Tuesday, 18 December 2018 05:30

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.  

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