International Commercial Arbitration: Legal and Institutional Infrastructure in Ethiopia (European Yearbook of International Economic Law, 12)

This book is the first-ever to explore commercial arbitration in the Ethiopian context. Alternative conflict resolution mechanisms are nothing new to the country: arbitration as a dispute settlement mechanism by which a third party issues a binding decision on a dispute between two or more parties by exercising the jurisdictional mandate conferred on it by the parties themselves was established with the adoption of the Civil Code in 1960. This pioneering book evaluates the extent to which Ethiopia’s laws and institutions allow disputing parties to effectively reap the benefits of international commercial arbitration. It interprets the relevant legislation and attempts to bridge the gaps in it, in order to help lawyers, arbitrators, arbitral institutions, academics and judges to understand and apply it. It also helps parties seeking to complete international transactions pertaining to Ethiopia make the right choice regarding conflict resolution. Acknowledgments Contents Abbreviations Chapter 1: Ethiopia and Its Legal System: The Context 1.1 The State, Its People and Economy 1.1.1 Geography, Population and Organization of the State 1.1.2 The Economy 1.2 The Legal System of Ethiopia 1.2.1 The Pre-World War Two Period: A Rudimentary `Legal System ́ 1.2.2 The Post-World War II Period: An Era of Laws and Institutions 1.2.2.1 The Codification of Laws: Any Local Content? 1.2.2.2 The Contribution of the Civil Law and the Common Law Traditions 1.2.2.3 The Continuing Competition Between the Civil Law and Common Law Traditions 1.2.2.4 Absorption of the Transplanted Laws 1.3 Does Ethiopia Have a Special Legal Regime for Arbitrations That Are `International ́? 1.4 Conclusion References Chapter 2: Arbitration Agreement: Validity, Lapse and Interpretation 2.1 Arbitration Agreement: Meaning and Relevance 2.2 Arbitration Agreement: Validity Requirements 2.2.1 Validity Requirements Under the New York Convention 2.2.2 Validity Requirements Under Ethiopian Law 2.2.2.1 Legal Capacity and Arbitration Agreement 2.2.2.1.1 Capacity of Physical Persons 2.2.2.1.2 Capacity and the Ultra Vires Doctrine 2.2.2.1.3 `Incapacity ́ as a Misnomer for Lack of Authority to Submit to Arbitration 2.2.2.2 Consent That Is Sustainable at Law 2.2.2.3 Object of the Arbitration Agreement 2.2.2.3.1 Object of Agreement Must Be `Defined ́ 2.2.2.3.2 Obligation to Submit to Arbitration Must Be Possible 2.2.2.3.3 Object of Contract Must Be Lawful A Party Privileged in Appointment of Arbitrator 2.2.2.4 Form Requirements for Arbitration Agreement 2.2.2.4.1 Effect of Non-Compliance with Form Requirement 2.3 Interpretation of Arbitration Agreements 2.4 Conclusions and Recommendations References Chapter 3: Arbitrability 3.1 Arbitrability: Its Various Shades of Meaning 3.2 Determination of Arbitrability: The Place of Domestic Law 3.3 Arbitrability as a `Ratione Materiae ́ Notion 3.3.1 The Scope of `Objective ́ Arbitrability in Ethiopia 3.3.1.1 Bankruptcy and Its Impact on Arbitrability 3.3.1.2 The Interplay of Arbitration and Bankruptcy in Ethiopia 3.3.1.3 Arbitration v. Bankruptcy: The US Approach 3.3.1.4 Arbitrability and Bankruptcy: The Approach in Europe 3.3.2 Competition and Consumer Protection Law and Arbitrability 3.3.2.1 The Main Features of Ethiopian Competition and Consumer Protection Law 3.3.2.2 Competition Law and the Question of Arbitrability 3.3.2.2.1 The US Approach to Competition Law and Arbitrability 3.3.2.2.2 Competition Law and Arbitrability: The European Union Approach 3.3.2.2.3 The US and EU Approach to the Interface Between Competition Law and Arbitration: What Are the Lessons for Ethiopia? 3.3.2.3 Consumer Protection Law and the Question of Arbitrability 3.3.3 The Erosion of `Objective ́ Inarbitrability: The Way Forward for Ethiopia 3.4 Arbitrability as a `Ratione Personae ́ Notion: A Cause for Concern in Ethiopia 3.4.1 `Subjective ́ Arbitrability: A Misnomer for Limitation on `Capacity ́? 3.4.2 Non-Arbitrability of Administrative Contracts 3.4.2.1 Administrative Contracts: What Are They? 3.4.2.2 Inarbitrability of Administrative Contracts: The Way Forward 3.5 Conclusion References Chapter 4: The Normative Basis for Decision on the Merits and Procedural Conduct of Arbitration: The Extent of Party Autonomy 4.1 Substantive Resolution Based on `Principles of Law ́ 4.1.1 Decision Based on Principles of Law and According to Law: Are They Identical? 4.1.2 Principles of Law and Lex Mercatoria: Are the Two Co-extensive? 4.2 Foreign Law and `Rules of Law ́: Are They on the Menu? 4.3 Equity: Its Different Shades of Meaning and Role 4.3.1 The `Weaker ́ Understanding of Equity 4.3.2 The `Stronger ́ Sense of Equity 4.4 Beyond Equity: Mandate to Settle and Modify Contract 4.4.1 Overview of the Trend in Other Jurisdictions 4.4.2 Mandate to Settle: Can Parties Confer This Power on Arbitrators Under Ethiopian Law? 4.5 Procedural Conduct of Arbitration: Flexibilities Allowed 4.6 Conclusions References Chapter 5: Kompetenz-Kompetenz and Separability 5.1 Kompetenz-Kompetenz of the Arbitral Tribunal: The Contest Between the Legitimacy and Efficacy of Arbitration 5.1.1 Kompetenz-Kompetenz: A Chameleon-like Notion 5.1.2 Kompetenz-Kompetenz in Jurisdictions of Significance: A Snapshot 5.1.2.1 Kompetenz-Kompetenz in French Law 5.1.2.2 Kompetenz-Kompetenz in German Law 5.1.2.3 Kompetenz-Kompetenz Under the UNCITRAL Model Law 5.1.2.4 Kompetenz-Kompetenz Under English Law 5.1.2.5 Kompetenz-Kompetenz Under the US Law 5.1.2.6 The Chinese Law and Kompetenz-Kompetenz 5.1.3 Kompetenz-Kompetenz Under Ethiopian Law: Legitimacy at any Cost 5.1.3.1 Positive Kompetenz-Kompetenz: Its Basis and Scope in Ethiopia 5.1.3.2 Negative Kompetenz-Kompetenz and Judicial Intervention in Ethiopia 5.1.3.2.1 Judicial Intervention Possible at Any Stage of Arbitration 5.1.3.2.2 Parallel Proceedings Not Guaranteed 5.1.3.2.3 Appeal to a Higher Court: Another Avenue to Prolong the Disruption of Arbitration 5.1.4 Jurisdictional Battle Between an Ethiopian Court and Arbitral Tribunal: Lessons from the SALINI Case 5.1.4.1 Injunctive Order Issued by the Ethiopian Court Rejected 5.1.4.1.1 Upholding the Agreement of the Parties `to Arbitrate ́ as a Ground for Disregarding the Injunctive Order of the Court 5.1.4.1.2 `Duty ́ of Ethiopian Court Under the New York Convention to Refer Disputes on Jurisdiction of Arbitral Tribunal to th... 5.1.4.1.3 Use of Domestic Courts to Frustrate Arbitration Contrary to International Public Policy 5.2 Separability of the Arbitration Agreement from the Underlying Contract 5.2.1 The Doctrine of Separability: Its Meaning and Implications 5.2.2 Justifications for the Doctrine of Separability 5.2.3 The Doctrine of Separability in Ethiopia 5.3 Conclusions References Chapter 6: Judicial Review of Arbitral Awards 6.1 The Judicial Scrutiny of Arbitral Awards: A Snapshot of the Approach Taken in Different Jurisdictions 6.1.1 Jurisdictions at the Pro-finality End of the Spectrum 6.1.2 The Middle-of-the-Road Approach 6.1.3 Jurisdictions at a Relative Pro-Fairness End of the Spectrum 6.1.3.1 The Law in the United States of America 6.1.3.2 English Law 6.2 Setting Aside of Awards 6.2.1 Jurisdictional Grounds 6.2.2 Procedural Grounds 6.3 Appeals from Award 6.3.1 Appeal from an Award on Non-Substantive Grounds 6.3.2 Appeal to Court on the Substantive Merit of the Award 6.3.2.1 The Pros and Cons of Review on the Merit 6.3.2.2 Grounds for Appeal on the Merits in Ethiopia 6.3.3 Waiver of Appeal from Award 6.3.4 Freedom to Opt in a Court 6.4 Review of Award on Cassation 6.4.1 Cassation: Its Nature and Distinction from Appeal 6.4.2 The Review of Awards on Cassation and Waiver of the Review 6.4.3 The Implications of the Case Law on the Success of Arbitration 6.4.3.1 The Fact-Law Dichotomy 6.4.3.2 Nonessential Error of Law or `Basic ́ Error of Law: No Easy Way to Tell One from the Other 6.5 Correction, Clarification and Supplementation of Awards: The Role of Courts 6.6 Modification of Award by Court: Impact on Enforceability 6.7 Conclusions References Chapter 7: Recognition and Enforcement of Foreign Arbitral Awards 7.1 Parallel Legal Regimes for Recognition and Enforcement 7.2 Recognition and Enforcement of Non-convention Awards 7.2.1 Recognition of Awards Not Covered by the New York Convention 7.2.2 The Enforcement of Non-convention Awards 7.2.2.1 Establishment of Reciprocity: A Precondition for Enforcement 7.2.2.2 Beyond Reciprocity: Grounds for the Denial of Recognition and Enforcement 7.2.2.2.1 Constitution of the Arbitral Tribunal 7.2.2.2.2 Opportunity to Appear and Present Defence 7.2.2.2.3 Public Order, Morals and Non-arbitrability 7.2.2.2.4 Award Must Be of Enforceable Nature Under Ethiopian law 7.2.2.2.5 Award Must Be Final and Enforceable 7.2.2.3 Burden of Proof Regarding the Grounds for Refusal to Enforce Awards 7.3 Recognition and Enforcement of Awards Covered by the New York Convention 7.4 Conclusions References Chapter 8: The Institutional Setting for International Commercial Arbitration 8.1 The Role of the Judiciary in Arbitration 8.2 Courts with Jurisdiction in Matters of International Arbitration 8.3 Standard Parameters for Assessing the Judiciary: How Do the Federal Courts Fare? 8.3.1 Independence 8.3.2 Training, Competence and Work Conditions 8.3.3 Accountability 8.3.4 Impartiality, Integrity and Corruption 8.3.4.1 Impartiality and Integrity 8.3.4.2 Corruption and Perception of Corruption 8.4 Support and Supervision of Arbitration: Perceptions and Anecdotal Evidence 8.4.1 Judicial Support to Arbitration: Views of Practitioners 8.4.2 Judicial Support for Arbitration: Court Cases Indicating Problems 8.4.2.1 Gebru Kore v. Amedeo Federeci 8.4.2.2 Solomon Negash v. Bahir Dar University 8.5 Arbitration Institutions 8.6 Conclusions References "This book explores commercial arbitration in the Ethiopian context. Alternative conflict resolution mechanisms are nothing new to the country: arbitration as a dispute settlement mechanism by which a third party issues a binding decision on a dispute between two or more parties by exercising the jurisdictional mandate conferred on it by the parties themselves was established with the adoption of the Civil Code in 1960. This book evaluates the extent to which Ethiopia's laws and institutions allow disputing parties to effectively reap the benefits of international commercial arbitration. It interprets the relevant legislation and attempts to bridge the gaps in it, in order to help lawyers, arbitrators, arbitral institutions, academics and judges to understand and apply it. It also helps parties seeking to complete international transactions pertaining to Ethiopia make the right choice regarding conflict resolution"--Adapted from the back cover. ... just because a party has concluded an agreement to arbitrate it cannot be concluded that he should be compelled to continue arbitration despite being unhappy with the procedure being followed by the tribunal. Coming specifically to the case at hand, though one cannot fully conclude the decision of the tribunal fixing the fee is not interlocutory, the establishment of a new panel of arbitrators does not adversely affect the petitioner's [Mr. Gebru Kore's] substantive rights. Because the decision requiring the establishment of a new panel does not impact on the substantive outcome of the case we do not think that decision [the Supreme Court's decision instructing constitution of a new panel of arbitrators] involves a fundamental error of law. So, we confirm the decision pursuant to Article 348(1). (Translation mine)