The purpose of this sub-section is to give detail about ADR involvement in insurance as a contract and discuss in general and specifically the extent parties’ right to waive their right to institute 1st instance substantive litigation, differentiating insurance matters which could be taken to ADR and not. In addition, we will discuss the types of ADR which are recognized in settling insurance disputes and selecting the one which is best, and also discuss as to how the number and identity of third parties which are involved are determined including their role, qualification and steps followed by them by referring to legal provisions and the practical facts we have realized during our interviews and case study.
The insurance relationship is a contract that may involve more than two persons, the insurer, in exchange for the payment of consideration (called premium) agrees to pay for loss caused by specific events. The beneficiary is the person to whom the insurance proceeds are payable. The insured is the person whose life is covered by a life insurance policy or the person who acquires insurance on property in which he\she possesses an insurable interest (Law for Business, seventh edition, A. James Barnes, Terry Moretied Dowrkin, Eric L. Richard ).
When the parties agree and sign an insurance policy which contains Arbitration clause, it is presumed that they have consented to be bound to settle their dispute by Arbitration. The agreement of insurance presupposes the meeting of mind of the parties that any reservation or restriction by one party shall not affect his agreement unless it is communicated to the other.
Kinds of ADR Recognized in Insurance
Types of ADR means are not few in number. However, the most widely used are three in number. The first one is Negotiation, a consensual bargaining process in which the parties attempt to reach agreement on a disputed on potentially disputed matter. And secondly Mediation is a method of non- binding dispute resolution involving a neutral third party who tries to help the disputing parties reach a mutually agreeable solution. And the last one is Arbitration which is a method of dispute resolution involving third parties who are usually agreed to by the disputing parties and whose decision is binding. Accordingly we will discuss how the above methods are applied in dispute arising in relation to insurance contract.
- A. Negotiation
It is a mechanism by which the parties solve their problems without the involvement of third parties. In this processes the parties’ diligence, commitment and confidentiality is substantial. And this shows that Negotiation is consensual means of ADR. Most of the time insurance companies prefer Negotiation to solve their disputes in order to maintain their customers and to preserve their future relationship with the insured. The insurance company uses different ways of communication to invite the insured in order to negotiate with them. Such as, through phone communication and by giving notice. This is the most efficient method especially during the policy issuance time and the first stage of most kind of disputes. In the latter case if they fail to agree, they will proceed to the other advanced kind of dispute settlement mechanism.
- B. Mediation
It is a mechanism whereby the parties nominate a third party and willingly produce their case before him in order to resolve their dispute. Most of the time insurance companies use Mediation in order to solve a dispute which arises between the insured and third party. Though most companies recognize arbitration in their policy as a means of dispute settlement, in effect, they start with mediation and some time if mediation fails to pull the parties together, court proceeding starts. The elders of the community or some times experienced lawyers will be called to serve as a mediator. The effect, the procedure and other matters there under will be regulated under the general provisions we have since the policy said nothing about mediation, but only about arbitration.
- C. Arbitration
It is a mechanism by which parties submit their case to the third party who renders binding decision. Most of the insurance companies in Ethiopia as stated in their insurance policy adhere to the settlement of disputes through Arbitration (Insurance policy of Nile Insurance Company, Nib Insurance Company, Hibret Insurance Company ).
The way of nominating an arbitrator depends on the wordings of their arbitration clause in their insurance policy. The insurance policy of some insurance companies suggests the appointment of the arbitrators by both parties. For instance we can see the content of Arbitration clause No.4.11 of Nib Insurance Company (S.Co.):-
“All differences in amount arising out of this policy shall be referred to the decision of an arbitrator to be appointed by both parties. If they are unable to agree on a single arbitrator then two arbitrators will be appointed each party appointing one arbitrator within one month of being require so to do by the other party. Failing that the party demanding Arbitration shall proceed with a sole arbitrator appointed by him. Where two arbitrators are elected by the parties they shall jointly appoint an umpire who will preside over all their meetings. The conduct of the Arbitration shall be as provided by the relevant law.”
Some other insurance companies even if they include Arbitration clause in their insurance policy, the policy fails to determine the way of nomination of arbitrators and their numbers. Rather it refers the provisions of the Civil Code (Article 3331 of the Civil Code ) to be applied with these factors as the case may be (Insurance Policy of Nile Insurance Company ). The arbitrators may be any person as far as the parties are consented and most of the time the arbitrators are expertise in the area of the dispute. The decision rendered by an arbitrator is final and binding up on the parties.
Question: Which kind of ADR do you think is best to settle insurance disputes and why? Can we employ different kings of ADR according to (depending on) the nature of the dispute?
184.108.40.206. Insurance Matters Which Could Be Taken to ADR.
In principle, when a dispute arises it is the court which is expected to solve such dispute. But there is also other means of solving a dispute, i.e. ADR. When we take the matters which can be taken to ADR in to consideration, all disputes cannot be resolved by ADR. Here, the question is all about whether there is public interest in the outcome of the dispute. As the interest of the general public cannot be determined by individuals who are not responsible to the public, we have to refrain from taking such kind of matters to ADR. Putting this general idea in mind, we are going to see the matters especially related to insurance. In insurance a dispute may arise from two different matters:-
- A. Between the insured and the insurer
In any kind of business transactions including insurance the occurrence of dispute is inevitable and in insurance, dispute could happen between the insured and the insurer. In order to resolve such dispute parties can take their case either to the court of law or to ADR. But before deciding in such matter parties must adhere to the policy which the insurance company issues and signed by them.
In terms of subject matter which can be taken to arbitration, most insurance policies allow “all differences” while others only “differences in amount”.
“If any difference arises as to the amount of any loss or damages such difference shall, independent of all other questions, be referred to the decision of an arbitrator…” (AWASH, UNITED, Workmen’s Compensation Policy, Conditions No. 14)
“If any difference arises in connection with this Policy such difference shall independent of all other questions be referred to the decision of arbitrator…” (AWASH Fire and Lightening Policy, Conditions No. 18))
So, if there is Arbitration clause in their insurance policy a dispute that arises between them must be first taken to Arbitration. In the absence of such clause it is up to the discretion of the parties to choose the means to resolve their problem. But when we see the practice of the insurance companies, I meet in Dire Dawa, Companies prefer to solve their dispute by ADR rather than the exhaustive court litigation in order to maintain their customers.
Here is a case about the interpretation of the policy and which matters can be taken to Arbitration decided by the federal first instance court of Addis Ababa Lideta division given on 17 April 1997 E.C (file No 42694 in the case Ato Ayenew Abebe Vs united insurance company).
Ato Ayenew Abebe is the owner of lorry plated 3-14740 E.T. The car get insured in the defendant company by policy No 01-4-03574 on 6 February 1987 E.C where by the company undertakes to pay all damages the car may face. The value of the car at that time was 400,000 birr and it was so in the renewal of 1996 E.C also. Art 8 of the policy reads as '' All differences arising out of the policy shall be referred to arbitrations decision''.
Unfortunately the car get crushed and totally come out of use on 6 may 1996 E.C while travelling from Addis Ababa to Gondar around Abbay Bereha falling to 130 meters cliff with its 150 quintal cement on it. The driver of the car escapes from the disaster by jumping out of the car when it is falling in to the cliff. The police of the Wereda made investigation about the event that the peril is covered by the policy for the reason that the car faces the accident in normal course of movement.
The insured immediately come and request the recovery from the insurer company on 14 July 1996 E.C. The insured Ato Ayenew gave notice to the insurer demanding reimbursement of total damager of birr 400,000 birr. Unlike this situation the company kept silent on the notice and all requests of the plaintiff remained unanswered.
On his defence for the court claim of the plaintiff, the defendant raised many objections among the objections raised by the company is that the court has no jurisdiction because the case has to be referred to arbitration pursuant to the arbitration clause. The court over ruled this preliminary objection of jurisdiction and continued to entertain the subject matter of the case until final decision is given on 29 September 1999 E.C.
The court takes into the meaning of the term of arbitration clause of the policy as presented to it in Amharic translation. The Amharic version of the policy has been considered to mean a difference "....arising on...." instead of “arising out of” the policy. The court used “arising on” to interpret and come to conclude that it is a dispute only about the terms or on the face of the contract. When continuing the analysis the court stated that there is no disagreement about the terms written on the contract. It has said that the plaintiff instituted his claim basing on and in accordance with the contract and this means there is no disagreement about the policy and so the arbitration clause cannot be applied.
Disputes subject to arbitration, according to the court's reasoning, are those composed of disputes on the wording of the contract. The case in hand doesn't contain such disputing word in the contract and so it is with the validity and wording of the contract so that it is not subject to arbitration.
It seems that, the court departs from the principle of interpretation of the contract. When we see the reasoning of the court on deciding the matter as not arbitrable, the court read the translation as “dispute arising on the contract ". This leads us to mean that disputing parties have to quarrel on the wordings written under the contract. When interpreting the term “arising on" to mean disputes on the wording of the contract, the court departs from the rule of interpretation of contracts specified under Arts.1732-39 of the C.C.
Art. 1734 of the C.C. obliges the court to search out the common intention of parties. Here, it means that what was to mean in saying that word in each of the parties' mind is determinant job, the interpreter has to figure out parties' understanding to the word is essential in interpreting the contract. In our case at hand what parties intended when saying “arising out of” or “arising on” (in translation) has to be ascertained first. The intention of both parties towards the cause of the dispute is clear, that is about the liability or not of the defendant as per the contract to the plaintiff and to what extent. This can be required only after the happening of the event.
I would like to raise another important issue as to which version of the policy should be considered overriding in case of disparity between the original English version and the interpreted Amharic version. In most, if not all, instances insurance policies are prepared in English version and only when required before authorities that it will be interpreted to Amharic version.
- B. Between the Insured and third party
A dispute may arise between the insured and third party in a case where the insured or his property causes damage to a third party. In this case, the insurance policy will not govern the matter since the third party injured is not a party to it (Principle of Privity of contract - terms of a contract will only be binding as between the parties to the contract.). Instead, provisions of the Commercial Code, for instance, Liability insurance provisions will apply (Articles 685-688). Thus, pursuant to Article 685 of the Commercial Code, matters as between the insured and the third party injured may be settled either in the court or by amicable settlement.
When we see the practice of the insurance companies (particularly Dire Dawa, for instance, Nib Insurance Company), most of the time those companies which have vested interest and allowed by the law to intervene (Article 41 of the Civil Procedure Code, See also Article 687 (1) of the Commercial Code) chooses Mediation to solve such dispute between the insured and third party. For the reason of the companies’ desire to maintain their future relationship with the insured and to preserve the good attitude of the public towards them Mediation is preferable.
Parties’ Rights to waive their Right to institute 1st instance substantive litigation
As a principle any party who claims that his right has been infringed have a right to take his case to the court with good cause (Article 33(2) of Civil Procedure Code ). But this does not mean that parties have no right to settle arguments between them by means other than court litigation. Because of the time, money and personal resources that get tied up in litigation, businesses and individuals are increasingly turning to alternative to trials to settle disputes.
Disputants have absolute right to agree to settle any dispute among them by ADR means as they enter in to a contract, that is in their agreement or they even can agree for such means after such dispute arises. In insurance contract, the insurance company and the insured shall agree as to their relationship by a document called an insurance policy (Article 657(1) of the Commercial Code ).
Under their insurance policy, many companies found in Ethiopia incorporate a clause that stipulates the handling of any differences, or some times only the claim over the amount of payment, that in case may happen between them and their customers. In such clause most of them prefer Arbitration means to settle disputes arising out of their insurance policy. (Insurance Policy of Nile, Nib, Hibret, Awash, United Insurance Companies).
“All differences arising out of this Policy shall be refered to the decision of an arbitrator to be appointed in writing by the parties in difference, or if they cannot agree up on a single arbitrator to the decision of two disinterested persons as arbitrators, of whom one shall be appointed in writing by each of the parties within thirty days after having been required so to do in writing by the other party. In case either party shall refuse or fail to appoint an arbitrator within thirty days after receipt of notice in writing requiring an appointment, the other party shall be at liberty to appoint a sole arbitrator and in case of disagreement between the arbitrators, the difference shall be referred to the decision of an umpire who shall have been appointed by them I writing before entering on the reference and who shall sit with the arbitrators and preside at their meetings. In the event of the death of an arbitrator or umpire, another shall in each case be appointed in his stead by the party or arbitrators (as the case may be) by whom the arbitrator or umpire so dying was appointed. It is hereby expressly stipulated and declared that it shall be a condition precedent to any right of action or suit upon this Policy that the award by such arbitrator, arbitrators or umpire of the amount of the loss or damage if disputed shall be first obtained.” (UNITED I. C., Private Vehicle, Commercial Vehicle Policy, Condition No. 8).
“If any difference arises as to the amount of any loss or damages such difference shall, independent of all other questions, be referred to the decision of an arbitrator…” (AWASH and UNITED Insurance Companies, Workmen’s Compensation Policy, Conditions No. 14).
“If any difference arises in connection with this Policy such difference shall independent of all other questions be referred to the decision of arbitrator…” (AWASH I. C., Fire and Lightening Policy, Conditions No. 18)).
The binding nature of such clause is unquestionable. It is clearly stipulated that terms included in a contract by mutual agreement of the parties will be binding between them as if it is law (Article 1731(1) of the Civil Code ). Thus, insurance contract being a contract, terms included in the insurance policy binds both parties and if they choose to settle their differences by Arbitration, such must be the first means to be taken when dispute arise between the parties. Whether viewed in terms of morality or of economic efficiency, the law should enforce as far the parties make their own law by the terms of their agreement. It is unnecessary to look outside rules as regulators of their conduct and they will probably find the results more satisfactory than if such rules were thrust up on them (Commercial Law by Roy Goode ).
Furthermore, courts also often require parties involved in certain kinds of disputes to try alternatives in an effort to get the parties to settle before trial. Since our law follows the theory of declaration of will (intention) (George Krzeczunowich, Formation and Effect of Contract in Ethiopia Law, FOL A.A.U 1983, pg.13 ), the court in order to decide the cases brought before it must look first of all at the parties’ concrete expression (Article 1680(1) of the Civil Code).
In one case decision (Ato Chanie Markoss Vs Hibret Insurance Company, Federal 1st Instance Court, Dire Dawa, File No.10560) the court have dismissed a case instituted before it by reasoning that the parties have agreed to settle any differences between them which arises based on the insurance policy by Arbitration. The court said that the parties have to exhaust this first, meaning that before coming to the court they have to try to settle their disputes by Arbitration in accordance to their agreement.
Ato Chane Markos, in this case, is the owner of code 00018Dr. FIAT BUS which is insured in the defendant company by policy no 06-24-0005. Unfortunately the car collided on 6 Dec. 1996 E.C. in Alemaya Wereda. After a lots of notices by the plaintiff to get compensated, lastly the plaintiff instituted file demanding 77,894 birr before federal first instance court of Dire Dawa on 28 Sept. 1997 E.C.
The defendant objected the jurisdiction of the court arguing that the case has to be seen to arbitration as it was referred by the policy. In defending this objection the plaintiff, in his counter defence, argued that the clause (Art.9 of the policy) is simply a policy written by the defendant where the plaintiff gives no willingness to be bounded by it that it shall not bind me. Secondly, even said binding, there is no officially established arbitrator in the country and the clause can not be implemented in such circumstance. Thirdly, the court should sustain preliminary objections only those listed under Art. 244 of C. Pr. C., and so on.
The court decided in favour of the defendant saying that the case has to be referred to arbitrator(s). The court tried to support its decision with reasons that parties agreed to refer all their disputes to arbitrators before taking it to court of law. As per Art 1731 of C.C. it is a law between them and so their case has to be referred to arbitration. As regards the counter claim of the plaintiff, that it has to be specified under Art. 244 of the C.Pr.C, the court said that the said article is illustrative than exhaustive. It is not prohibited to accept other objections which are not listed there. As the principle of Civil laws, all not prohibited are permitted. Therefore, the case has to be seen by arbitrator(s) before court litigation.
The court, in my view, made a surprising analysis with the appropriate law to reach decision. The answer for the argument of the plaintiff that the policy is prepared only by the defendant and the plaintiff gives no consent to be bound, is really appropriate. This means the plaintiff had sufficient information about the arbitration clause in the time of the conclusion of the policy. It is beyond our objective to discuss about the validity of insurance policy as a contract, and hence it is better to pass over this part of the argument.
But the problem, I can see is that, the court failed to answer the argument that there is no state established arbitrator. Actually this may be for the reason that it is easy and obvious. As we have discussed in chapter one and as the definition infers arbitration involves choosing a judge to one self. This directly takes us to conclude the existence of state established arbitrator worth's nothing for arbitration clause to be implemented. Even there were established arbitrators, they couldn't see the case between the parties unless the latter agreed to refer to them. But if the plaintiff wants establish arbitrator for any other center as already established arbitrator in the country.
Moreover, the court effectively interprets Art. 244 C. Pr. C. but failed to apply. The court understood Art. 244 C. Pr. C. to be illustrative than exhaustive and this is well constructed legal analyze (Robert Allen Sedler Ethiopia civil procedure pp.174 ). Those listed under the said article as a ground for preliminarily objection, are not exhaustive and the courts can sustain other preliminary objections out of listed under the article. When we come to its application to the case in our hand, it worth nothing whether it is illustrative or exhaustive. The court's conclusion that, the objection is out of the list, is not correct. Art. 244(2) (a) & (g) are talking about this type of objections. Therefore, the objection is among those listed under the article. The decision of the court sustaining the objection is right that the case has to be subjected to arbitration. But this is not for the reason that Art. 244(2) is illustrative than exhaustive. This is because the principle is listed under Art. 244 (2) (a) & (g) of C. Pr. C.
After the decision of the court both parties have nominated arbitrators each and the dispute is now in the hands arbitrators.
All in all, the parties have a right to waive their right to institute 1st instance substantive litigation by stipulating a clause in their insurance policy which states that differences between them will be settled by ADR means, Arbitration in our case, and this clause as discussed above have a binding effect as between them and must be the first resort to turn to solution. The court it self should try to enforce the policy which manifests the interest of the parties.
ADR is a mechanism that encourages disputants to arrive at a mutually negotiated understanding with a minimum outside help. In business transaction the existence of dispute is inevitable and in order to solve such dispute parties use ADR as a means instead of going to court litigation which is costly and exhaustive. Parties to an insurance contract may agree and include Arbitration clause in their insurance policy or they may agree after the occurrence of the dispute. The existence of such clause in their policy makes the decision given by the arbitrators binding as that of court. Without exhausting the remedy available in the Arbitration they cannot take their case to the court. They may also resolve their dispute by Negotiation before even going to Arbitration and to the court, in the absence of any Arbitration clause in the insurance policy. If in any case third party is involved the matter will be resolved by Mediation.
Ethiopia has undergone lots of revisions and amendments in her legal regime regarding labour laws in the different political regimes we experience. It is because that the political system and belief we adhere has got a significant relation and impact as well on the liberalization or otherwise of the labour or industrial relation. What makes legal regimes regulating labour law different from the others is also that different laws are implemented to guide the relationship of different groups according to the nature of the work (e.g. house servants), the identity of the employer (e.g. civil servants) and sometimes according to the status of the employee ( e.g. managers). It is not the intention of this sub section to deal this categorization more than this. Rather to look the latest proclamation No 377/2003 in relation to the settlement of disputes other than the labour divisions of the regular courts.
We have three kinds of forums recognized by this proclamation to entertain labour dispute and give valid disposition accordingly; regular courts, labour relation board, and ADR (like Arbitration, Conciliation, strike, look out, collective bargaining). In this part we will see only some of the ADR means employed in labour dispute and the working of the Labour Relation Board.
ADR is a means to achieve justice without the interference of the government. It is not usually lead by the will and whim of the government. But exceptionally the government may have a limited interest in the ADR proceedings, for instance in labor cases the government plays some role in conciliation proceedings. This part will try to deal with this situation in detail.
ADR in labor relation is aimed in maintaining industrial peace and security towards the all round development of the country. Furthermore since disputes are bound to arise ADR lays down the procedures necessary for their expeditious settlement. We also aimed at addressing various ADR methods and their legal effects as are used in the labor proclamation. Furthermore we will see how labor disputes are settled at various levels. The other issues dealt with are the salient features of each dispute settlement methods, in an attempt to familiarize the reader with the legal framework of available dispute settlement methods in the labour law.
Conciliation is an activity conducted by a private person or persons appointed by both parties jointly or the ministry at the request of either of the parties for the purpose of bringing the parties together and seeking to arrange between them voluntary settlement of dispute which their own effort alone could not have produced. (Art 136 (2) of labour proc.).
Nomination is an inherent right of the parties (Art 3318 of the civil code). The parties may entrust a third party with a mission of bringing them together and if possible settling the dispute between them. They can transfer their right to appoint a conciliator to third party when they are not in a position to know the best conciliator. In addition, the conciliator can be appointed at the request of the parties by institution or by third party.
When we come to labor dispute, the question as to who appoints the private person mentioned in article 136(1) of the labor proclamation the Amharic version seems very clear than the English one. In the Amharic version the conciliator is appointed by the disputing parties or the ministry at the joint request of the parties but the English version of the same article says “by a private person or persons appointed by the Ministry at the joint request of the parties”. What exactly mean ‘private person’ is not clear in the English version. But the Amharic one speaks about conciliators nominated by the disputants for mattes under Article 143. The Amharic version seems to reflect the intention of the legislator more accurately; because article 143(1) clearly states that the parties can resort to conciliation or arbitration of their own choice rather than the ministry. And secondly the proclamation under article 141(1) imposes obligation up on the ministry to assign the conciliator once a labor dispute is reported by other parties.
We have to kinds of conciliation by considering the definition Article 136(1) and Articles 141 - 143 of the same by looking the identity of the person who nominates the conciliators, i.e. the disputants themselves or the Ministry. Article 136(1) left the option open as to who nominates the conciliator; either by the will and interest of the disputants or by the Ministry “at the joint request of the parties”. When the parties themselves nominate the conciliators it is a kind of conciliation recognized under Article 143(1) and there is no limitation of the king of dispute, collective or individual, in this regard. But if the conciliators are nominated by the Ministry, it will be regulated under Articles 141 and 142, and it is only collective labour disputes that can be entertained by this panel.
The other issue here is the seemingly inconsistency between Articles 136(1) and 141 whether the consent of both of the disputants or only one of them suffices the Ministry to nominate conciliator for them. Article 136(1) speaks about “joint request of the parties”, whereas the latter article reads that the Ministry shall appoint conciliators when a collective labour dispute “is reported to the Ministry by either of the disputing parties”. One line argument here is that to look the very purpose of ADR proceeding in general and conciliation in particular and try to find out the answer for these seemingly inconsistence articles. Any of the disputants should not be compelled to submit his or her cases for the conciliators nominated by the Ministry if he or she prefers the labour board over this panel. Other wise how could we say it an alternative? This may lead us to give effect to Article 136 over Article 142 and hence the Ministry will be obliged to secure the consents of the disputants as to their willingness to submit themselves to the panel before nominating the conciliators. The other line of argument says that it is public policy which compels collective labour disputants to the conciliation proceeding though one of them prefers labour board over conciliation. Do you think that it is the intention of the legislator to compel the disputants to do so?
In principle conciliation is a consensus oriented joint problem solving process and does not seem to be compulsorily imposed on the parties but in exceptional cases disputants are obliged to bring their case before conciliator, this is true in disputes arising out of co-operative societies (ART 46,Co- Operative Society Proc. No. 147\98). The reason behind compulsory conciliation is encouraging the party initiating it, by saving him from being seen by other parties as a weaker party.
The reading of art 158 (2) of labor proclamation shows that the disputing parties before they strike or lockout partially or wholly shall make all efforts to solve and settle all their disputes through conciliation. In case of Art 157(3) cumulatively taken with art136 (2) of labor proclamation neither have workers the right to strike out nor employers have the right to lockout in cases of essential public undertaking (Art. 136(2) Labor Proc.).
So conciliation is offered by the legislature to serve as appropriate labor dispute settlement means. Generally parties sit together put all the playing cards on the table so as to say, negotiate in good faith and mutually concede a jointly favored settlement which may finally lead them into a mutually agreed solution for the dispute.
As to the determination of the number of the conciliators, there are two arguments. The first one argues their number should be odd while the other says it should be even. One line of argument is that it should be even because the disputant acquire equal opportunity to select conciliator. This means that if one party selects a conciliator the other party also selects another. The other argument is that the number of conciliator should be odd. Even though these arguments are presented, the number of conciliator does not matter as the conciliator does not give a binding decision, so the number of conciliators is not limited.
Individual labor disputes can not be taken to Ministry nominated conciliator, so it is possible to say such kind of conciliation is made for collective labor disputes (Arts141 -142 of the labour law). The proceedings in conciliation could take place either with a neutral third party conciliator assigned by the ministry or appointed by the parties themselves. Naturally, the disputing parties involved in the labor dispute will try to settle their point of disagreement through a process of communication in the absence of a third party otherwise known as negotiation. This is the most effective and advantageous means of settling disputes. However, the fact remains that, not all disputes are solved through negotiation.
Arbitration as pointed out under article 143 of the labor proclamation is recognized as alternative means to conciliation which are provided under art 136,141 and 142 of the above cited proclamation. In conciliation either of the parties can submit their case to the ministry which appoints the conciliator. But alternatively the parties can appoint an arbitrator with out reporting to the minister. This provision also states that the appropriate law shall govern the settlement of dispute by the arbitrator. The appropriate law might mean the provisions of civil and civil procedure code.
Arbitration is one of the ADR means which helps the parties to adjudicate with out going to the court litigation or some administrative tribunal. Arbitration seems more rigid than the other ADR means and also more flexible than court litigation. Even though that may not be typically the same with the court proceeding and also the third party in the dispute or the arbitrator give binding decision over the dispute ;because of these procedural activities it is more rigid than the other ADR means’s. When we compare it with the courts or administrative tribunal litigation, it is more flexible.
Much has not been said about Arbitration under the labour law when we compare it with the place of conciliation. It only recognizes arbitration as one alternative means of settling labour disputes. This shows us that conciliation is preferable to settle labour disputes than arbitration. Thus, it will be necessary to resort to the civil code and the civil procedure code provisions to guide the procedure.
It is an inherent right of the parties to nominate the third party or the arbitrator though Article 143 doesn’t expressly say so and anything as to the determination of the number of third party. But when it say that parties can take their case to arbitrators or conciliators other than the one nominated by the Ministry, it is declaring that the parties can nominate their own arbitrator for the settlement of the dispute. It is noticed as well that there is no Ministry nominated arbitrator in such case.
In relation to the effect of the award one thing has been said under Article 143(2) of the code. As per the civil procedure code Articles 350 – 357, appeal from the award or setting aside of the award is permitted on the grounds listed there under. Article 143(2) in broader term speaks about these rights of the parties. In case of conciliation, for instance, if the parties fail to agree on the matter, they can either take the matter to the labour board if it is a collective labour dispute or to the labour division court if the matter is an individual labour dispute as a first instance case. But if the proceeding is arbitration first we don’t expect ‘agreement’ in the strict sense but only ‘award’ and this award may satisfy the interest and desire of both or only one of them or none of them though it is not advisable such to happen. In any of the instance any of the parties can take to appeal or setting aside of the ward to the labour board in case of setting aside of collective labour dispute, or to first instance courts in case of setting aside of individual labour dispute, or to the high court in case of appeal of any type of dispute. This seems the interpretation of Article 143 in line with the other relevant laws regulating the matter.
From the reading of Article 143 we may refer that all kinds of dispute whether individual or collective labour disputes can be entertained by arbitration proceeding unless there is an express prohibition in other parts of the law.
As to the matters related with the way of nomination of the arbitrators, the nature of the proceeding, the costs of the proceeding, the duty and right of the parties as well as the arbitrators, effect and enforcement of the award the general provisions of the civil code and the civil procedure code will apply.
Labour Relation Board
Labour relation board is the other king of organ duly established to address the grievances in the industrial relation of the nation when. This organ has a first instance jurisdiction over collective labour disputes. The question here is, is the labour relation board purely adjudicatory organ? Can we equate the procedures and the rules applied in the board with the same of the courts?
The minister shall assign the members of the board according to the proportional representation of trade unions and employers association including a chairman and two qualified members on matters of labor relation. This board can entertain cases and pass binding decisions or compromise the parties as to the appropriate end to their issues pursuant to art 147 of the proclamation.
To address this issue it is better to see some provision of the labor proclamation, civil code and civil procedure code. Article 149(5) of the labor proclamation provides that the ad-hoc or the permanent board shall not be bound by the rule of evidence law and a procedure applicable to the court of law. But it may inform it self in such a manner as it thinks fit. From this provision we can understand that the LRB is entrusted with unlimited discretion where it can the case in a flexible and informal manner as it thinks fit in informing itself as empowered by article 148 of the proclamation. But cumulative reading of article 3345(1) of the civil code and article 317 (1) of civil procedure code we can understand that, even an arbitrator do not have such extended discretion of disregarding the evidence and other adjective and procedural laws of the state.
Article 150(3) of the said proclamation in reaching its decision the board should take in to account the substantive merit of the case and need not follow strictly the principle of substantive law followed by the civil code. Under article 147(4) states that order and decision of the board shall be considered as those decided by the civil court of law. This provision gives the same effect for the decision of the board with the court decision. We will get the same wordings about the states of awards given by arbitrators under Article 319(2) though homologation by the court is additional requirement for the award to get enforced.
Article 147(1)(a) and 150(1) strictly and expressly obliges the board to try to conciliate or compromise the parties before giving any sort of decision of its own. It shows us that at least at the earliest stage of the proceeding it should conciliate but not adjudicate the matter. The other rules under Articles 147ff of the labour law as well resemble the civil procedure rules of arbitration.
Finally, it is noted that conciliation, Arbitration are not the only organs entertaining labour disputes alternative to court litigation. Even the objective of the labour Relation Board is not purely to act as an adjudicatory organ but to serve as a conciliator at least at the earliest stage of the proceeding. In addition we have other ADR types duly recognized under the labour law, i.e. self help. The effective implementation of these meanses will help parties to end up their grievances by extra- judicial devises amicably.
ADR in other Laws
The coming discussion is intended to show you the place and importance of ADR in the dispute settlements arising over different subject matters. In the previous discussions we have seen the role of ADR in the customary dispute settlement and also the provisions under Ethiopian laws regulating the matter under the general provisions of the civil code and the civil procedure code. Now we will see the specific provisions in different subject matters like family law, labour law and insurance law. I would like to remind here the discussion we have made about the issue of arbitrability or scope of arbitration and the blurred legal regime we have. Thus, we are not saying that it is only in those subject matter that arbitration would come. But it is evident in many other fields, like investment law, contract, expropriation of property in property law and others. So it is only an example and the student them selves can look fore ward to see other fields. The other thing here is that, we believe that each specific subject has thoroughly dealt ADR in respect to the dispute arising there under like in the family law, labour law or insurance law courses. It is to emphasise its importance and to compare it with the prevailing principles that we have discussed so far.
Arbitration in Family Law
Arbitration, as an alternative dispute settlement mechanism, is widely in use, especially in family matters in Ethiopia. Its proceedings are more preferable to the parties in the dispute due to its speedy nature. Both the civil code and RFC (The Revised Family Code) expressly provides for arbitration. In such away those spouses under the dispute are tried to settle their dispute through their appointed family arbitrators other than the ordinary court litigation.
Family arbitration as one method is established in modern way in Ethiopian since 1960 when the civil code came into force for facilitating settlement of family disputes by identifying the chronic problems and helping the couples to communicate, and the arbitrators may indeed help save the marriage. This method also improves the relationships between even previously hostile married partners who have prepared themselves for divorce.
This method is the one which has a mandatory power to family disputes. It is clearly seen under Art.731 of the civil code of Ethiopia “if it is found that no arbitrator had been designated …” shown that arbitration be permanent institution rather than a body that being selected periodically as is known in today’s practice. (Art.82(2) of RFC )
The new revised family code of Ethiopia diminished the role of institution of family arbitration as one devise of settling family disputes. For instance, the sole jurisdiction to see and decide divorce cases is given to the court unless the court forwards the spouses taking their consent to family arbitrators to change their mind. (Senior research paper on function of family arbitration under Ethiopian law, by Medhanit Adamu p.18 Unpublished, Haramaya University) But where the court fails to settle a dispute, the court will refer the spouses to nominate their own family arbitrators to solve the dispute amicably. These arbitrators, unlike the civil code family arbitrators, could be any person either professional, family member or any third party as long as the spouses are well consented.
Generally the rationale behind the RFC for the exclusion of the institution of family arbitrators is that, the appointed family arbitrators in both side devoted much time through litigation by supporting their own sides’ interest. It affects the justice system that tries to solve as speedy as possible in a minimum cost. As it has been shown earlier, the purpose of inclusion of family arbitrators, under the civil code, has been taken away under the RFC since the drafting committee came to know that the pre existing family arbitrator failed to meet the objective it was established.
The positions taken by RFC is that determining or settling family disputes should be substantially made through court litigation means’s. If the court failed to do so, it may recommend the parties to settle their disputes through arbitrators by their own choices. But the problem here is that there is no separate division in the court system which independently sees these family cases like divorce. In Ghana, Brazil & elsewhere marriage and family issues have special tribunals and speedy proceedings. (Senior research paper on function of family arbitration under Ethiopian law, by Medhanit Adamu p.18 Unpublished, Haramaya University).
Kinds of Family Disputes Governed By ADR
Before discussing the subject matters of family disputes that are governed by ADRs in our legal system it is better to have a bird over view of the US model. From the US model the kinds of family disputes that are subject to ADR are broadly categorized into two categories: these are 1) divorce and 2) non divorce. In order to solve the above kinds of disputes among the most applicable dispute resolution mechanism, they use a competent mediator by giving positive strategies in order to manage the problems. (Rebert Coulson, Family Mediation: Managing Conflict, Resolving Disputes,Jossey Bass Publishers, 2nd Edn, p 43ff ).
The subject matters of family disputes in general constitute the following matters among other things:
A) Divorce- it is a very common kind of marital disputes that arise when marriage is being dismantled from the human complexity of custody and visitation to the complicated financial and legal aspect of property transfer.
B) Pre-martial agreement- it is a negotiation prior to marriage and planning to protect spouses interest.
C) School and parent- such kind of dispute arise between parents and school authorities because of to receive appropriate educational service to wards their children based on their contract.
D) Teenagers and their parents-such dispute arise when adolescent behavioral problems create emotional climax in a family.
E) Teenager pregnancy-when unmarried teenagers becomes pregnant the dispute arises between the two family groups.
f) Other family disputes-here under are some of the examples
I) Relocation- disagreement may arise when spouses receives promotion or job after that moving elsewhere of one of the spouse.
II) Nursing care -when a family member retires sometimes other members of the family adjust their life style, as a result of such agreement failure to pay the service reward creates dispute between them.
III) family business-control of family owned companies can be come an issue especially when a founder or subsequent owner dies as a result dispute arise among heirs and legatees.
IV) inheritance- dispute over the meaning and application of a will.
V) violence- the disagreement of a family escaletes into violence.
Under Ethiopian law almost all family disputes that are mentioned above are not subject to ADRs and most of them are not recognized in Ethiopia. As has been stated earlier the family arbitration that was established by the civil code has no or only little recognition in RFC. This shows that arbitrators have no power to decide even the matters that were assigned to them by the civil code. Disputes that arise out of the dissolution of marriage, difficulties that arise between the spouses during the marriage, disputes arising out of betrothal or out of breach of a betrothal (Arts 723. 725 and 726 of the Civil Code), were among the subject matters that were governed by ADRs according to the civil code prior to the coming in to force of the RFC.
As it is clearly provided under the RFC art.115-117 the existence of valid marriage, the established of irregular union and divorce did not belong to the family matters that has to be governed by ADRs rather they are matters which will be seen exclusively by the court. Similarly, under the RFC art.118 (1) stated that “without prejudice to art.177 of the provision of this code, disputes arising out of marriage shall be decided by arbitrators chosen by the spouses.” From this provision it is possible to point out disputes that arise in family can be governed by ADRs. Any non divorce conflict, distribution of property, family business, inheritance by will not by law, violence, relocation of the spouses and the like can be resolved by family arbitrators chosen by the consent of the spouses. Mehari Redaie, on his comment on the RFC, takes the position of appreciating the submission of family disputes to the family arbitrators and justifies its importance to the disputing parties, the government and the society. (Some points to understand the RFC by Mehare Redae p. 108) Here, it is noticed that while the code recognized celebration or conclusion of marriage before religious officers and also according to custom, but limited the decision over divorce to courts of law only.
Appointments and Removal of Third Party
A. Appointments - The consent of the spouses is determinant for the appointment of family arbitrators. The number of the arbitrators will also be determined by the spouses. The RFC allows the possibility of number of arbitrators being one or more than that under art.119 (1). So there is no indication as to the evenness or oddness of their number. As it is enshrined under the civil code (Art 332-) and accepted in general jurisprudence it is preferable if the number is odd; otherwise, if their number is even, it will create difficulty while giving decision. In order to avoid this problem the civil code dealt some indications about the number of the arbitrators. It provides that they should be two from wife side and two from husband side and one by their agreement, if failed, by the nominated fours or some times by the court. This was important as the other arbitrators are chosen from both sides to save the possibility of partiality.
Another point in relation to appointment is about their qualification. There is no qualification requirement to be an arbitrator in the RFC. If they are chosen by the consent of the spouses they can arbitrate the dispute. Regarding this issue the civil code pursuant to art.725 (1) had required the personal testimony of the marriage in order to arbitrate the dispute that arises between the spouses during marriage. But this requirement is not absolute and the spouses can agree to the otherwise.
We will deal latter, in recommendation part, with the issue- what will be the solution if the spouses initially agreed to settle their dispute through arbitration and latter fails to agree on the appointment of the arbitrators?
B. Removal of third parties - An arbitrator is required to conduct the arbitration with in a certain accepted standards. The court has the power to remove an arbitrator, (Civil code art. 733(2)) who fails to use all the reasonable dispatch and diligence in conducting the proceeding. (Art 668 of C. C.) Removal of an arbitrator is the act of removing the same from his/her power to arbitrate the disputant. To revoke the authority of an arbitrator is an extreme remedy which might deprives interest of one party. According to the general accepted principle, arbitrator will be removed from entertaining and handling the issue. Grounds for the removal of arbitrators can be; serious and irreparable misconduct, actual/potential bias, incapacity, where he failed to perform the function of arbitrators, where justice requires so and others.
All the aforementioned discussions are based on the general jurisprudence. In our law under the civil code, which is actually repealed, it confirms with the above discussion. Whereas under the RFC it is not stated about the removal of the arbitrators and the grounds of their removal. So there is a gap in this area of the law. The writers of this paper will recommend latter to fill the gap.
220.127.116.11. Powers and Duties of Third Party
A. Powers - After their appointment, family arbitrators have the power upon the spouses. Their power is recognized both by the civil code and the revised family code. (Mehare Redae RFC commentary p.106) These family arbitrators are empowered by the spouses. Since they are appointed by the free consent of the spouses, the power of the arbitrator emanates from the disputing parties.
When we compare the power of family arbitrators in the previous law and the current law, family arbitrators had more power in the previous. Their power was up to the pronouncement of divorce for serious causes.(RFC Art.121(1)) But this power is revoked by the RFC and here what we have to understand is that, even though their power to pronounce divorce is taken away by the current family law it is impossible to say that family arbitrators have no any role.(RFC Art 121(3)) Indeed, their power is to reconcile or making an effort to reconcile the spouses and to make the spouses to renounce their petition for divorce in case of divorce issues now. Family arbitrators have no any power other than reconciling the disputing spouses for disputes involving in divorce (RFC Art.117). As we can see the RFC family arbitrators have the power to act as mediator as far as their purpose is to reconcile the spouses. They can use all possible meanses to settle the dispute and to keep the sustainability of marriage.
Generally speaking, any attempt of the third party arbitrators to pronounce divorce other than persuading for the conciliation has no legal effect. This is for the fact that marriage is the base fore the society in general and for the family in particular. Therefore, it should not be as such flexible to be dissolved by the decision of third party arbitrators. But some scholars argues to the contrary saying that once we have recognized conclusion of marriage to be made in offices other than the court or notary, it would be justifiable to allow divorce in the same cases.
B. Duties of Third Party Arbitrator - Arbitrators, due to the irony relationship that they have with the spouses, play a vital role in family dispute resolution. Both the repealed provisions of the civil code and the RFC, confers duty upon arbitrators. Hence we will see the duties conferred upon them in some detail in this section. What is expected from the chosen arbitrators to be fulfilled includes keeping the principle of confidentiality and arbitrators are assumed to be neutral.
According to the RFC Art. 83(2), they have the duty to report on their efforts to reconcile the spouses and renounce the desire of divorcing. Regarding this point the repealed law had contained broad duty which is gives them the power of deciding over the fate of the marriage though it is subject to the approval of the court (Civil code Art. 679(1)). Similarly they were duty bound to pronounce judgments that could enabled the parties to solve all disputes arising out of divorce. The means of liquidation to be employed were to be decided by the family arbitrators.
After the arbitrators are already appointed and they accept the status, the next step is starting the procedure to resolve the family dispute. Under the revised family code there is no requirement as to the acknowledgement of arbitrators’ acceptance for being arbitrator by the dispute. However, the civil code had employed such mechanisms to know the willingness of the arbitrators to arbitrate the dispute. After having appointed the arbitrators, the spouses should submit their choice to the court within 15 days (art.119 (1) of RFC). On receiving the list of arbitrators or the appearance of the arbitrators the court will make a record and give direction as to how reconciliation has to be preceded and to submit the result of the arbitration or the attempt of reconciliation within three months. From this time on wards the work of reconciliation is left to the arbitrators except submitting some reports about their progress.
Even though the revised family code provides for direction as to how to proceed the conciliation, it did not mention even some of the procedures to be followed in the reconciliation process. It seems that it is left to the discretion of the arbitrators and the court. Nevertheless, the procedure most likely has to be in the following manner. The arbitrators appoint a day which is convenient for the disputants in the most probably convenient place. Most importantly the place should not be a place having many persons, for example, market place and the like. After asking them separately about the matter, the arbitrators could start the arbitration in the presence of the spouses. Separate talking with the spouses at this level does not amount to caucus since it is made only at the earliest time and for reconciliation but not for transfer of other information.
If they are not able to decide the issue at that day they may adjourn another day which is convenient to the spouses. But it is not possible to adjourn for more than three months, unless the court orders to do so, (art. 119 of RFC). But lastly if they are not successful in reconciling the spouses, they have no power to pronounce divorce of the spouses rather they only report the result of their attempt to the court without delay (art121 (2) of RFC).
Outcomes and enforcement of the proceeding
A. Outcome of arbitration in family dispute - The outcome of arbitration by arbitrator tells us an important step for the resolution of the dispute among the spouses. If reaching an agreement was impossible, there will be no further step, except the reporting step. The outcome of the arbitration will be either of the following two options:
i) Resolving the dispute
i).Resolving the dispute - the main purpose of founding arbitration tribunal is to resolve the disputes among the spouses in amicable way. Because of this reason if a petition is taken to the court for divorce, the court will let them to take their case to the arbitrator of their choice and to reconcile as much as they can. After the process, the arbitrators who dealt the issue may come up with conciliating the spouses or they may not. If the arbitrators successfully resolved the dispute, their decision will be effective and they should report the same to the court.
ii). Divorce - once the arbitrators entertain the case and fails to persuade the spouses to reconcile, according to the RFC the arbitrators have no power to pronounce divorce, but it is the court that has the power to deal with the issue of divorce (RFC Art ). But according to the civil code the arbitrator had this power if there exist a serious cause for divorce (Art 668 of the C. C.).
ADR proceeding are playing a pivotal role to settle family disputes in the administration of justice. Family disputes, particularly disputes among the spouses are the crucial problems in the society. This problem most of the time settle by ADR means’s, especially by arbitration proceedings out of court. Nowadays the process of settling family disputes out of court is very much encouraged because the courts are becoming more and more congested and a case requires a long time to be decided. In return arbitration institutions help the justice system by reducing the burden of courts.
This arbitration proceeding are like a mini-trial court proceedings which are conducted by those arbitrators who are appointed by the common interest of the spouses. This proceeding has its own procedures and enforcement mechanisms in which arbitrators have to follow through out of their effort of settling the disputes. Arbitrators have their own powers and duties which they have to discharge and apply where they conducts the arbitration proceedings. If they are not able to carry out their function competently and diligently, they will be removed from their position.
- Category: Alternative Dispute Resolution
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The Addis Ababa Chamber of Commerce and Sectorial Associations, established in 1947, provide technical and advocacy services to help business people start, run, and grow their businesses. Today the AACCSA is the only organization that provides a wide range of non-financial assistance to business in the country. The AACCSA also plays a major role in voicing the business concerns to the government. With over 7,000 registered members, the AACCSA is the largest and oldest chamber of commerce in Ethiopia. It is the only representative body that speaks with authority on behalf of the business community. The AACCSA is an autonomous non-governmental, non-political and non-profit organization that acts on behalf of its members. Since, its establishment it has served its members in promoting socio-economic development and commercial relations with the rest of the world. Its major objective is to promote the establishment of conditions in which business in general and in Addis Ababa in particular can prosper. The AACCSA is today one of the most dynamic civil society organizations representing business in Ethiopia and is active in matters of importance extending beyond its regional geographic base.
B. Mission Statement
The Addis Ababa Chamber of Commerce is set to create an environment in which business in Addis Ababa can develop and grow at a much faster pace. In doing so, the Chamber will encourage the Addis Ababa business community to direct its resources on the critical issues facing our city. In the coming years the Addis Ababa Chamber of Commerce will forge a partnership between the private and public sectors:
- to strengthen Addis Ababa’s economy across the six zones,
- to promote a more flexible and hospitable condition for small and medium businesses,
- to promote business ventures that contribute to a large employment base.
- to improve the overall physical condition of the city.
This will be achieved not only by building a team of highly trained and dedicated staff but more importantly by forging a consensus among all stake holders on how best to promote faster and widely shared economic growth.
The AACC strives to strengthen the relationship and co-operation of itself and its members with counterpart organizations and partners in the sectors of International Trade, and Investment. Strengthening friendly cooperative relations by promoting the exchange of business delegates from time to time, and the exchange of publications and other information related to trade, technology and the economy in general, is mutually advantageous in promoting investment and trade relations in various fields. Thus, the Chamber serves as a link between its members and foreign companies by hosting trade missions and providing forums for the exchange of opinions. It also organizes trade missions to different countries and facilitates the establishment of business contacts. The Chamber receives visitors from various countries and organizes business trips for its members abroad.
C. Arbitration Rule of the Chamber
The rule has got articles which are put in to different categories. The first chapter is about the preliminary points, the second about the initiation of the proceeding, the third about the composition of the tribunal, the fourth about the arbitral proceeding, the fifth exclusively about the nature of the award, the sixth about the cost of arbitration and two more schedules dealing with the cost of the proceeding and the declaration of independence to be signed by arbitrators. As we did for the EACC rules, let's see this rule in light of the prevailing principles of the concept.
Short Summary on Rules of Arbitration of AACC
I. Institution of proceeding - Any disputes to be settled by AACC should fulfill certain pre-conditions required by the institute. The arbitral proceeding shall start by written application of the parties to the institute which may be in the form of an arbitration clause in a contract or a separate agreement stating disputes which have arisen or which may arise in the future (Art 3). The claimant, up on depositing a down (installation) payment specified in annex1 of the chamber, shall made application for arbitration. Such application must contain the name and address of the claimant, respondent, arbitrator (if more than is to be appointed) and advocate, if any, and all documentary evidences on which the claim is based on (Art 4(1) (i) and (ii)). The secretariat of the institute examines the technical sufficiency of the claim and if it finds not sufficient, it shall reject to be completed the formality. But if the secretariat finds sufficient, then it shall send a notice of arbitration with the copy of the claimant’s application. It shall send also a copy of arbitration rules, list of arbitrators and arbitration fee schedule simultaneously to both parties (Art 4(2)).
The respondent shall, within 45 days (subject to extension by the institute if there are justifiable reasons) from the date of receipt of the notice, submit his documentary evidences and written defence appoint his arbitrator to the secretariat. However if the respondent has counter claim, by paying the down payment specified in the annex, he shall submit with his statement of defence the facts and reason, and documentary evidences on which the claim is based to the secretariat (Art 5).
The arbitral tribunal may allow the parties to amend their respective claims if it is not too late to raise the request, and such amendment does not affect the proceeding. If the respondent fails to file his defence, then the proceeding shall be conducted by ex-parte hearing. The same rule shall also be applicable when the claimant fails to file a reply against the respondent’s counter claims (Art 5).
ii. Appointment of arbitrations - the parties under the arbitration rues of AACC shall freely determine the number of arbitrators, if not agreed, the tribunal shall decide to be three arbitrators (two of them appointed by each and one jointly). But where the case is not complex, the institute may appoint a sole arbitrator. The arbitrators, to keep the confidentiality and interest to the parties, are expected to be absolutely impractical and independent. There are also other obligations imposed on the arbitration such as entering in to oath and signing on the following "arbitration declaration of independence" and performing in utmost good faith and disclosing any facts or circum stances connected with the case which may put into question his independence in the eyes of the parties (Art 9).
Here it is
I, The Arbitrator whose name is hereunder mentioned, hereby declare and confirm that:
"To the best of my knowledge, there is no reason why I should not serve the Arbitral Tribunal Constituted by the Arbitration Institute of the Addis Ababa Chamber of Commerce with respect to a dispute between -------------------- and -----------------."
."I shall keep confidential all information coming to my knowledge as a result of my participation in this proceeding, as well as the contents of any award made by the Tribunal."
"I shall judge fairly as between the parties, according to the applicable law, and shall not accept any instruction or compensation with regard to the proceeding from any source except as provided in the International Conventions and in the Regulations and Rules made pursuant thereto."
"A statement of my past and present professional, business and other relationships (if any) with any one of the parties is attached hereto."
Name of Arbitrator: -----------------------------
Date of Declaration: ----------------------------
Up on reasonable grounds, the parties have a right to challenge appointment of any arbitrator within 15 day from date of appointment. Generally an arbitrator may be replaced only on the following grounds; when an arbitrator dies (Art 12(1)); when he removed due to failure to perform de jure and de facto his duties (11(10)); and when both parties agree to replace him or the challenge got acceptance by the tribunal (12(3)). However, taking into consideration the comment of the parties and arbitrators, the court may decide, when it deems appropriate, to continue the proceeding with the remaining Arbitrators (Art 12(7)).
iii. Arbitral Proceeding - In the absence of agreement between the parties, the court shall determine the applicable law (Art 21(1)), the language (Art 15) and the place (Art 14) of arbitration on which awards shall be made. On this stage parties have a right to treat and present their case equally. When the court deems necessary, it shall decide whether the proceeding shall be conducted on the basis of the documentary evidences, witnesses (Expert) hearing or oral arguments. But if such party requests to conduct so, the court shall follow it (Arts 13(2) and 16(3)). Subject to prior summon to the parties to appear before it on the day fixed for first hearing, the court shall hear the presentation of their cases in person or representative capacity.
If a party duly summoned fails to appear, without good cause, the Arbitration tribunal shall proceed with the hearing (Art 17(2)). Finally, when the tribunal satisfied that the parties have had a reasonable opportunity to present their cases and evidences, it shall declare the proceeding closed.
iv. Awards and its effects - any order or decision shall be made by majority vote and when there is no majority, the presiding judge may decide on his move. The award shall be in writing and a copies signed by the arbitrators shall be given to the parties. It shall also be final and binding preventing the parties’ right to appeal against the awards.
Before an award is made, a proceeding may be terminated on the following grounds:
- If the parties settled their dispute by their agreement (Art 22(1)),
- If continuation of the proceeding becomes unnecessary or becomes impossible (Art 22(2)),
- If a party fails to pay an additional provisional costs in advance during the proceeding (Art 26 (4) and 29(2-4)),
After an award is made, either parry with notice to the other party, may request the tribunal:
- To interpreter the award (Art 23),
- To correct the award on errors in computation, clerical …etc (Art 24)
- To give additional award on claims presented in the proceeding but omitted from the award and can be rectified without any further hearing or evidence (Art 25)
The award includes determination of cost arbitration which are fees and expenses of arbitration expert witnesses, institute’s administrative expenses and legal & other reasonable costs of the parties during the proceeding. These costs are determined in advance according to the scale set out in annex 1 and considered as partial payment principally and cost in advance shall be payable in equal share by both parties. But the institute may set separate advances on costs corresponding to their claims or set offs (Art 26(2&5)).
The final award shall fix costs of arbitration and decide which party, in what proportion they shall bear them. However, if the proceeding is suspended or terminated, the institute shall render an accounting to the parties on deposits received and return any unexpended balances to the parties (Art 29(5)).
II. Comments on Rules of Arbitration of AACC
First and for most, according to the provisions of the civil code and civil procedure a party submitting an arbitral submission should be capable under the law and have the capacity to dispose of a right without consideration ( for gift ) on the matter in dispute (Arts 3326(1) civ.c. & 315(3) c. pr. c.). However, provisions of rules of arbitration of AACC does not clearly state such pre-requests except to have a defined legal relationship, whether contractual or not, irrespective of his minority, interdiction or any other reason incapacitating him to discharge his function properly. The same is true to arbitrators that he could not be an arbitrator if he is not of age, where convicted by a court or unsound mind …etc (Art 3340(1) c.c.). But no such pre conditions under the chambers rules have been put.
Secondly, Arbitrators shall be appointed freely by the parties and in the absence of such agreement or in case of request, the ordinary court and the institute may appoint arbitrators under the codes and the chamber, respectively (Arts 3332 (3) c.c., 316(1) c. pr. & 7 of AACC). Under the civil code without any regard to his nationality, any person can be appointed as arbitrator. However, if the parties are of different nationalists, the institute may appoint a sole arbitrator or chairman of a nationality, other than of the parties unless otherwise agreed or deems necessary by the institute (Arts 3339(1-2) c.c. & 8 of AACC). Can you justify this part of the rule and whether it is in line with the provisions of the civil and civil procedure codes?
Thirdly, the proceeding before the arbitral tribunal under the civil procedure shall, as near as or be the same as in a civil court. For instance if a witness duly summoned fails to appear, with out good cause or intentionally avoided the service of summon the court may issue arrest warranty with or within bail and he may be liable to criminal prosecution for his failure to assist justice (Arts 118 &317 of c. pr. and 440 cr.p.c. and notes by R. Alen Sedler on Ethiopian C. pr). Even the proceeding in AACC is also more or less similar with that of court proceeding, the institute or arbitral tribunal shall not have a power to order arrest warranty for a witness who is duly summoned and failed to appear before it.
Fourthly, all persons have a right to appeal to a court against any order or judgment of a tribunal which first heard the case (Art 20(6) FDRE Constitution).
The parties shall not waive their right of appeal except such waiver made by the party with full knowledge of the circumstances (Art 350 (2) civ pro). However, the institute clearly prevented the parties to exercise their right to appeal (Art 20 (4) of AACC) except to made application to correct errors on awards. In addition, unlike the arbitration rules of the civil procedure, the institute does not also contain provisions applicable to setting aside awards (Art 355-357 of civ pro) because the institute’s award would be final and binding.
Fifthly, as we stated earlier, it is inevitable during the proceeding that the institute and the arbitrators would incur costs and the disputants shall pay in advance as partial payment, when the proceeding started to secure to bind the parties by the decision of the arbitrations. The fees shall be calculated according to the scale in Annex 1 of the chamber put below.
a. Administrative service Fee Schedule of AACCSA Arbitration Institute
Sum In Dispute in ETB
Up to 50,000
From 50,001 to 500,000
2,500+3.50% of the amount above 50,000
From 100,001 to 500,000
4,250+1.70% of the amount above 100,000
From 500,001 to 1,000,000
11,050+1.15% of the amount above 500,000
From 1,000,001 to 2,000,000
16,800+0.70% of the above 10,000,000
From 2,000,001 to 5,000,000
23,800+0.30% of the amount above 2,000,000
From 5,000,001 to 10,000,000
32,800+0.20% of the amount above 5,000,000
From 10,000,001 to 50,000,000
42,800+0.07% of the amount above 10,000,000
From 50,000,001 to 80,000,000
70,800+0.06% of the amount above 50,000,000
From 80,000,001 to 100,000,000
b. Miscellaneous fees
- Registration fee-500.00 ETB
- Arbitrator/Adjudicator/Conciliator appointment fee-1000.00 ETB
- Ad-Hoc Arbitration/Adjudication/Mediation Service fee-4000.00 ETB per three months.
If we take for instance the first schedule for claims involving up to 50,000 Birr, assume there is 10,000 Birr claim in the dispute:
Then the parties would pay,
- 2000 Birr for administrative expenses
- 500 Birr for registration fee
- 1000 Birr for Arbitrators fee
- 4000 Birr for Ad-hoc Arbitration service per 3 months
- Some other costs of expert witnesses, if any
Finally the parties would pay approximately > 7,500 Birr for a dispute having a claim value of 10,000 lasted for 3 months. Therefore, this seems very unreasonable and disproportional with claim instituted and the cost the parties would pay in courts of law. In other perspective for a giant companies like construction and infrastructure companies which are involved in arbitration proceeding, the fee might be reasonable because-
- The companies carried out their transaction through a huge amount of moneys even the scale is at increasing rate in the first nine schedules, finally it is constant.
- The dispute involving such companies is more complex in nature, and needs relatively longer time to settle. So due to these reasons the arbitral proceeding would incur higher expenses, fees and costs required the parties to be paid become reasonable. However, the registration fee (500 Birr) is not proper at all for parties to a mere technical matter.