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Bereket Alemayehu

Bereket Alemayehu

Bereket Alemayehu got his LL.B. from Addis Ababa University with Great Distinction. He was one of the winners in the 2014 Essay Competition on the title “How can tax law stimulate economic growth and finance development?”, which was organized by the Lex:lead Group. Besides, he was awarded a Certificate of Honourable Mention for his high achievement in the Lex:lead Group’s 2013 Essay Competition on the title “How can the rule of law reduce poverty and foster economic growth?”. Previously, he also served as a Paralegal at Addis Ababa University, Center for Human Rights and rendered legal advice and/or prepared pleadings to individuals (particularly, the indigent).

Saturday, 07 October 2017 04:09

Overview of Commercial Arbitration in Ethiopia

Many countries have rules of arbitration so as to facilitate the settlement of disputes through arbitration. Ethiopia is no exception. As such, it has laws that allow and, in some cases, promote disputes to be settled by arbitration. This piece briefly explains the legal and institutional frameworks for commercial arbitration in Ethiopia.

Currently, the main sources of Ethiopian arbitration law, which are of general applicability (to commercial and non-commercial disputes), are the 1960 Civil Code and the 1965 Civil Procedure Code. There are also other laws which embrace arbitration for settling disputes, such as the Mining Operations Proclamation No. 678/2010 and the Energy Proclamation No. 810/2013. Besides, the bilateral investment treaties which Ethiopia signed incorporate arbitration as one means of resolving state-state and investor-state investment disputes. It is, however, worth noting that Ethiopia is not a party to the Now York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States.

The Civil Code regulates the contractual aspect of arbitration, hence, contains provisions on the form and signing of an arbitration agreement, the appointment, replacement and removal of an arbitrator and other provisions relating to the constitution of an arbitral body. On the other hand, the Civil Procedure Code deals with the procedures to be observed during arbitration proceedings, making of awards, review of awards, and the requirements and procedures for the enforcement of foreign awards.

Even though Ethiopia has many legal instruments on arbitration, there is only one institution which serves as a forum for arbitration in the country, i.e., the Addis Ababa Chamber of Commerce and Sectoral Associations Arbitration Institute. Apart from institutional arbitration, many cases are also settled through ad hoc arbitration in Ethiopia.

Under Ethiopian arbitration law, arbitral awards are generally binding. However, they may be subjected to appeal, which is waivable, and setting aside, which cannot be waived. Additionally, the Federal Supreme Court Cassation Division, which is mandated with the highest judicial power and whose rulings have precedential effect, has the power to review decisions of arbitral bodies for alleged basic error of law. The Cassation Division declared this position in its decision in National Mining Corporation PLC v. Dani Drilling PLC.

Finally, regarding enforcement of foreign arbitral awards, they can be enforced in Ethiopia subject to the conditions incorporated in the Civil Procedure Code, which include reciprocity and legality of an arbitral award.

In general, Ethiopia has legal and institutional frameworks through which commercial disputes may be resolved by arbitration, instead of the conventional litigation.  

Of late, the Government of Ethiopia has expressed its resolve to allow and promote the participation of the private sector in the business of generation of electricity, an area which has been exclusively controlled by the state. This stance of the government has been clearly incorporated in the Ethiopian National Energy Policy which prioritizes the provision of necessary support and incentives to the private sector in order for it to participate in the development of the country's energy resources. More recently, in the Growth and Transformation Plan II (2015/16 - 2019/20), the government aims at meeting the national energy demands of the growing economy and producing exportable surplus by increasing the electric power generating capacity through hydro, wind, geothermal and solar power initiatives. Obviously, the role of foreign and local investors, on this regard, will be of paramount importance.

In light of the Policy and the Plan, the government has recently passed laws that would serve as the bases for the regulatory and institutional frameworks of the Ethiopian energy sector. In 2013, it promulgated the Energy Proclamation No. 810/2013 that directs the establishment of the Ethiopian Energy Authority (EEA), enumerates its powers and duties and stipulates the requirement of getting licenses to engage in the business of generation, transmission, distribution, sale, importation and exportation of electricity. Besides, the government ratified the Geothermal Resources Development Proclamation (hereinafter “Proclamation”) in July 2016.

The Proclamation is intended to be the main regulatory framework for investments in geothermal resources. Among others, its objectives are to support the generation of electricity from geothermal resources and provide for local consumption and export, ensure security of tenure for all investors involved in geothermal resources development operations and encourage sustainable and carbon-neutral economy in Ethiopia. The Proclamation also prescribes that no person may undertake geothermal operations without first obtaining a relevant license from the EEA, which is empowered to oversee the country’s geothermal resource and operations thereon.

The Proclamation allows granting three types of geothermal operation licenses for Class I Geothermal Resources (geothermal resources that can be used to generate electricity). These are Reconnaissance License, Exploration License and Geothermal Wellfield Development and Use License. The requirements for these licenses are also provided under the Proclamation. 

Furthermore, the Proclamation regulates other issues in relation to carrying out geothermal operations. These include the powers and duties of the EEA, rights and obligations of licensees, environmental and safety requirements and dispute settlement mechanisms. Finally, it envisages the issuance of Regulations and Directives for its proper implementation.

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Mehrteab Leul & Associates is a member of DLA Piper Africa Group, an alliance of leading independent law firms working together in association with DLA Piper, both internationally and across Africa.

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