Month: March 2024

By Dagnachew Tesfaye, Managing Partner at DMLF

Introduction

Losing access to the sea is generally a great loss to a nation, politically, militarily, and economically. The independence of Eritrea caused Ethiopia to become landlocked in 1991. The Ethiopian navy operated from foreign ports for several more years. Ethiopia is a neighbor to five or six coastal countries namely Djibouti, Eritrea, Kenya, Somalia, Somaliland and Sudan.  Among the landlocked countries of the world, Ethiopia is the largest populous nation to be a landlocked country.

The international community has attempted to come up with few rules about the rights of land-locked states. The Barcelona Convention and Statute on Freedom of Transit (1921), the Geneva Convention and Statute on the International Regime of Maritime Ports (1923), the Geneva Conventions on the Law of the Sea (1958), the New York Convention on the Transit Trade of Land-locked States (1965) and the United Nations Convention on the Law of the Sea (UNCLOS, 1982).

The UNCLOS substituted the four Geneva Conventions. UNCLOS provides land-locked states with the right of access to and from the seas and freedom of transit. However, UNCLOS makes such rights subject to the agreements to be made by land-locked and coastal states. This, in turn, relies on the prevailing relations between the concerned states. If the land-locked and transit states are not in a good relation, the transit states may be unhappy to negotiate such an agreement and thereby put hurdles on the land-locked states’ free transit. The rights of land-locked states rely on the political will and commitment of transit states. The denial of free transit, affects the rights of land-locked states on the different maritime regimes. Land-locked states have no absolute right of access to and from the seas. Therefore though there are international conventions on the matter, negotiating bilateral and multilateral agreements with the transit states has a crucial and irreplaceable role. Being a land-locked developing country Ethiopia has been facing geographical, political, trade, transit, and other challenges. Ethiopia depends on Djibouti for its access to and from the sea.  From the international to continental and bilateral agreements on access to the sea affecting Ethiopia shall be the focus of the article. The article is intended to give brief knowledge on the existing laws and programme of actions for land-locked states like Ethiopia.

1958 Convention on the High Seas 

The Convention on the High Seas is a global treaty  which codifies the rules of international law relating to the high seas, otherwise known as international waters. Article 2 of the 1958 Convention on the High Seas makes clear that the high sea is open to all nations, and both coastal and non coastal states enjoy freedom of navigation. Article 4 of the Convention clearly provides that : ‘Every State, whether coastal or not, has the right to sail ships under its flag on the high sea.’ Furthermore, Article 14(1) of the Convention on the territorial Sea and the Contiguous Zone stipulates that ships of all States, whether coastal or not, shall enjoy the right of innocent passage through the territorial sea. The convention on the High Seas was superseded by the 1982 UNCLOS III, which introduced several new concepts to the law of maritime boundaries including Exclusive Economic Zone. Except Kenya, none of the neighboring coastal states of Ethiopia are signatories of the convention including Ethiopia.

UN Convention on Transit Trade of Land-locked States, 1965

The1965 New York Convention has been noted as the first international agreement to recognize the special disadvantaged position of land-locked states. The convention has essentially been superseded by the UNCLOS III, which contains similar provisions for transit arrangements to be made between coastal and land-locked states. Nevertheless, the Convention  for the first time gave recognition that land-locked states enjoy a legal right of free transit. Article 2 stipulates that freedom of transit is to be granted to traffic in transit and means of transport on routes in use mutually accepted for transit. No discrimination is to be exercised on the basis of the place of origin, departure, entry, exit or destination or on any circumstances relating to the ownership of the goods or the ownership, place of registration of flag of vessels, land vehicles or other means of transport used. A notable weakness of the New York Convention is its lack of universal ratification. It currently has 43 signatories and unfortunately to date Ethiopia is not a party to the Convention. Except Sudan, being a signatory, none of the neighboring states of Ethiopia are parties to the convention. The 1965 New York Convention was the foundation for negotiations at UNCLOS III on the question of rights of transit for land-locked states.

UNCLOS III 

The United Nations Convention on the Law of the Sea (UNCLOS III)  was adopted with one chapter dedicated to the rights and freedoms of landlocked states. Although the provisions are brief, one can consider them as an achievement as some measure of success. The adoption of Article 69 and Part X (Articles 124 – 132) UNCLOS depicted some recognition of what landlocked states had struggled to achieve. There are some supplementary Articles throughout UNCLOS which highlight further recognition of landlocked states’ rights in the seas carried over from previous treaties and conferences.

Landlocked states strive to gain access to global resources in line with the minimum standards as set out by the United Nations Convention on the Law of the Sea (UNCLOS III).It is a known fact that securing a cost effective transit arrangement with minimum rights or freedoms of transit and access is highly dependent on diplomatic relations between the landlocked state and its transit or coastal neighbor. UNCLOS emphasizes cooperation at regional, sub-regional or bilateral levels. The Convention does not stipulate penalties where there lacks any cooperation arrangements in place between landlocked states and their coastal neighbors. Even to the extent  there is an arrangement in place UNCLOS does not insist that the arrangement be equitable. Landlocked states are vulnerable to any disturbance their transit neighbors may experience. Landlocked states rely on political stability and the will of their coastal neighbors. Landlocked states remain dependent on their transit neighbors’ infrastructure and administrative processes. All these dependencies  which might  contribute to delay in transit for landlocked states.

These rights and freedoms of landlocked states under UNCLOS are not absolute nor self-executing. The ability of landlocked states to exercise these rights remains at the will and discretion of their coastal and transit neighbors. Landlocked states are required to negotiate bilateral and multilateral agreements in this regard and take what they can get, if anything at all. UNCLOS III became the new constitution of the seas and oceans, and yet UNCLOS upheld coastal states’ superiority to landlocked states. Ethiopia is a signatory to UNCLOS III. Djibouti, Kenya, Somalia and Sudan are also signed and ratified or acceded to the Convention.

Almaty Declaration and Plan of Action 

In 2003, a conference was held in Almaty, Kazakhstan to adopt a programme of action to address the unique challenges that LLDCs face. The United Nations Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and the Small Island Developing States adopted the  Almaty Programme. The Almaty Declaration and Plan of Action was adopted in 2003. The main purpose being to minimize the effect of dependency of landlocked states on their transit and coastal neighbors.Landlocked states and their transit neighbors seem to have found middle ground through Almaty Programme.

Almaty Programme of Action was adopted as an initiative to address the special needs and problems of landlocked states. This was attempted to be done by bringing together all relevant stakeholders that could assist in overcoming specific and peculiar challenges that put obstacles to international trade for landlocked states. General Assembly Resolution 66/214  recognized the Almaty Programme of Action as a fundamental framework for true relationship between landlocked and transit developing countries and their development partners at all levels including national and sub-regional levels. The Resolution further recognizes, among others,  that international trade and trade facilitation is one of the priorities of the Almaty Declaration and Program of Action as a means to guarantee that landlocked developing countries get a more swift flow of goods and services through trans-border trade.

The Vienna Programme of Action 

The Vienna Programme of Action for Landlocked Developing Countries(LLDCs) for the Decade 2014–2024  is focused upon addressing the challenges faced by LLDCs. The Vienna Programme of Action aims to contribute to the eradication of poverty stemming from countries’ landlockedness. The aim is to implement  specific actions related to  six priority areas: transit policy; infrastructure development; trade and trade facilitation; regional integration and cooperation; structural economic transformation; and means of implementation. The plan advises for additional investment in infrastructure, including roads, railways, and ports, to improve connectivity and reduce transportation costs. The plan also focuses on the need for greater trade liberalization and facilitation, including the removal of trade barriers and the promotion of trade diversification. The VPoA addresses the unique challenges faced by LLDCs and provides a comprehensive plan to address those challenges. The plan recognizes the importance of partnerships and cooperation between LLDCs, transit countries, and development partners, and the plan calls for increased financial and technical assistance to help LLDCs implement the plan.

The 2050 Africa’s Integrated Maritime Strategy (AIMS)

The 2050 Africa’s Integrated Maritime Strategy  was adopted in January 2014. The Strategy focuses on ensuring that the African continent is a key player in maritime affairs. The Strategy recognizes the need for ratification and domestication of all binding instruments. The Strategy promotes intra-Africa trade, with wealth creation for all of Africa as the ultimate goal, through increased development and integration. The Strategy provides a specific mention of the need to ‘protect’ the right of access to the sea and freedom of transit of goods of landlocked states. The Strategy, nonetheless, refers to landlocked states as “landly-connected” states.  The strategy anticipates creation of a Combined Exclusive Maritime Zone of Africa. The Strategy calls for  the need for interpretation consistent with existing instruments such as the UN Convention on Transit Trade for landlocked States (New York Convention) and the Convention on the Facilitation of International Maritime Transport which have specific provisions on equal treatment of landlocked states. The Strategy is primarily focused towards promoting intra-Africa maritime trade. It calls  for improved transit routes to ensure the smooth flow of trade within Africa. The Strategy does not have provisions dedicated solely to addressing the plight of transit for landlocked states but rather calls for an assessment of bottlenecks on transit of goods generally.  Without negotiating and entering into effective, mutually beneficial bilateral, sub-regional or regional agreements, the rights and duties of Africa’s ‘landly-connected’ states in relation to the maritime domain would have very limited practical value.

Africa Continent Free Trade Area(AfCFTA)

Among the Agenda 2063 flagship projects, AfCFTA is one of the significant ones. AfCFTA aims for increased trade agreements, geared towards intra-africa trade by eliminating barriers. African Continental Free Trade Area (AfCFTA) as at August 2023, 47 of the 54 signatories (87%) have deposited their instruments of AfCFTA . Ethiopia and Djibouti have ratified AfCFTA whereas Eritrea, Somalia and Sudan’s membership is pending.  AfCFTA contributes to the peculiar needs faced by Africa’s Landlocked Developing Countries (LLDCs) and Small Island Developing States (SIDS).  AfCFTA promises to contribute towards addressing some of these challenges.15 of the 16 African LLDCs have ratified the AfCFTA, as a symbol of their readiness to leverage the opportunities offered by the AfCFTA. Discussions are taking place in leveraging the AfCFTA towards addressing the peculiar trade and development challenges of Africa’s LLDCs and SIDS.

Agreement Between Ethiopia and Djibouti

Political will and mutual benefits are two key drivers of a successful agreement between a landlocked and a transit state. As a result, Ethiopia and Djibouti signed an agreement on port utilization and transit of goods towards Ethiopia in 2002. Relying on the UNCLOS principles, the agreement stresses the success of the Djibouti–Addis Ababa transport corridor and includes various terms and modalities of transit transport. Moreover, the agreement adds an institutional planning framework with a joint expert committee, which meets every three months, and a ministerial committee, which meets biannually. Ethiopia and Djibouti  recognized the mutual benefits of the agreement. Ethiopia’s key interest is safe and competitive access to the sea, and for Djibouti the traffic in transit is a source of income, contributing 70% of the port’s income.

Conclusion

While landlocked states have a general right in terms of UNCLOS to access the sea and its living resources, the practical application thereof is left to bilateral agreements to be entered into between the landlocked state and the transit states involved. In accordance with the relevant UNCLOS articles, states shall enter into these agreements to determine the ‘how to’ of these rights. Though there are some considerations provided by UNCLOS, there is no guarantee that the rights of landlocked states are protected. The actual terms to be included in the agreements are left up to the landlocked states to deliberate with their counterparts during the negotiations. In practice, therefore, the implementation of UNCLOS provisions related to the rights of landlocked states still relies to a significant degree on political will and existing favorable relations between the relevant states. Ethiopia’s need to have sea port access also depends on bilateral agreements entered with its coastal neighbors of Eritrea, Somalia, Somaliland, Kenya, or Sudan based upon international principles and plan of actions.

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By Dagnachew Tesfaye, Managing Partner at DMLF

Introduction 

The Federal Supreme Court Cassation Division on Cassations File Number 241752 on July 03,2023 rendered a binding decision on the issue of when a bonus will be paid even after the employment contract of an employee is terminated. The case has been between the applicant Ato Melaku Kasaw Alemu versus respondent Ethiopian Electric Power. The case was first brought by the current applicant in the Federal First Instance Court as a plaintiff. Then still the applicant appealed to the Federal High Court. Finally the applicant filed an application to the Federal Supreme Court Cassation Division. The argument in each level of the court and the final judgment of the Cassation Division shall be looked into in brief.

Federal First Instance Court 

The applicant argued in the FFIC that the applicant has worked for the respondent since 1988 in different positions. The applicant’s employment was terminated on August 7,2022 due to retirement. The applicant claimed that the applicant has to be paid in cash accumulated annual leave from 2011-2020 of 462 days. Moreover the respondent has paid a bonus for the budget year 2021/2022(2014EC) of one month and half month salary to those employees of the organization. The applicant argued that the applicant has served for the full year of the budget year of 2021/2022 but the respondent refused to disperse and pay the bonus payment to the applicant. Hence the respondent be ordered to pay the bonus pay even if the applicant’s employment is terminated having served and contributed to the profitability of the respondent that led to the payment of bonus.

The respondent on the other hand argued that annual leave of 462 days is barred by a period of limitation of two years as per Article 79(4) of the Labor Proclamation 1156/2019. The respondent further argued that the accumulated annual leave claim is barred by 6 month period of limitation as per Article 163(3). Regarding bonus, eligible employees according to the internal directive on bonus payments of the respondent goes to employees that are still working in the organization and their employment is not terminated. The employment contract of the applicant has been terminated. Thus the respondent argued this will inhibit the payment of bonus to the applicant. On the other hand, the respondent mentioned an argument on penalty stating the fact that there are no legitimate delayed payments to the applicant. As a result the request for three months salary for delay is unjustified.

The Federal First Instance Court gave a decree stating that the unused annual leave cannot be postponed for more than two years. Hence the request of the unused and accumulated annual leave by the applicant is barred by 2 years period of limitation as per Article 79 of the Labour Proclamation No 1156/2019.

On the merit of the case, exhausting the hearing of the arguments of the partties, the court rendered a judgment on the bonus payment claim. The court ruled that the employer’s directive state bonus payment is for employees working in the employer and whose employment is not terminated. The employment contract of the applicant is terminated due to retirement. Thus the court ruled that the applicant is not entitled to bonus payment.

Federal High Court

The applicant lodged an appeal to the Federal High Court. The appellate court affirmed the ruling of the lower court and dismissed the appeal of the applicant.

Federal Supreme Court Cassation Division 

The applicant filed an application to the cassation division. The content of the application is as follows: the right to get unused annual leave materialize when the employment contract is terminated; the applicant filed a claim of accumulated annual leave within 6 months from the date of termination; the labour proclamation forbids annual leave not to be postponed for more than 2 years; however the law doesn’t state the consequences of postponement for more than two years; the annual leave has been postponed due to the employer; hence the 462 days of accumulated annual leave should be considered in light of Article 1845 and be paid to the applicant. Regarding bonus payment, the applicant argued that he has contributed for the profitability of the respondent for the full year bonus has been paid. When bonus is paid, the applicant should have been entitled to get the bonus payment even if the employment is terminated. On C/F/No 20869, the applicant argued, the cassation division gave an interpretation that the bonus payment should be paid to an employee who has contributed to the profitability of an organization even when the employee left the job. Thus the 2021/2022(2014 E.C) bonus payment has to be paid to the applicant together with penalty for delay of payment.

The cassation division accepted the issue of bonus for further look. Hence the respondent was ordered to respond and the applicant as well gave a reply.

The respondent’s response briefly is as follows: bonus has to be paid based on agreement of employer and employee and bonus is not obligatory claim as stated in C/F/No 64758; as per September 7/2022 directive of the organization, bonus for the year of 2021/2022(2014E.C) is paid for an employee who is still working and his employment is not terminated. The employment contract of the employee is terminated before the enactment of this directive. For the mere fact that the employee served on the budget year doesn’t justify the payment of bonus. The employer has not delayed any justified payment of the employee. As a result, the penalty request is unacceptable. Therefore the lower courts’ decisions need to be confirmed.

The applicant gave a reply on April 11,2023. The applicant reaffirmed the argument presented on the application.

The cassation division examined the case. The issue to be resolved is whether a rejection of bonus payment of the 2014 E.C year due to the fact that the employee’s employment contract is terminated due to retirement is appropriate or not?

The Cassation Division first stated the facts of the case. Then the cassation division looked into different cassation bench interpretation on Article 53(2)(c) of the Labour Proclamation on bonus. The cassation decisions were C/F/No 20669, 101825 and 202839.

The conclusion reached by the cassastion division is that if there is no precondition for disbursement of bonus by a directive or collective agreement, the employee is entitled to get bonus payment even when the employment is terminated. However when there are clear preconditions for payment of onus in collective agreement or work rules or directives of the employer, the employer may not be obliged to pay bonus to an employee who doesn’t meet those requirements.

Though after termination of employment of the applicant, the respondent has enacted a directive on September 7,2022 stating the fact that 2021/2022(2014E.C) year bonus shall be paid to employees whose employment is not terminated and still working in the organization. The applicant does not meet the conditions for payment of bonus as the applicant’s employment is terminated and no longer serving the organization. Therefore, the cassation ruled that the respondent is not obliged to pay bonus to the applicant as the latter does not meet the condition of the directive of the organization that entitles payment of bonus.

The cassation division further ruled regarding the 462 unused annual leave. The Labour Proclamation Article 79(4) prohibits the postponement of annual leave for more than 2 years, and as such the applicant’s claim is unacceptable. To sum up, the cassation bench confirmed the lower court’s decsion.

Conclusion

The request for the payment of bonus by an employee depends upon meeting pre-conditions provided by the employer in the form of collective agreements, directives or work rules. In the absence of any pre-condition, even an employee whose employment is terminated could seek the payment of bonus given the employee had been working for the profitability of the organization that resulted in bonus payment. However, when there are conditions for example that  bonus shall be paid to employees who still work in the organization and their employment is not terminated, those employees whose employment is terminated cannot request for the payment of bonus.

Regarding unused annual leave, see the  issue in the article dealt here. 

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By Mahlet Mesganaw, Partner at DMLF

The Transaction of Minerals Ratification Proclamation No1144/2019 governs the transaction of Minerals resources after production. The Proclamation covers all transactions of minerals produced from all mining operations conducted in Ethiopia. We shall briefly look into the competency requirements, Licenses required, eligibility and duration of Licenses obtained.

Certificate of Competence 

To transact minerals, a person has to qualify to carry out the trade. The following certificates of competence(CoC) may be requested and upon fulfillment of the requirements, issued : a) mineral supplier coc, b) mineral crafting coc, c) mineral refining coc, d) mineral smelting coc, d) mineral transaction coc and f) mineral export coc.

Licenses

Any person who wishes to trade in minerals shall present a coc and shall be issued with the following License : a) mineral supplier licenses b) mineral crafting license,c) mineral refining license,d) mineral smelting license, d) mineral trade license and e) mineral export license.

Eligibility 

Among the Licenses referred above, mineral supplier license or gold and silver smelting license shall not be issued to foreign investors. A holder of a mining license shall not be issued with a supplier licence. Similarly for coc, mineral transaction or export certificate of competence shall not be issued to foreign investors.

Duration and Renewal 

Any license or coc shall be valid for one year from the date of issuance subject to renewal upon fulfillment of the requirements.

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By Dagnachew Tesfaye, Managing Partner at DMLF

The answer is YES. A foreign national advocate or foreign registered law firm can practice law in Ethiopia under two conditions. The first condition is that the case the foreign national advocate or foreign registered law firm seeks to engage involves the application of the law of the country that issued the advocacy license of the foreign national advocate or foreign law firm. The second condition is that the practice shall be done only in collaboration with a local advocate or law firm licensed under Ethiopian law.

The Federal Advocacy Service Licencing and Administration Proclamation No 1249/2021, done as of 5th day of August 2021, is the one that was revolutionary in the context of allowing foreign nationals advocates or foreign registered law firms to practice law in Ethiopia in the above two conditions. This proclamation repealed the previous Proclamation No 199/2000 that restricted the practice of law to only Ethiopian Nationals. The existing proclamation not only opens the door for foreign national advocates or foreign registered law firms to practice law in Ethiopia but also with equal footing to Ethiopian nationals, foreign nationals of Ethiopian origin are given the green light to practice law in Ethiopia.

The scope of the existing proclamation on Article 3 provides that the proclamation shall be applicable not only to federal advocates and law firms licensed under the proclamation but also foreign national advocates and law firms working within Ethiopia.

Hence the grounds for denial of an advocacy license or imposition of disciplinary measures shall also apply,as appropriate, to advocacy service providers holding a foreign license.

Therefore a foreign national advocate or foreign registered law firm with a valid advocacy license granted to the foreign national or foreign registered law firm in a foreign country may use their foreign license to render advocacy service to clients in Ethiopia on cases involving the application of the foreign law the advocacy license is issued on  and in collaboration with a local advocate or law firm licensed under the Proclamation.

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