an agreement to arbitrate future disputes should be treated differently. In contradistinction to the situation where the parties agree to submit an existing dispute arbitration, and agreement to submit future disputes to arbitration does not lapse in case the parties did not agree on who is to replace him if an arbitrator is unable to discharge his duties because of any of the reasons provided for in sub-article (1) of Article 3336. However, sub-article (2) of Article 3337 is qualified and the agreement to submit future disputes shall only remain valid, if at the time a dispute arises the ground that gave rise to the inability of the arbitrator to discharge his duties has ceased. According to sub-article (2) of Article 3337, therefore, the application of the provisions of sub-article (1) of Article 3337 is limited to cases of agreements to arbitrate existing disputes.
Accordingly, if one limits himself to arbitration of existing disputes, and the disputants fail to agree on who is to replace an arbitrator who has been named in the agreement to arbitrate, and the parties did not, by agreement, set aside or modify the seemingly mandatory provision of sub-article (1) of Article 3337, it is provided that the arbitration agreement lapses and the party seeking to avail himself of the arbitral submission cannot apply to the court of the court for a replacement appointment.
There is nothing clear as to whether Article 3337(1) is applicable only to case where there is only one arbitrator as distinguished from a tribunal constituted of “several” arbitrators although the define article “the” used in that sub-article seems to indicate that it is. It is highly probable; however, that sub-article (1) of Article 3337 is limited to sole- arbitrator each by the parties, the like hood of application of the sub-article under consideration is remote in the each party would be replacing his arbitrator who refuses to accept his appointment, dies, becomes incapable, or resigns. If the parties fail to agree on who replaces their sole-arbitrator appointed to resolve their existing dispute, therefore, their submission shall laps on the strength of Article 3337.
B. The Number of Arbitrators.
The Civil Code in Article 3331(1) states that the parties may, in the agreement to arbitrate, provide that there shall be one of several arbitrators. This may automatically be taken as a legal provision giving the parties freedom to submit the resolution of their dispute to one or three or more arbitrators. It, in other words, gives the discretion to the parties on whether to submit their case to one private judge (a sole arbitrator) of their choice or to a tribunal constituted of three or more odd-numbered arbitrators the chairman of which is to be chosen either from among themselves or from outside depending on the number of arbitrators appointed by the parties.
It is important to note that there is no provision of the law that limits the number of arbitrators to be chosen by the parties. It, therefore, follows that the maximum number of arbitrators to be appointed, is left to be fixed by the parties as conveniently numbered as they think fit for the quick and just disposal of their case, without ignoring the possibility that the parties may go for a sole arbitrator.
One thing to be noted is the Civil Code implicitly reflected is preference for a panel of three arbitartors23 in comparison to sole arbitrator or an odd number of arbitrators, which is more than three. This is indicate in Article 3331 (3) of the Civil Code where in it is provided “where the submission fails to specify the number of arbitrators or the manner in which they shall be appointed, each party shall appoint one arbitrator” . This, of necessity, leads to the application of Article 3332 which is to the effect that the two arbitrators appointed by the parties will have to appoint another third arbitartor23 who shall as of right preside over the arbitration tribunal. Together with the president therefore, the arbitral tribunal would be constituted of three arbitrators. The procedure for appointment provided in Articles 3333 and 3334 of the Civil Code also consolidated the stand taken in Article 3331(3).
On the other hand, through the Civil Code’s preferred number, at least impliedly, seems to the three arbitrators for a tribunal, in general however, it is important to note that the Code, in one way or another, tends to go for uneven number of arbitrators there by avoiding the “possibility of a deadlock and the attendant dilatory tactics ” This manifested in the code’s imposition on the appointed arbitrators either by the parties or persons in charge of their appointments or even by the courts whose number is even unless the parties have agreed otherwise, the appoint another arbitrator (outside themselves) who shall as of right preside over the arbitral tribunal and whose addition makes the number of the arbitrators on the tribunal odd there by facilitating decision by majority.
II. Disqualification Removal and replacement of arbitrator
- A. Disqualification.
In addition to the grounds for replacement of an arbitrator for his default, this is as used in Article 3336 of the Civil Code, which may either be voluntary or involuntary as the case may be, there are other reasons for which an arbitrator may either be disqualified or removed.
As has already been discussed, by virtue of the provisions of Article 3336(1) of the Civil Code, there is a procedure for the replacement of an arbitrator who refuses to accept his appointment, who dies after having accepted his appointment, becomes incapable after his appointment or resigns after having accepted his appointment. Article 3340-43 on the other hand, provide for the grounds that may cause the disqualification and removal of an arbitrator and the procedure to be followed in putting into effect removals and disqualifications. As has already been hinted, there is much in common between what Article 3336 provides by way of the grounds and the replacement procedure of an arbitrator in case of his default on the one hand and what Articles 3340 et seq. on the other provide on the disqualification and removal of an arbitrator. Despite the similarities between the provisions of Article 3336 and those of Articles 3340 et seq., yet there are observable differences between replacement for default and disqualification and removal, which merits to be discussed herein below.
(i) Grounds of disqualification
Article 3340 (1) of the Civil Code lays down a number of reasons why an arbitrator may be disqualified some of which, to state again, did appear in the provisions of Article 3336(1). The grounds enumerated under the provisions of sub-articles (1) & (2) of Article 3340 are: minority, conviction by a court, unsound mind, illness, absence, impartiality, independence and any other reason sufficient to indicate the inability of the arbitrator to discharge his functions properly or within a reasonable time. Each ground deserves to be considered separately and below is an attempt made in that line.
a) Minority of an arbitrator
Mention has already been made that even though “any person may be appointed as an arbitrator” the effect of such a wide and unqualified provision seems to have been curbed by the provisions dealing with disqualification of an arbitrator. It therefore follows that a minor appointed as an arbitrator may later on be disqualified merely because he is not of age. What one should bear in mind here is that unless one of the parties, presumably the one entitled by law to avail himself of the disqualification applies to the court to that effect, a minor arbitrator need not be disqualified merely because he is not of age. To repeat what has already been said earlier, there is no positive requirement of capacity laid down in the arbitration provisions of the Civil Code unless one argues that the requirement is there by implication. Although there is the risk of disqualification in as much as an arbitrator didn’t attain the age of 18, a 15 years old boy could however be appointed an arbitrator and the award he renders could be enforceable. As distinguished from the application of Article 1808, here, it is one of the parties that should apply for disqualification and not the minor arbitrator. An arbitrator may, however, avail himself of his being incapable to initiate the replacement under Article 3336(1) of the Civil Code.
b. Where an arbitrator has been convicted by a court
An arbitrator may be disqualified if he has previously been found guilty of a crime. This is clearly a very wide ground that may be said embodies any crime for which an arbitrator whose disqualification is being sought has been convicted and the record of which has been kept. Normally, one would have thought of crimes like bribery, corruption, breach of trust and others akin to such crimes to be most relevant types of crimes justifying the disqualification of an arbitrator. However, according to the phrase used in Article 3340(1) of the Civil Code, there seems to be no distinction between the nature and/or gravity of the offence for which an arbitrator has been charged and convicted. It seems the presentment of a record of conviction of any crime would be sufficient to warrant disqualification for the purposes of Article 3340(1) of the Civil Code.
As a ground warranting disqualification, one also would wonder if legal interdiction (this would be consistent with capacity provisions of the Civil Code) may fit in to the situation envisaged under Art. 3340(1). A legal interdiction signifies the circumstances in which the law withdraws from a person the administration of his property as a consequence of a criminal sentence passed on him 28 and penal laws determine the cases in which a person is to be considered as interdicted. In our case, the relevant provision of The Criminal Code of the Federal Democratic Republic of Ethiopia 2004 is Article 123 and it provides:
Where the nature of the crime and the circumstances under which the crime was committed justify such an order and the criminal has, by his unlawful act or omission shown himself unworthy of the exercise of any of the following rights, the court may make an order depriving the offender of:
a) His civil rights particularly the right to vote, to take part in any election, or to be elected to a public office or office of honor, to be a witness to or a surety in any deed or document, to be an expert witness or to serve as an assessor; or
b) Of his family rights particularly those conferring the rights of parental authority of tutorship or guardianship; or
c) His rights to exercise a profession, art, trade or to carry on any industry or commerce for which a license or authority is required.
In Article 3340(1) of the Civil Code, “conviction by a court” is not qualified as to whether the conviction must be coupled with the deprivation of the rights mentioned in Article 123 of the Criminal Code in which case it may have to be taken literally. If it is to be taken literally, it doesn’t matter whether the criminal court that has convicted the arbitrator whose disqualification is being sought has gone further to find the previous criminal (the present arbitrator) to be unworthy of the exercise of his civil rights or may be to put it more aptly, to be appointed as an arbitrator.
According to Article 3340(1) of the Civil Code, therefore, an arbitrator may be disqualified if the penalty or the measure pronounced in the judgment by which he has been convicted has been entered in police record in cases where such an entry is required by law and in accordance with the order relating there to. Of course, the party seeking to disqualify the arbitrator should have has access to police record provided he meets the requirement of a person having a justified interests in them which again is determined by the law referred to in sub-article (1) of Article 156 of the Criminal Code.
An arbitrator, can validly object to his being disqualified on the ground of criminal conviction if he had been re-instated and his conviction cancelled pursuant to Articles 232-237 of the Criminal Code . In general, it doesn’t seem to be an easy task for a party to probe his allegation of the past criminal conviction of an arbitrator whom he is desirous of having disqualified. In the event that the party seeking the disqualification of an arbitrator on the ground of past criminal conviction fails to prove his allegation, it may be argued that the concerned arbitrator would remain on the tribunal. On the other hand, there is also the possibility of the arbitrator being removed from the tribunal and be replaced by another arbitrator immediately after an allegation of past criminal conviction has been tabled. The later argument may be strong especially taking into consideration the time lost in proving and/or disproving past criminal conviction of an arbitrator whose disqualification is being sought.
c) Where an Arbitrator is of Unsound Mind
The other ground for disqualification of an arbitrator is if he/she is found to be a person of unsound mind. This generally expressed ground could, however, cause debate as to whether it refers to somebody who is notoriously insane or whether it’s also applicable to a person who is mentally unbalance. The law deems a person to be notoriously insane where by reason of his mental condition he is an inmate of a hospital or of an institution for insane persons or of a nursing home for the time for which he remains an inmate. In the rural areas, i.e. in communes of less than two thousands inhabitants, the insanity of a person shall be deemed to be notorious, where the family of that person, or those with whom he lives, keep over him a watch requested by his mental condition and where his liberty of moving about is, for that reason, restricted by those who are around him.
Where the case of an arbitrator whose disqualification is sought on the ground of being a person of ”unsound mind” happens to be notorious, then the proof of his insanity might not, as such, cause difficulty thanks to the two Civil Code provisions above-mentioned i.e. Arts 341 and 342. It would be a matter of obtaining evidence as to the mental condition of the concerned arbitrator from a hospital, or an institution for insane persons or from a nursing home. If, on the other hand, the concerned arbitrator happens to be from the rural area, evidence may be obtained from his commune (may be from his local Peasant Association or a Cooperative Society?).
On the other hand, if the insanity of the arbitrator one of the parties wants to have disualified is not notorious, the proving of the “unsound” status of the concerned arbitrator’s mind might not be very easy. In urban context, in a while visiting a mental hospital or institution as an outpatient in which case there may be the possibility of obtaining medical evidence from the hospital or institution visited by the concerned arbitrator. On the other hand, if the concerned arbitrator has never been to a mental hospital or institution, but yet people in the community he lives and/or works regard him as a person of “unsound mind,” then proving his mental condition might not be easy. Even in such circumstances, however, resort may be had to the Urban Dwellers’ Association or Kebele Administration of the urban centre wherein the concerned arbitrator lives, or in rural communities to the concerned Peasants’ Association and/or Cooperative Society. How far such non-medical evidence may be a conclusive proof to have an arbitrator disqualified on the ground of being a person of “unsound mind,” however, becomes an issue by itself. Going back to the provisions of the Civil Code that deal with capacity, one notes that where the insanity of a person is not notorious, juridical acts performed by such a person may not be impugned by himself on the grounds of his insanity unless he can show that at the time he performed them, he was not in a condition to give a consent free from defects.
Subject to the exception in Articles 349 and 350 of the Civil Code, therefore, if a person whose insanity is not notorious cannot invalidate his acts, can a party to an arbitration proceeding have an arbitrator disqualified on the ground of the latter being of “unsound mind” where such “unsoundness” is not notorious? Who is to determine the truth of the allegation that an arbitrator is a person of “unsound mind” to bring about the desired disqualified on the ground of his being a person of “unsound mind” be submitted to a court? These an d similar other questions remain unanswered since there is no provision in the Code that addresses them.
d. Where an Arbitrator is Ill
Pursuant to Article 3340(1) of the Civil Code, illness may also constitute a ground for disqualification of an arbitrator. As no indication as to what sort of illness may be taken as a valid ground to disqualify an arbitrator is given by the Code, it may possibly be said that any illness other than mental illness which is treated separately, and which has already been discussed above, may be taken as a ground for having an arbitrator disqualified. “Illness” as a ground to justify the disqualification of an arbitrator appears to be an even more awkward ground relative to “unsound mind” as a ground. To envisage the application of illness as a ground for disqualification, the situation may be such that the concerned arbitrator might want to continue to serve on the tribunal pretending that he is healthy but in actuality he is ill. This might sound unlikely but it may sometimes happen because of the fees to be paid to an arbitrator. The more likely imaginable circumstance in relation to illness would be where an arbitrator is no longer able to regularly appear for meetings of the tribunal or generally unable to discharge his responsibilities as a member of the tribunal or generally unable to discharge his responsibilities as a member of the tribunal. There may also be the possibility that the ailing arbitrator submitted a resignation letter to the tribunal and to the party that appointed him with the view to voluntarily trigger his being disqualified and being replaced by another. Application to have an arbitrator disqualified also may possibly be submitted by the party who appointed the ailing arbitrator in the circumstance where the concerned arbitrator struggles to continue to serve on the tribunal with the hope that he will soon get well and resume rendering the services expected of him.
In general, and as stated earlier on, illness as a ground for disqualification consists in situations where an arbitrator is not healthy and as result cannot attend the meetings of the arbitrators and moreover, the proceedings of arbitral tribunal. If the tribunal cannot effectively continue to discharge its duties because would be to adjourn the hearings and/or meetings may be once or twice.
Nevertheless, since it would definitely be detrimental and unfair to the parties if the resolution of their dispute is to be dragged indefinitely because of the illness of one of the arbitrators, it would become appropriate for the entitled party to apply to the tribunal or “another authority”, where there is one, to have the ill arbitrator disqualified.
e. Where an Arbitrator is absent
To begin with, it is not clear whether “absence” in Article 3340(1) of the Civil Code is used in reference to failure to attend the arbitral proceedings and/or meetings of the arbitrators, or the technical legal circumstance where an arbitrator has disappeared and has given no news of himself for two years and hence is declared to be absent. In any event, and despite lack of clarity in its meaning, “absence” is mentioned in Article 3340(1) of the Civil Code as one of the grounds to disqualify an arbitrator.
If the word “absence” in Article 3340(1) of the Civil Code is intended to cover the situations where the arbitrator fails to attend meetings and/or proceedings; then the absence could be due to mental illness or another type of illness that may suffice to cause disqualifica6ion. “Absence” if it is in relation to failure to attend meetings and/or proceedings could also be attributable to any other reason that debars an arbitrator from discharging his functions properly or within a reasonable time. In other words, the arbitrator could still be around but is unable to attend meetings and/ or proceedings regularly. Failure to attend just one very important preliminary meeting of the arbitrators may possibly result in having the absentee disqualified for the purposes of Article 3340(1) of the Civil Code unless the parties are convinced that the absentee arbitrator is kind of a key person for the resolution of their dispute and would accordingly wait and see if he could resume his functions soon.
On the other hand, if absence in Article 3340(1) is in reference to the technical legal situation covered by Articles 154-173 of the Civil Code, starting from the very first article., i.e. Article 154, there should at least be a lapse of time of two years since the last news about the person purported to be absent has been heard from him. After an application has been submitted to a court of jurisdiction, there will also, of necessity, be lapse of time, which probably would push the time until the final declaration of absence is made. The question would, therefore, be could parties to a dispute be patient enough to wait for longer than two years and until a declaration of absence is made to have the absentee arbitrator disqualified? The answer to this query should naturally, be in the negative. This is so simply because of parties should wait for longer than two years to have an absentee arbitrator disqualified; then arbitration process cannot but be taken as a means of speedy resolution of disputes. It, therefore, follows that “absence” in Article 3340(1) cannot be in reference to the declaring of absence at least with respect to the disqualification of an arbitrator appointed to resolve an existing dispute. However, there may be the possibility of the term “absence” used in Article 3340(1) in reference to the legal circumstances covered by Article 154-177 of the Civil if the arbitrator to be disqualified on the ground of “absence” was appointed to resolve a future dispute.
f. any Other Reason That Renders an Arbitrator Unable to Discharge His Functions Properly or Within a Reasonable Time
Without prejudice to the grounds considered above, Article 3340(1) in its latter limb also recognizes “any” other reason rendering an arbitrator unable to discharge his functions or within a reasonable time” to be a ground for disqualification. This latter limb of Article 3340(1) is so wide any may be taken as accommodating very many reasons. The following may be considered as few of the possible grounds that may fit into this last limb of Article 3340(1).
1. Detention and/or imprisonment. Where an arbitrator is imprisoned for sometime, this fact may be taken as a factor adversely affection his ability to attend the arbitral proceedings and/or meetings of the arbitrators. The detention and/or imprisonment may be for a brief period of time. Nevertheless, however brief the period may be, it might still render the concerned arbitrator unable to discharge his functions within a reasonable time.
2. Fulltime engagement otherwise. Where an arbitrator is fulltime engaged otherwise, and is, as a result, unable to discharge his functions of being an arbitrator, this very situation may be taken as sufficient enough to constitute a ground for disqualification.
3. Insurmountable Personal and/or Family Problems. Where an arbitrator is faced with an insurmountable personal and/or family problem and is unable because of that the discharge his functions or within a reasonable time the situation in which the concerned arbitrator finds himself may be a sufficient ground to have him disqualified. Blanket as the last limb of the provisions of Article 3340(1) is, any reason, which could not be imagined now, may be a invoked to have an arbitrator disqualified as long as the concerned arbitrator is totally unable to discharge his functions as an arbitrator because of that reason or though he may be able to discharge his functions, is unable to do so within a reasonable time because of the same reason.
g. Partiality of an Arbitrator
Unfortunately, the Civil Code doesn’t provide the definition of partiality or impartiality. Not does the Code provide any clue as to what circumstance or which factors constitute cases of partiality. We may, therefore, be forced to look elsewhere in order to be able to get some ideas as to what “partiality” may mean or those factors that constitute it. To begin with, “the concept of partiality may be concerned with the bias of an arbitrator either in favor of one of the parties or in relation to the issues in dispute”. Partiality would be the state of mind, which is harbored by an arbitrator and which dictates the outcome of the proceedings so much so that the arbitrator whose impartiality is challenged would decide or propose to decide the case in front of him favoring the party to whom he is predisposed and naturally against the party about whom he is biased. 39 Partial arbitrator would be dictated by his bias instead of being led by his conscience and judgment in disposing of the case.
The impartiality of an arbitrator may also be challenged where an arbitrator exhibits prejudice against one of the parties to the dispute or one or more of the issues in the dispute. At the end of the day, however, both bias and prejudice may be taken as meaning the same thing, at least for the purposes of challenging the impartiality of an arbitrator.
An arbitrator who is personally interested in the outcome of a case in from of him or whose interests would be adversely affected by the outcome of the case may also be predisposed in such a way that his conducts would be telling that he is biased against one of the parties or one or more of the issues in the dispute.
In some respects, the partiality of an arbitrator may also be inferred from the conducts he openly exhibits in the course of the arbitral process. Clear and indubitable animosity, for example, of an arbitrator, presumably against one of the parties, may be a sufficient cause to challenge that arbitrator on the ground of partiality. For that matter, any improper conduct and detected improper motives exhibited by an arbitrator may also be taken as sufficient to challenge and possibly to warrant the disqualification of an arbitrator on account of impartiality.
Although the relationship an arbitrator has had or is currently having or may be contemplating of having in the future with one of the parties, primarily affects the independence of an arbitrator, in may instances, however, the bias or prejudice or the partiality because of which an arbitrator may be challenged may also arise from relationships. In other words, the bias or prejudice an arbitrator may be accused of may simply be because of no other reason but the relationship between the challenged arbitrator and the party he tended to favor. According to Red fern and Hunter: “impartiality is a much more abstract concept than independence in that it involves primarily a state of mind which presents special difficulties of measurement.” Incidentally, impartiality is by far the most important ground for which an arbitrator may be disqualified since “justice must be beyond all suspicion as to the independence and impartiality of the judges, and this basic principle of justice administered by an arbitral tribunal.” Impartiality becomes even more glaringly important because of the general tendency of party-appointed arbitrator’s misconception of his role as he “will approach the examination of the dispute with some prejudice in favour of the party who has appointed him and it may even happen that in some cases, especially if he is not a lawyer, he will conceive his role as that of an advocate rather than a judge” A party-appointed arbitrator, however, “is not a partisan.” Arbitration being a private mechanism of dispute settlement, it is, on the other hand, submitted that parties may want that their arbitral adjudication to proceed in sort of a partisan way. This may be achieved by the parties agreeing that “one arbitrator shall be an umpire and the other arbitrators as mere advocates and representative of the parties who have appointed them.” It is believed that parties are al liberty to do so and consequently, it would only be possible fro them to challenge the impartiality of the umpire and they cannot raise that of the other advocate arbitrators. Professor David is of the opinion that partisanship in arbitration proceedings may still be tolerable but on condition an arbitrator avoids dishonesty:
“It is fundamental that this should be done openly. A party cannot be prevented from choosing an arbitrator a person who will consider his case in a friendly way, but in this case it cannot be possible for the other party as well to designate an arbitrator a person devoted to his interest. What is unacceptable is concealment, which would result in the inequality of the parties. Also forbidden of course is dishonesty. As M. Domke has said in respect to the partisan-arbitrator” partisan he may be but not dishonest.
Article 3340(1) of the Civil Code seems to indirectly recognize that an arbitrator appointed by one of the parties may be partisan to the party who appointed him by limiting the disqualification of an arbitrator for partiality and lack of independence only applicable in respect of an arbitrator appointed by agreement between the parties or by an appointing neutral third party. In other words, what Article 3340(1) provides is that an arbitrator who is common to both parties should be impartial and independent. Such an arbitrator, it seems, could either be a sole arbitrator appointed either by the agreement of both parties or failing such an agreement by a third party usually referred to as an between the parties that each of them appoints one arbitrator and the president be appointed by the two party-appointed arbitrators; then the latter, who as of right presides over the tribunal, may not be partial to one of the parties. He may be disqualified if there happens to be any circumstance capable of casting doubt upon his impartiality. On the other hand, if the parties have agreed to have a tribunal of five arbitrators and they have managed to agree on three of them and for the appointment of the remaining two they designated a third party; the two arbitrators appointed by the designated appointer shall have to be impartial to the parties lest they be disqualified.
That the stand adopted by the Ethiopian legislature in this respect is a widely accepted view has been confirmed by Prof. David’s statement:
“If doubts may be entertained as to the party-appointed arbitrators, the situation is different in case of arbitrators designated otherwise; by an agreement between the parties or by the other arbitrators or by some third person. The arbitrator is then bound to be independent and impartial in the same manner as a judge. This principle is unanimously recognized; how it is implemented and guaranteed differs, however, from county to country.”
Whether a court-appointed arbitrator, be he a president of the tribunal or otherwise, may be subjected to the disqualification provisions and procedures of the Civil Code may be a matter of controversy. If a court may be treated as a “third party” in discharging its law-given responsibility of appointing arbitrators cannot be assimilated to that of a third party appointing authority or person, then the question as to whether or not a court-appointed arbitrator may be disqualified for partiality may arise. It appears to be a little awkward to assimilate an arbitrator-appointing third party of necessity designated by the parties as such with a court, which is there independent of the will of the parties. It, therefore, seems that a party seeking to avail himself of the arbitration agreement may resort to the court to have an impartial arbitration appointed by a third party removed irrespective of whether or not such a right is spelt out in the arbitration agreement.
The issue as to whether or not a court-appointed arbitrator may be removed if he happens to be partial to one of the parties remains to be addressed. Accordingly, one may pose the queries: should a court-appointed arbitrator be subjected to the same procedure as party or third-party appointed ones for the purposes of being disqualified on the ground of partiality? Who is to remove a court-appointed arbitrator? Is it the party seeking to have him disqualified? The tribunal? Or the court that appointed him? These and similar other queries are yet to be ruled upon by courts in the future.
As is provided clearly under sub-article (3) of Article 3340 of the Civil Code, the president of an arbitral tribunal may be disqualified for the same reasons and by the same procedures that the applicable to the other arbitrators. If this is so, it should be taken as a clear indication that a president appointed by the party-appointed arbitrators either from among themselves or from outside is taken as a third-party appointed arbitrator. A c our-appointed outside is taken as a third-party appointed arbitrator. A court-appointed president’s disqualification for partiality, however, is as stated above for non-president arbitrators a mater to be ruled upon in the future.
As has already been discussed, “a party may not nominate an arbitrator who is generally predisposed towards him personally or as regards his position in the dispute provided that he is at the same time capable of applying his mind judicially and impartially to the evidence and arguments submitted by both parties”. We have also considered that the predisposition of an arbitrator towards the party who appointed him, does not apply to a presiding arbitrator who “must be, and be seen to be entirely neutral as well as impartial.”
h. Independence of an Arbitrator
Independence of arbitrators is a topic that is very much related to impartiality of arbitrators. Sometimes, the partiality of an arbitrator may be for no other reason but merely because of lack of independence on the part of the arbitrator that acted partially. Irrespective of the overlapping between impartiality and independence, however, it may be worthwhile to treat the topic of independence distinct from impartiality for a number of reasons. First, because, treating the question of independence is as important as treating impartiality and secondly because the Ethiopian Civil Code in Article 2240(2) treats the two separately and distinctly. Independence, in other words, is written as a ground separate from impartiality for the purposes of challenging arbitrators under Ethiopian Law. In this regard, Red fern and Hunter opined:
The terms “independent” and “impartial” are not interchangeable. It would be possible, for instance, for an arbitrator to be independent in the sense of having no relationship or financial connection with one of the parties, and yet not impartial. He might have such strong beliefs or convictions on the matter in issue as to be incapable of impartiality. The converse can also be imagined of an arbitrator who is not independent of one of the parties (because he has some financial interest) yet who is perfectly capable of giving an impartial view on the merits of the case.
The Ethiopian Civil Code doesn’t give any kind of hint as to which factors affect the independence of arbitrators. The Civil Code doesn’t give the meaning of the word “independence” either. In fact, the only article of the Civil Code wherein reference is make to “independence” happens to be in Article 3340(2). In the face of lack of any provision of our law that at least explains what independence means, one would be circumstantially dictated to look for what is meant by independence, elsewhere. Red fern and hunter offered the following:
There is both an objective and a subjective aspect to the question of independence, which is a less abstract concept than that of impartiality. Objectively, it is easy to see that a person should be precluded from acting as an arbitrator if he has a direct professional relationship with one of the parties; and still more, if he has financial interest in the outcome of the arbitration (through a shareholding, perhaps in a company which is a party to the dispute). Subjectively, the position is less simple to analyze.
The same learned authors in the third edition of their book on the same subject wrote that “The concept of “dependence” is concerned exclusively with questions arising out of the relationship between an arbitrator and one of the parties, whether financial or otherwise. By contrast, the concept of “partiality” may be concerned with the bias of an arbitrator either in favor of one of the parties or in relation to the issues in disput.”53 The following may be considered as situations signifying relations between a challenged arbitrator and one of the parties.
1. Past Business Relations(s)
It may be that one of the arbitrators in a tribunal of three or more arbitrators has had business relation with one of the parties sometimes in the past. The relationship may have taken place some ten years back or a few weeks or days before the arbitral tribunal constituted, among others, by the arbitrator who is not being challenged. So, the pertinent query would be could the other party apply for the disqualification of the arbitrator who has had prior business relations with his opponent on the allegation that the relation is sufficient to constitute a circumstance capable of casting doubts upon the concerned arbitrator’s impartiality? This query may be answered in the positive and it is regarded by renowned authors as “a special case where a party may wish to challenge an arbitrator is when he discovers that business relations have been or are entertained or likely to be entertained between the other party and the arbitrator.”
Professor David offered the following on business relations: [A] decision of the Supreme Court of the U.S.A. given in 1968 has marked a reaction. The person appointed as a third arbitrator in this case in which one of three arbitrators had four or five years previously given some advice to one of the parties as an engineer and for which he had received twelve thousand dollars, and the fact of which was not disclosed by him at the time of accepting his appointment was held by the U.S. Supreme Court as a sufficient ground for disqualification on the strength of the mere fact that he has previously had business relations with one of the parties and has derived some profit there from.
The problem of challenging of an arbitrator on the ground of business relations would be frequent in cases where the arbitrators are themselves, business men or as is usually called” commercial men.”.
2. Existing Business Relations
Where one of the parties discovers that an arbitrator is currently having a business relationship with the other party, his opponent, whilst the arbitral process is in progress; for stronger reasons the situation may be a ground to challenge the arbitrator having such a relation. The widely known approach to avoid the disqualification or challenge of an arbitrator in this respect would be disclosure on the part of eh concerned arbitrator. The expectation is that the concerned arbitrator, at the time of accepting his appointment as an arbitrator, should disclose the fact of his having business relation with one of the parties to both parties involved in the dispute to be adjudicated by arbitration. If the parties agree after such a disclosure, to still have him continue as an arbitrator, then they shall be regarded as having done away with their right to challenge the impartiality of the concerned arbitrator on the ground of having business relations with one of them.
3. Future Business Relations
If one of the arbitrator or in a sole arbitrator case, if the arbitrator is likely to entertain a future business relation with one of the parties, it may be a ground for the other party to challenge the independence of such an arbitrator. This would, personally, consist in the belief that the challenged arbitrator would incline to favour the party with whom he is anticipating or hoping to have business relationship. It would, however, be difficult for the party wanting to avail himself of disqualification because of lack of proof of future business relation unless he is able to produce clear and tangible evidence as to the intention or plan of the arbitrator to have business relation with his opponent party.
It is not very clear as to what standards of proof would be required to show circumstances capable of casting doubt up on the impartiality and independence of an arbitrator. On the other hand, since the matter is civil, as opposed to criminal, it may be said that ordinary civil standard of proof would do. On the other hand, there is a mild form of crimination of an arbitrator whenever the impartiality of such arbitrator is challenged and hence his disqualification is sought by one of the parties. The disqualification of an arbitrator for fear of impartiality may be damaging to his future reputation and may have bearing on his being chosen as an arbitrator in the future after his impartiality has once or twice been challenged and he was disqualified as a consequence of that. More over, a controversial issue may arise because of the application of the phrase used in Art. 3340(2), i.e. “… any circumstances capable of casting doubt upon his impartiality….” It is feared that the application of the said phrase might give rise to controversy because there is no clue as to whether the “circumstances capable of casting doubt” should necessarily and tangible be in existence at the time of invocation of the challenge or, whether fear of impartiality and lack of independence may be proved by putting bits and pieces of apart circumstances i.e., those circumstances which may be capable of indicating that the person whose disqualification is being sought might be impartial in disposing of the case submitted to him for adjudication. In other words, the scope of application of the crucial phrase in Art 2240(2) is not clear as to whether the “circumstances capable of casting doubts on an arbitrator’s impartiality and lack of independence should be only those which constituted precise, relevant and well established or establishable ones or even those ones that are remote, uncertain or conjectural to have an arbitrator disqualified on the ground of impartiality.
4. Non Business Relations
Other relationships other than business relationship may as well be the cause for disqualification of an arbitrator on account of lack of independence. Consanguine or affinal relations between the arbitrator whose independence is being challenged and one of the parties, may very well constitute “a circumstance which is capable of casting doubt “ up on the impartiality of an arbitrator. One of the arbitrators’ having love affairs with one of the parties may possible constitute a circumstance falling under Article 2240 (2) and thereby become a ground for challenging the impartiality and independence of the concerned arbitrator.
5. Employer-Employee Relations
An arbitrator who may be having an employment relationship with one of the parties may be challenged on the ground of lack of independence. Although the focus generally is on an on-going employment relationship between the challenged arbitrator and one of the parties, it may sometimes be the case that past employment relationship that may have been brought to an end before the nomination of the challenged arbitrator may as well be a ground for challenging the independence of an arbitrator. If, in particular, the reasons for termination of the relationship has been such that there was on disagreement or misunderstanding between the parties; the ex-employee of one of the disputants in an arbitral process may still be inclined to favour his ex-employer. It may, as well, be that if the previous employment relationship was brought to an end in an unpleasant way to the ex-employee, it may constitute a bias against the former employee and hence a ground for him to challenge his ex-employee’s but present arbitrator.
It is said that in an on-going employer-employer-employee relationship between a party and an arbitrator, not only does such an arbitrator “have a financial interest in keeping his job, but he is also by definition, in a subordinate relationship to his employer”.
6. Lawyer-Client Relationship
According to the International Chamber of Commerce, a lawyer of one of the parties who has been appointed as an arbitrator may be challenged and “it is generally recognized that the regular counsel for one of the parties may not serve as an arbitrator in the absence of agreement to the contrary.
Other than bias and/or relations, an arbitrator may be disqualified whenever there happens to be “any circumstance capable of casting doubt up on his impartiality and independence” In other words, the impartiality and/or independence of an arbitrator is not only affected where an arbitrator harbors a bias against one of the parties or where he has some kind of relation with one of the parties. As mention has already been made as regards that last limb of article 3340 (1), sub-article (2) of the Article is in the same fashion, so wide and blanket. It may accommodate, any circumstance, which in any way, is capable of casting, even the slightest doubt, up on the impartiality or independence of an arbitrator.
Before finalizing our discussion on grounds of disqualification, it would be worthwhile to take a brief look at the proviso stated in Article 3341 of the Civil Code under the title of “demurrer” Article 3341 provides: “unless otherwise provided, a party may seek the disqualification of the arbitrator appointed by himself only for a reason arising subsequently to such appointment, or for one of which he can show that he had knowledge only after the appointment” It is not clear whether the phrase “unless other wise provided” refers to the provision of the law or the stipulation of the parties. This writer believes that the phrase should be taken as referring to the agreement of the parties, if any, and not the provisions of the law. This is, it is believed, to be so primarily because of the fact that the proviso being imposed by the law cannot be excepted by another legal provision.
ii. Procedure for disqualification
Notwithstanding the fact that arbitration is a mechanism of private adjudication, the law has prescribed a procedure for disqualification of arbitrators. As we have already noted that there are law-prescribed grounds for disqualification, the law clearly states that the party attempting to have an arbitrator disqualified must comply with the prescribed procedure. Per the provision of Article 3342(1) of the Civil Code, first of all, the party seeking to have an arbitrator disqualified must file and application to the arbitration tribunal. Such arty must file his application before the tribunal renders an award and as soon as he knew of the grounds for disqualification. Sub –article 2 of Article 3342 provides: “The parties may stipulate that the application for disqualification be made to another authority.” And where there is such a stipulation, there has to be filed an application for disqualification to the designated authority before the tribunal renders an award.
The arbitration tribunal, or the designated authority, must rule on the application for disqualification by either granting the application by ruling that the concerned arbitrator is disqualified or deny the application by ruling to dismiss the request to have the concerned arbitrator disqualified. In the latter case, i.e., where the tribunal, or as the case may be, the designated authority, dismisses the application for disqualification, sub-article 3 of article 3342 provides that an appeal may be lodged within ten days as of the date of the ruling to a court of law against the denial.
Though it doesn’t address “replacement” and the procedure to be followed in replacing arbitrators whose impartiality and independence has been successfully challenged, the Civil Code, however, addresses removal of arbitrators. The Civil Code in Article 3343 prescribes removal as a remedy in the event that an arbitrator who had accepted his or her appointment unduly delays the discharge of his/her duty. An interesting point worth noting in the provisions of Article 3343 is that the power to remove an arbitrator who unduly delays the discharge of his/her duties is primary given to the authority designated by the parties. Article 3343 of the Civil Code doesn’t leave any clue as to whether the authority envisages therein is the one entrusted by the parties to appoint arbitrators; or a separate one with a special power to remove an arbitrator who unduly delays the discharge of his/her duties.
Article 3343 of the Civil Code also addresses the question: “who may apply to have an arbitrator who unduly delays the discharge of his/her duties removed”? Article 3343 does not provide that request of removal must be submitted by the “party availing himself of the arbitral submission.” Neither does the article provide that the right to have an arbitrator who unduly delays the discharge of his/her duties must be given to the party that appointed the concerned arbitrator. Quite logically, and with the view to assist the constitution of the arbitral tribunal, the lawmaker has given the right to apply to have an arbitrator removed to either one of the arties.
An arbitrator, whether an umpire or otherwise, whose impartiality or independence has been successfully challenged must, naturally, be replaced by another arbitrator. The Civil Code does not address whether an arbitrator whose impartiality has been unsuccessfully challenged stops discharging his duty all by himself or whether the court must remove him. Moreover, it is nowhere provided as to how an arbitrator whose impartiality or independence has successfully been challenged may be replaced. Exceptionally, it seems that the legislator may have thought that the challenged arbitrator would stop discharging his/her duty after the challenging party has proved that the concerned arbitrator is either partial or not independent. However, in the circumstances that the arbitrator whose partiality or lack of independence had been proved doesn’t, by him/herself stop discharging his/her duty as an arbitrator, then removal by the court upon the application of the challenging party seems to be inevitable. Though nothing has been provided for in the Civil Code as to replacement procedure, it may be argued that the procedure of appointment of arbitrators with all its ramification may be repeated again when an arbitrator shall have to be replaced.
This journal article is so important I took it as it existed only by omitting the footnotes, introduction and conclusion parts.
3.7.4. Scope of Arbitration
An Article taken from: Arbitrability in Ethiopia: posing the problem (Zekarias Keneaa JEL Vol XVII, 1994)
Despite the advantage one can avail himself of by resorting to arbitration, not all disputes or quarrels, or even differences arising in peoples’ relations can be submitted to the adjudication of parties’ chosen experts. For different reasons, different states exclude disputes of certain categories from the ambit of arbitration. Hence, in every state, there would always be matters capable and permitted to be submitted to arbitration – arbitrable matters and there would, as well, always be matters regarded as not capable of being arbitrated – in arbitrable matters. Redfrern and Hunter beautifully summarized it as quoted here below:
The concept of arbitrability is in effect a public policy limitation upon the scope of arbitration as a method of settling disputes. Each state may decide, in accordance with its own public policy considerations which matters may be settled by arbitration and which may not. If the arbitration agreement covers matters incapable of being settled by arbitration, under the law of the agreement is ineffective since it will be unenforceable. Moreover, recognition and enforcement of an award may be refused if the subject matter of the difference is not arbitrable under the law of the country where enforcement is sought. (Allan Redfern and Mertin Hunter, Law and Practice of International Commercial Arbitration, Sweet and Maxwell. London, 1986, p. 105).
As inferable from the above quotation, which disputes may be submitted to arbitration (arbitrable) and which ones may not be submitted to arbitration (in arbitrable) is usually decided on by states and such decisions are expressed in national laws pertaining to arbitration. Because of diverse policy considerations, national interests and commercial realities, matters that are capable of being arbitrated in some states may constitute matters incapable of being arbitrated in other states. I other words, in some categories of disputes must, as a matter of public policy, be adjudicated by state courts staffed by sovereign – appointed – judge and the submission of such matters to disputing parties’ – appointed private judges may be considered as illegal and the resultant award unenforceable.
In this work, an attempt is made to assess what is arbitrable and what is not in Ethiopia. The work does not exhaustively deal with the question. Far from it, all it does is, it tries to posse the problems that have occurred to the author’s mind related to arbitrability in Ethiopia. The endeavor, however, might hopefully assist future research to be conducted on the subject.
II. Arbitrability and Family Law
In Ethiopia there are no other substantive legal provisions, other than civil code articles 722, 724, 729 and 730 wherein it is clearly stated that it is only the court that is competent to decide on matters stated under those provisions. The message contained in the above – mentioned civil code articles may be put as: it is the court only the court, in exclusion of all other alternative dispute settlement mechanisms and tribunals, including arbitration, that can give decision on the issues of which squarely fall within the spirit of those provisions. In other words, matters falling within the limits and bounds of those provisions are not arbitrable.
Pursuant to Art 722 of the civil code, the issues of whether a betrothal has been celebrated or not and whether such a betrothal is valid, cannot possibly be submitted to arbitration because the very article makes the court the only competent organ to hear and give decisions on such matters. To put it otherwise, the phrase “only the court is competent” does away with the possibility of submission of matters the issue of which pertains to the celebration of a betrothal or whether a betrothal is valid or not to private adjudication.
Similarly, in line with the provisions of Article 724 of the civil code, the possibility of submission of reference of suits the issues of which relate to the determination of whether or not a marriage has been contracted and whether such marriage is valid to arbitrators is prohibited and it is only the court that is recognized as competent to hear and decide on such matters. In a similar vein, in Art 730 of the civil code, the law has taken the stand that no other tribunal except the court is competent to decide whether an irregular union has been established etween two persons. Unlike difficulties and/or disputes arising between spouses during the currency of their marriage or even the petitions for divorce whether made by both or one of the spouses, which have to compilsorly be submitted to arbitration, disputes arising out of irregular unions have to be submitted for resolution to the court and to no other tribunal.
In spite of the fact that pursuant to the mandatory provision of Article 725 – 728 of the civil code, despite, (difficulties) arising out of existing marriages, petition for divorce or even disputes arising out of divorces have to but compulsorily be submitted to arbitration: it is according to Article 729 of the civil code, only the court that si competent to decide whether a divorce has been pronounced or not. Article 729 of the civil code may be taken as having the message that the divorce decision made by family arbitrators have to be obligatorily be submitted to the court. The court, after having ascertained that family arbitrators have compiled with the necessary legal requirements, and that the decision for divorce is rendered by a duly constituted panel of arbitrators, make its own decision that an enforceable decision of divorce has been pronounced. Though in line with the provision of Article 729 of the civil code the court seems to be making the latter decision on its own initiative, on the other hand, appeal may also be lodged to the court to have the decision of arbitrators impugned on the ground of corruption of arbitrators or third parties fraud or the illegal or manifest unreasonablity of the decision made by arbitrators (Art. 736 of the civil code). Yet still, Article 729 also seems to be imparting the message that the court renders a kind of homologation and or certification service with respect to divorce decision given by family arbitrators. In other words, certifications that a married couple has been divorced or a marital union has been dissolved can only be given by the court and not by arbitral tribunal or the arbitrators that pronounced the divorce. The article seems to be imparting the latter message particularly when one considers the controlling Amharic version of Article 729 of the civil code. (Include the Amharic version here)
III. Matters Relating to Administrative Contracts Inarbitrable?
On the other hand, when one shifts from the substantive law over to the procedural one, one encounters Article 315(2) of the civil procedure code wherein it is clearly provided that only matters arising from Administrative Contracts and those prohibited by law are said to be Inarbitrable. Naturally, therefore, a question follows as to whether or not all other matters except those arising from Administrative Contracts and those prohibited by law could be regarded as arbitrable in Ethiopia, subject of course to the provisions of Articles 3325-3346 of the civil code. First of all it is surprising to find a provision that reads:
No Arbitration may take place in relation to Administrative Contracts as defined in Article 3132 of the civil code or in the other case where it is prohibited by law in the civil procedure code but nothing to that effect or even similar to that is stated in anyone of Articles 3325-3346 of the civil code.
As issue of interpretation or construction of the two legal texts i.e. Article 315(2) of the civil procedure code on the one hand and Articles 3325-3346 of the civil code on the other might as well arise. This becomes even more glaring as one considers the provisions of Article 315(4) of the civil procedure code which states that “Nothing in this chapter shall affect the provisions of Articles 3325-3346 of the civil code”.
If nothing in Book IV of the civil procedure code affects the provisions of Articles 3325-3346 of the civil code, and nothing as to whether or not matters arising from Administrative Contracts are Inarbitrable is mentioned in Articles 3325-3346, could Article 315(2) be given effect? In other words, if the overriding text of Articles 3325-3346 of the civil code are silent as to whether or not disputes emanating from Administrative Contracts are arbitrable; can’t that be taken as an implication that even disputes from Administrative Contracts are arbitrable in so far as nothing express is stated in Articles 3325-3346 that they are not? Or should there be a manifest contradiction between the two codes’ relevant texts for Articles 3325-3346 to be overriding?
In Water and Sewerage Vs Kundan Singh Construction Limited (High court, Civil file No 688/79) the court took a stand that Article 315(2) is a sufficient provision to exclude disputes relating to Administrative Contracts from the ambit of arbitrable matters. A close consideration of the main reasoning of the High Court to justify this stand, however, tells that the court based its reasoning on a poit jurisdiction instead of taking Article 315(2) of the civil procedure code as a legal provision, sufficient on its face, to prohibit the submission of matters relating to Administrative Contracts to Arbitration. In the course of justifying its stand, the court said “question pertaining to which court or which tribunal has jurisdiction is a matter of procedure and that procedural matters are provided for in the code of civil procedure and not in the civil code”. The court, it may be said, endeavors to use this line of argument in its attempt to defeat the strong point in Article 315(4) of the civil procedure code, i.e. that nothing in the chapter in which Article 315 of the code of the civil procedure is found shall affect the provisions of Articles 3325-3346 of the civil code. By so doing, the court rejected the argument raised by the defendant that Article 315(2) of the civil procedure code should not be given effect in the face of Articles 3325-3346 of the civil code wherein nothing is mentioned as to the inarbitrability of disputes arising from Administrative Contracts.
The other point the High Court raised to justify its ruling that matters related to Administrative Contracts are Inarbitrable was that the provisions of our civil code relating to Administrative Contracts were taken from French law. The court went further and stated that in French law there is a prohibition that disputes arising from Administrative Contracts should not be submitted to arbitration, and that such a prohibition is found in the French Code of Civil Procedure. Consequently, said the court, the prohibition in Article 315(2) is appropriate taking French law and the fact that provisions on Administrative Contracts in our civil code were taken from French law.
On the principle of interpretation that a latter law prevails over a preceding one it could be said that the civil procedure code which was promulgated in 1965 as opposed to the civil code which was promulgated in 1960, is overriding. This, point of interpretation was also raised by the court in the Kudan Singh case.
Would the approach of interpretation that follows the hierarchy of laws be of help in the context under consideration because of the fact that the seemingly contradictory legal provision appear in different types of legislations, i.e., Arts. 3325-3346 in a proclamation, whereas, Art 15(2) of the civil procedure appears in an Imperial Decree?
IV. Other Substantive Law Provisions Indicative of Arbitration
Yet still, the main problem in relation to arbitrability in Ethiopia, however, seems to emanate from the confusion created by the Civil, Commercial and Maritime codes’ express provisions for arbitration in certain respects and their silence otherwise. Family disputes arbitration dealt with in the civil code is, I think, a compulsory arbitration ( Starting 1977, disputes between state – owned enterprises were also made as compulsorily arbitrable in Ethiopia by virtue of a directive No 2756/fe 1 ha/20 issued on Hamle 14, 1969 (July 21, 1977) by the then Prime Minister, Ato Hailu Yimenu.) rather than it is consensual. In other respects, the 1960 civil code for instance, expressly provides for arbitration under Articles 941, 945, 969(3), 1275, 1472ff, 1534(3), 1539, 1765, 2271 and is silent otherwise. (However, it is good to note that it is doubtful if Article 2271 of the civil code may be taken as a provision indicative of arbitration in the sense of Article 3325 of the same code. Where a seller and a buyer, refer the determination of a price to a third party arbitrator, it doesn’t mean that the parties submit a dispute to be resolved. Unless the parties have unequivocally agreed that they will bound by it the “price” to be quoted by the “arbitrator”, cannot be taken as binding as an award is in case of arbitration proper.)
The commercial code expressly provides for arbitration under Articles 267, 295 and 303 by way of reference to Articles 267, 500(1), 647(3), 1038, 1103(3) and the Maritime Code’s only provision wherein it is expressly mentioned about arbitration in Article 209.
In the labour legislation we had for the last two decades, i.e. Proclamation 64 of 1975, the possibility of submission of a collective or individual trade dispute to arbitration was provided for in Article 101(1). In sub-article 3 of the same provision, arbitration, in fact, seems to have been envisaged as obligatory with respect to disputes arising in undertakings which do not have trade dispute committee.
In the new Labour Proclamation, i.e. Proclamation No 42 of 1993(It is noted here that the current labour proclamation was not enacted at the time when the this article is published and the observation on the current labour proclamation is discussed under 3.7.3. of this chapter), it is provided in Article 143 that “parties to a labour dispute may agree to submit their case to their own arbitrators…”
Now, therefore, it would be appropriate if one asks a question doesn’t the fact of the existence of such express provisions for arbitration by the Codes mean that all other matters are Inarbitrable? What was it that necessitated express provision for arbitration in certain cases only? Was it just an endeavour to bring the possibility of arbitration to the attention of the parties concerned as an alternative dispute resolution mechanism or as an alternative to court action? Or was it meant to clear out the doubts from people’s mind that disputes arising from those situations for which the codes mention arbitration may be submitted to arbitration although the Codes’ provisions, including those mentioned under Article 3325-3346 of the civil code, do not mention what is not arbitrable as a matter of Ethiopian public policy except what is stated under Article 315(2) of the civil procedure code?
In some jurisdictions, there are well defined areas of matters which, as a matter of public policy, are designated as not arbitrable. For example, the German Civil Procedure Code Article 1025a provides: “An agreement to arbitrate disputes on the existence of contract referring to renting rooms is null and void. This does not apply when reference is made to section 556a paragraph 8 of the German Civil Code.” (Reproduced in Ottoatndt Glosner, Commercial Arbitration in the Federal Republic of Germany. Kluwer, 1984, p. 42.)
The French Civil Code Article 2060, on the other hand, provides: “One may not submit to arbitration questions relating to the civil status and capacity of persons or those relating to divorce or to judicial separation or disputes concerning public collectivities and public establishments and more generally in all areas which concern public policy.”
In Italy, parties may have arbitrators settle the disputes arising between them excepting those provided in the civil code Articles 409 i.e., those concerning labour disputes and those provided I Article 442 concerning disputes relating to social security and obligatory medical aid.
Some other jurisdictions have adopted different approaches from that of German and France. The Swedish Arbitration Act of 1929 (as amended and in force from January 1, 1984) for instance, provides in Section 1 that “Any question in the nature of civil matter which may be compromised by agreement, as well as any question of compensation for damage resulting from a crime, when a dispute has arisen with regard thereto, be referred by agreement between the parties to the decision of one or more arbitrators.”
The Swiss Intercantonal Arbitration Convention of March 27/August 29, 1969, on the other hand, provides in article 5 that “the arbitration may relate to any right of which the parties may freely dispose unless the suit falls within the exclusive jurisdiction of state authority by virtue of a mandatory provisions of the law.”
Coming back to Ethiopian law, wherein we don’t have provisions limiting the kind of question that may or may not be submitted to arbitration except for what is stated under Article 315(2) of the civil procedure code, how should we go about deciding what’s arbitrable and what’s not? Especially, how should the approach taken by the codes to have here and there provided for arbitrable matters be viewed? Can we argue a contrario that the rest, i.e. those numerous matters for which the codes do not expressly provide for the discretion to arbitrate, save of course those matters for which the civil code imposes obligatory arbitration, are Inarbitrable? Or can we by way of argument settle on the test of arbitrability that is close to the Swedish test that bases itself on the provisions of Article 3326(1) of our civil code and say “any matter which relates to any right which the parties can dispose of without consideration” is arbitrable in Ethiopia? This test becomes a fallacious on the moment one reads the provisions in sub-article 1 of Article 3327 that goes; “the provision of Art 3326 shall not apply where this code provides for arbitration.” It, therefore, follows that if the capacity to dispose of a right without consideration is not needed when the codes expressly provide for arbitration, the test that “any matter which relates to any right which the parties can dispose of without consideration is arbitrable in Ethiopia” fail to be an always working criterion.
Added to the above, the very approach taken by the legislator i.e. considering the situation where the codes provide for arbitration and where they don’t, tells us that matters not expressly provided for in the codes may as well be made subjects of arbitral jurisdiction. The Swedish approach, therefore, doesn’t, I think, work for the present Ethiopian reality and the test that’s similar or identical to there’s should be seen cautiously if not totally dismissed. The line of thought that pursues the idea that the matters not expressly provided for by the civil or other codes are inarbitrable also fails automatically because of the above mentioned argument. Hence, it could be said that the codes’ express provision for arbitration here and there is meant to hint to the parties involved pertaining to matters provided for, that arbitration is an alternative to judicial proceedings or to encourage them to submit to arbitration.
Except for what is stated under Article 315(20 of the civil procedure code, the approach taken by the German, Italian and French arbitration laws also doesn’t seem to fit in to the existing Ethiopian legal reality.
V. Arbitrability and the High Court’s Exclusive Jurisdiction
The provisions of Article 25(2) of the civil procedure code may also be worth considering at this stage to see if there is in anyway the possibility of arguing that those matters provided for under Article 15(2) (a-i) could be taken as not arbitrable. One thing clear from Article 15(2) of the code is that the High Court, in exclusion of all other courts, shall have an initial material jurisdiction to try cases the matters of which emanate from those areas enumerated (a-i). Does this, however, mean that the exclusion applies to arbitration as well? If the extension is appropriate to speak in terms of tribunals does the exclusion apply to arbitral tribunal as well or is it limited to courts? Most important of all, could it be taken that those matters provided for under Article 1592) of the code are meant to be inarbitrable?
Provisions of Article 15(2) of the code, coming under chapter 2 of the Book I of the code and dealing with material jurisdiction of courts, are meant to serve as a exception to the principle laid down under Article 12(1) as further expounded by the two articles immediately following and sub-article 1 of article 15.
Article 15(2) in other words, confers jurisdiction on the High Court irrespective of whether or not the amounts involved in the suits springing from matters listed (a-i) are worth either 5,000 Birr or below for suits not regarding immovable property or the amount involved is 10,000 Birr or less in a suit, for instance, relating to expropriation and collective exploitation of an immovable property.
The clear message in Article 15(2) is that the High Court has jurisdiction to try cases involving matters listed (a-i) by virtue of the law itself ousting the material jurisdiction of the Awraja and Woreda Courts. The clarity of the message of the article, however, doesn’t seem to have ready answer to quarries like: What if the parties to a contract or even to a dispute agree to oust the jurisdiction of the High Court by considering to submit their future or existing disputes in relation to those matters mentioned under Article 15(2) to arbitration? Should such an agreement be regarded as illegal or unenforceable? If parties knowingly or unknowingly agree to submit an existing or future dispute emanating from one of those areas mentioned under Article 15(2) to arbitration, and there arises some sort of disagreement as to the formation of the tribunal: should the court whose assistance is sought in appointing an arbitrator decline to do that on the strength of the provisions of Article 15(2) of the code? What about a tribunal duly constituted either by the parties themselves or through the assistance of the court, should it decline jurisdiction in favor of the High Court or should it assume jurisdiction, proceed and give an award? At the enforcement stage, would such an award be recognized and be given effect by the court to which an enforcement application is filed? These and other related questions may be raised in relation to Article 15(2) of the code and arbitrability.
Would figuring out the rationale behind the giving of exclusive jurisdiction of the High Court regarding suits springing from those matters provided for under Article 15(2) (a-i) be an answer to the questions raised above? Could the purpose behind Article 15(2) be the public policy to make sure that the matters provided for in that sub-article are tackled by the court of high position that is staffed with high trained and or experienced judges? Or could the purpose be more serious than that? Was the intention behind the conferring of exclusive jurisdiction on the High Court in suits regarding those areas to single out certain areas of importance in Commercial and Maritime relations and other sensitive areas, to give emphasis to some and to thereby ensure certainty in the way of interpretation of the laws involving those areas which in turn would help develop the jurisprudence of the laws in those area?
The rationale behind Article 15(2) may be to facilitate trials of the suit arising from those matters by (highly) trained and experienced judges, or judges that have specialized in dealing with those matters. If that is the case, the submission to arbitration of disputes emanating from those matters might have not been intended to be excluded altogether because in the modern world arbitration are, generally, qualified enough to deal with all sorts of complicated matters. Incidentally, the provision o the civil code Article 3325(1) makes it clear the arbitrators “under take to settle disputes in accordance with the principles of law.” And if arbitrators have to resolve disputes in accordance with the principles of law, then it follows that arbitrators should, of necessity, be legal professionals of some sort whether trained or those who have managed to acquire the expertise through practice and /or experience.
On the other hand, if the intention behind Article 15(2) was to ensure certainty and, may be, predictability in the way in which the areas of law dealing with those matters are interpreted, then the argument that those matters provided for under Article 15(2) may not be submitted to arbitration could, generally speaking, hold true. Nevertheless, even if the disputes arising from those matters are submitted to arbitration, in certain respects, it could be argued that it doesn’t make a glaring difference because Ethiopian arbitrators are appointed to resolve disputes according to principles of law anyways. It should, however, be noted that in accordance with the provisions of Article 317(@) of the civil procedure code, arbitrators may, where the parties at dispute have agreed to that effect, decide with out giving regard to the “principle of law”. The authorization given to arbitrators by disputing parties to decide with out being bound by the strict application of the law is referred as to amiable composition or ex aequo et bono. The arbitrator(s) who is (are) authorized to proceed in amiable composition is (are) called amiable compositeur(s).
If parties in their agreement to arbitrate existing or future disputes empower their arbitrator to proceed as an amiable compositeur, that would be tantamount to ousting the provisions of Article 15(2) of the civil procedure code, unless it is arguable that parties can not contract out the exclusive jurisdictional power of the High Court vested in it by virtue of the said provision. Unless the existence of Article 15(2) is taken as a prohibition (to meet the requirement of the last part of Article 315(2) of the same code), not to submit to arbitration disputes emanating from any one of those areas, there is no convincing reason, I would say, why parties can not submit disputes of at least some of those matters to arbitration.
Off hand, what is it, for instance, that prohibits the submission of disputes arising from insurance policies (Article 15(2) (c) of the code to arbitration? I wonder if there is any public policy reason that precludes insurance disputes from being submitted to arbitration. If the provision of Article 15(2) (c) of the code is to be construed as showing the inarbitrability of insurance disputes, then those arbitration clause in a number of standard policies that have been in use and currently in use by the Ethiopian insurance corporations are to be taken as contrary to the spirit of the above-mentioned provision, and hence are not to be given effect. The clauses may, as well, be taken as an evidence showing circumstances of opting out the application of Article 15(2) (c) by parties to insurance contracts, thereby waiving their right to initially submit their disputes to the High Court and only to it. True, the legislator might have had it in mind that consumers (insurance policy holders) and insurers usually are unequal parties and hence might have thought that policy holders need to be given the backing of state courts, in fact that of the High Court right from the initiation stage of their cases.
One also wonders if there is a public policy reason why suits relating to the formation, dissolution, and liquidation of bodies corporate (Article 15(2) (a) of the code cannot be submitted to arbitral jurisdiction.)Could the legislative worry that triggered this specific provision be the protection of interests of individual third parties so that there won’t be miscarriage of justice when arbitrating disputes between giant big business monopolies or trust and individuals? If that is the case, dos it imply that third parties interests cannot be protected through arbitral adjudications? Or is it because formation, dissolution and liquidation of bodies corporate could as well be applicable to the so called “administrative bodies” which category includes the “State, Territorial subdivision of the state, Ministries and Public Administrative Authorities?”(Article 394-397 of the civil code) Though it may be understandable why suits pertaining to the state, its territorial subdivisions, Ministries and Public Administrative Authorities may not be arbitrable; one, but, can’t help wondering why suits regarding the formation, dissolution and liquidation of bodies corporate, for instance associations, may not be submitted to arbitration.
As mention has been already made, French law prohibits arbitration in a number of specific areas among which “disputes concerning public collectivities and public enterprises” constitute one category. Mr. Carbonneau is of the opinion that it should be emphasized that disputes falling in the latter category “in which arbitration agreements are prohibited has been interpreted to entail lack of capacity of the state and its entities to arbitrate disputes in which they are involved. (T. E. Carbonneau, The Elaboration of a French Court Doctrine on International Commercial Arbitration, Tulana Law Review, 1980, p. 9).
It is also true that in many countries matters relating to patents and trade marks are excluded from being arbitrable (Rene David, Arbitration in International Trade, 1985, p. 188). Bankruptcy is also regarded not arbitrable matter in quite a number of states. But I wonder if Article 15(2) (b) and (d) of the code were formulated with the objective excluding those matters from the purview of arbitrability.
It is difficult to understand why maritime disputes or suits arising from negotiable instruments are put out of arbitral adjudication. If Article 15(2) of the code in general, and Article 15(2) (b) in particular is to be construed as indicating inarbitrable matters, I wonder as to what construction should be given to Article 209 of the Maritime Code where it is stated that parties t the Bills of Lading may insert arbitration clauses and hence agree to adjudicate their future disputes by way of arbitration as long as they (parties) do not, give power of amiable composition to the arbitrator. In England, maritime arbitration is a very specialized arbitration and for that matter Londoners have a kind of specialized association, the London Maritime Arbitration Association (LMAA) just to arbitrate maritime disputes.
When one thinks of disputes relating to or arising out of negotiable instruments, one necessarily wonders why such disputes or matters pertaining to negotiable instruments cannot be submitted to arbitration. Starting from the Geneva Protocol of 1923, arbitrable matters (at least for international arbitration) were formulated as limited to “…Commercial matters or to any other matter capable to settlement by arbitration.” If this is the yardstick, there seems to be no reason, why disputes relating to negotiable instruments cannot be arbitrable. After all, negotiable instruments are, typically, commercial in their very nature. Or if according to Article 715(2) of the Commercial Code some negotiable instruments fail to qualify to be in the category of “Commercial” like, “documents of title to goods” or “transferable securities”, could it be argued that the latter two categories of negotiable instruments are not “Commercial” in their very nature? I personally doubt. True, “transferable securities” or “documents of title to goods”, do not, as such, carry “unconditional order(s) or promise(s) to pay a sum certain in money”, a typical characteristics of Commercial negotiable instruments under Ethiopian law (Articles 732, 735, 823, 827 of the commercial code). Minus the requirement of carrying unconditional order(s) or promise(s), however transferable securities are generally understood as “evidence of obligation to pay money or of rights to participate in earnings and distribution of corporate, trust and other property are mere choses in action. Nevertheless, in modern commercial intercourse, they are sold, purchased, delivered and dealt with the same way as tangible commodities and other ordinary articles of commerce…” Being evidence of debt, of indebtedness or of property, transferable securities usually include bonds, stock (share) certificates, debentures and the like. In other literatures dealing with negotiable instruments, it is good to note that the term “securities” is usually preceded by “instrument” and documents known as “transferable securities” in our commercial code are transferable to as “Investment securities”.
“Documents of title to goods” from legal point of view, though they may as well have other meanings, may be generalized as written evidences that enable the consignee to dispose of goods by endorsement and delivery of the document of title which relates to the goods while the goods are still in the custody of the carrier or in transit. Documents of title to goods may as well be evidences as to the title of the person claiming the status of a consignee of the goods.
The generic expression of documents of title to goods in modern business, includes Bills of Lading, Airway and Railway Bills, depending on whether goods represented by the document on title are carried by sea, air or by rail.
In so far as documents of title to goods are very much related to international sale, purchase and carriage of goods, it is hard for one to categorize such documents as falling out side the purview of commercial transactions and/or relationships. As transferable securities and documents of title goods, the other two categories of negotiable instruments given recognition by the Ethiopian Commercial Code, are not, function wise, away from business activities, there seems to be no reason why disputes arising from or suits relating to negotiable instruments irrespective of whether the instruments fall in the category of commercial, transferable securities or documents of title to goods may nor be submitted to arbitration.
What about those matters stated under Article 15(2) (e) and (f) of the code? Should matters that pertain to “expropriation and collective exploitation of property” be excluded from being seen as matters capable of being arbitrated in Ethiopia? I as far as expropriation results from an act of a competent public authority, and in as much as an “authority” is to be taken as “administrative body”
There may be the possibility of arguing that matters relating to expropriation are inarbitrable. The private person whose interest is affected by expropriation, it seems, may apply to a competent court of law where he/she thinks is expropriated out side the spirit of the relevant constitutional provisions, if any, or with out due process of law. Otherwise, disputes arising out of a competent authority’s appropriate decision to expropriate and the dispute (agreement) ensuing because of resistance of the interested owner to such a decision, cannot be submitted to arbitration on the ground of sovereign immunity. Nevertheless, it is worthwhile to note that though disagreements relating to expropriation per se are inarbitrable, matters of compensation due by expropriating authority to the owner of an expropriated immovable and possibly the claims of third parties against the expropriating authority may be submitted to arbitration (Article 1467(3) cum 1472ff).
What about disputes pertaining to “collective exploitation of property”? Would there be a valid public policy reason why such disputes may be regarded as inarbitrable? Why should, in particular, disputes arising from collective exploitation be termed to be inarbitrable where all the parties concerned have freely consented to arbitrate? One possible reason why such disputes may be seen as inarbitrable might be because of the plurality of the parties involved, lest it might be difficult to justifiably safeguard the interests of all of them. Imaginably, the interests of the pluri-parties concerned could be quite complicated and such multiple interests and the ensuing complication it creates may, as well, constitute sufficient public policy reason not to submit such dispute to arbitration. Moreover, an arbitral tribunal generally doesn’t have the power to order the consolidation of actions by all parties involved even if this would seem to be necessary or desirable in the interests of justice.
With respect to suits relating to “the Liability of public servants for acts done in discharge of official duties” (Art 15(2) (f) of the code), it would be argued that the exclusion of such suits from the ambit of arbitrable matters may be justifiable based on the widely known reasoning of sovereign immunity again. Under Art 2126 of the civil code, (It is worth to note that arbitration, save in situations it is imposed by law, arises from contract. Doubt may, therefore, be expressed whether tort cases are, generally, arbitrable. As to the non arbitrability of suits arising from contracts to which the state or its territorial sub-division is a party, and may be the liability of officials involved in state contracts, Art 315(20 of the civil procedure code is the only authority available.) whose title reads: “Liability of the State” particularly in the second sub-article, it is provided “Where the fault is an official fault the victim may also claim to be compensated by the state, which may subsequently recover from the public servant or employee at fault.”
The above quoted provision shows that the state, almost certainly, becomes a party to literally all suits instituted on the basis of this provision (the state, it is submitted, is presumed to be financially better off than the official, employee, or public servant that causes the damage by his fault.). Article 2128 further sates that the provisions of the two immediately preceding articles apply to the liability of public servants or employees of a territorial sub-division of the state or of public service with legal status (Art 394ff of the civil code).
Those suits emanating from sub-sub-articles (g) nationality; (h) filiation and (i) habeas corpus of Art 15(2) of the code may be said, fall outside the purview of arbitrable matters. Suits relating to these matters are instituted based o specific legal provision(s) and usually for the personal protection and interests of the person(s) filing them. The state and the public at large would, normally, have interests in the final outcome of cases pertaining to these matters as well. Nationality “represents a man’s political status by virtue of which he owes allegiance to some particular country.” This, without more, can be taken as indicative of the interests of the state in nationality suits and which may constitute a sufficient public policy reason why nationality suits should not be submitted to private adjudication.
As to filiation, which is “primarily the relation of parent and child,” it would, I think, be possible to argue that such suits (filiation suits) are inarbitrable. The society would definitely be interested in the final outcome of filiation cases, and the law wouldn’t want, as far as practicable, that children be left without fathers or mothers. From family matters, filiation seems to be the only aspect that may have been envisaged as inarbitrable, for other family disputes particularly divorce cases and those related ones ate compulsorily arbitrable in Ethiopia. (Art 725-737 of the civil code).
Generally, matters relating to status, like filiation, nationality, etc. are regarded as inarbitrable. Family disputes are not regarded as arbitrable in quite a number of jurisdictions, and ours in that respect is an exception that came about, presumably, because of tradition.
Suits (actions) relating to habeas corpus, for sure, can’t be arbitrable. Robert Allen Sedler, based on Article 177 of the civil procedure code argues that, habeas corpus suits are actions for a writ “usually sought by persons in custody on a charge of having committed a penal offence, and that the action to obtain the writ is considered a civil action”. Often it is expected that the official to whom the writ is addressed might refuse to obey to “bring the body” to court and it is in that respect that the compelling power of the High Court for the public official in question comes in to play. So, it may be said that it is understandable if actions for suits of habeas corpus are said to fall outside arbitrable matters.
VI. Arbitrability and Objects of a valid Contract
Finally, in the absence of provisions supplying us with adequate guidelines of arbitrability in Ethiopia, we would, I think, make some further interpretational endeavors. Except for the provisions of Article 315(2) of the civil procedure code and in situations where the law provides for a compulsory one, arbitration arises from contracts whether it is an agreement to submit existing or future disputes to private adjudication. If arbitration emanates from contracts, it is, by virtue of Article 1676 of the civil code, subjected to the general provisions of contract i.e., Article 1675-2026 of the civil code and without prejudice to the application of the special provisions of Arts 3325-3346 of the same code and probably Arts 315-319 and 461 of the civil procedure code. If arbitration is subject to the general provision of contracts, then the requirements laid down under the provisions of Art 1678 viz:
No valid contract shall exist unless:
- The parties are capable of contracting and give their consent sustainable at law;
- The object of the contract is sufficiently defined and is possible and lawful;
- The contract is made in the form prescribed by law, if any
apply to arbitration. From among those elements mentioned under Article 1678, the requirement that the object of a contract must be sufficiently defined, must be possible and lawful for it to validly exist in the eyes of the law, are quite pertinent to the subject of arbitrability. It may be debatable whether those three strict requirements do squarely apply to the arbitration agreement per se. Nevertheless, they definitely do apply to the underlying contract for the enforcement, variation, or interpretation of which parties agree to submit their disputes to arbitration. It could, therefore, at least be said that disputes arising from illegal or immoral underlying contracts cannot be arbitrable. Problems are bound to arise when an arbitral tribunal constituted to adjudicate a dispute arising from contracts having illegal or immoral objects seeks the assistance of the court of the place where it is stated. Problems might as well arise when recognition and enforcement of