Arbitration and Conciliation Working Procedure: Highlights

By Dagnachew Tesfaye

Ethiopia has adopted a comprehensive Arbitration and Conciliation Working Procedure under Proclamation No 1237/2021(hereafter the Proclamation) effective from publication in the Federal Negarit Gazette, done on 2nd of April 2021. This Proclamation repealed the arbitration and conciliation provisions of the Civil Code and Civil Procedure Code. The proclamation shall apply to commercial related national arbitration, international arbitration whose seat is in Ethiopia and national conciliation proceedings.


However divorce, adoption, guardianship, tutorship, succession, criminal cases, tax cases, judgment on bankruptcy, decision on dissolution of business organizations, all land cases including lease, administrative contracts, trade competition and consumer protection, administrative disputes falling under the powers given to relevant administrative organs by law shall not be submitted to arbitration.


The arbitration agreement shall be in writing, signed by the parties having two witnesses. An arbitration agreement concluded by electronic communication shall be deemed to have been in written form.


With respect to matters falling under the arbitration agreement, the contracting parties may request the court interim measures to be taken before the arbitration proceeding is initiated or during the proceedings. This shall not be considered as violation of the the arbitration agreement by the contracting parties and as intervention by the court.

The Proclamation will be applicable as law governing arbitration in which Ethiopia is designated as a seat of the arbitration and where the contracting parties have not chosen the applicable law. Where the parties have chosen the arbitration law, such law chosen by the parties shall govern the arbitration.

The parties to the contract will choose the number of arbitrators by agreement. Where the contracting parties fail to agree on the number of arbitrators, it shall be three arbitrators.

Where one of the contracting parties fail to appoint the co-arbitrator within 30 days from the date of receipt of the notice by the other party, or where the two arbitrators fail to agree on the appointment of the third arbitrator within 30 days from the date of their appointment or where the contracting parties fail to agree, in case of a sole arbitrator, the First Instance Court shall appoint such arbitrator upon the request of one of the parties.


Where the contracting party who has notifies the other party to participate in the appointment of arbitrator or properly notified to designate a co-arbitrator from his side and if he fails to reply within 30 days or deny the existence of an arbitration agreement, the requesting party shall have the right to cancel the agreement in his own time and submit his suit to the court.

Arbitration Centers may be established by the government or private persons. The details shall be determined by the Regulation. This shall make Ethiopian cities as hubs for arbitration and it is the hope of the writer that the regulation will not be neglected for a long time from being enacted.

One aspect that makes arbitration proceeding lack teeth has been its inability to issue interim measures to protect the interests of the claimant. But in this proclamation, unless the contracting parties agree otherwise, the tribunal may issue an order interim measure upon request made by one the contracting parties. Also where an order for interim measure cannot be enforced, one of the contracting parties may apply to a court for the enforcement of such order.

The proceedings of arbitration such as determination of rules of procedure, place of arbitral tribunal, language, presentation of statement of claim and statement of defense oral and written arguments are stated in detail. In addition to this, the Proclamation provides what happens in case of non-appearance of a party in dispute and intervention of a third party.

The arbitral award shall be in writing and signed by the arbitrator or arbitrators. Where the award is rendered by majority, the signature of the majority shall suffice and the arbitrator who has not signed on the arbitral shall state his reasoning. Correction of clerical errors, numerical errors, unintended and inadvertent omission of words may be requested within 30 days from receipt of the award.

Regarding appeal or application to Cassation, unless the contracting parties agree otherwise in their arbitration agreement, no appeal shall lie to the court from an arbitral award. Also unless there is agreement to the contrary, an application for cassation can be submitted where there is a fundamental or basic error of law.

Execution of an arbitral award shall be done by court. An arbitral award rendered in Ethiopia or in a foreign county shall be deemed to be binding and shall be executed pursuant to the Civil Procedure Code by applying to a court that is empowered to execute the award had the case been heard by a court. The party shall submit the arbitration agreement, the original award or an authenticated copy of the award. The arbitral award brought into Ethiopia for recognition or execution shall be authenticated by the relevant organ, and translated into the working language of the court.

And finally the proclamation state dispute resolution through Conciliation agreement. Contracting parties may express their agreement, in writing or in any other means, to resolve future or existing disputes through conciliation. Conciliation initiated by one party does not get a response within 30 days from the date of receipt of notification from the other party or upon expiry of the date of response, the party who initiate the conciliation may treat this as a rejection of the invitation to conciliate and shall notify the other party is revocation of the invitation.

Where the conciliator believes that there exists a proposal for conciliation that may be acceptable to the contracting parties, he may formulate the terms of the settlement agreement. The parties may sign a written settlement agreement. The conciliator shall authenticate the settlement agreement and furnish a copy thereof to each contracting party. Such settlement agreement shall be deemed to be final and non appealable. The execution shall be made by the court that has material jurisdiction and which is located at the place where the settlement agreement is reached.

In conclusion the Arbitration and Conciliation Working Procedure Proclamation sets the ground work for establishment of alternative dispute resolution in Ethiopia. The Proclamation helps to complement the right to justice, efficient resolution of investment and commercial related disputes. Those areas awaiting the enactment of Regulation by the Council of Ministers should be looked fast and see the realization of the ADR to its fullest extent for the business community and justice sector in Ethiopia.

Reduction of Work Force


By Dagnachew Tesfaye
This brief article will look into the reduction of workforce as envisaged by the Labour Proclamation 1156/2019( hereafter the Labour Proclamation) and Reduction of Work Force Directive No.43/2013(hereafter the Directive). The Directive is a registered directive at the Federal Attorney General’s portal. An attempt to elaborate what reduction of work force means and the procedure of implementing the reduction will be looked in detail. A brief conclusion shall follow.

“Reduction of Workforce” has been defined in the Labour Proclamation as termination of workforce of an undertaking affecting a number of workers representing at least ten percent of the number of workers employed or, in the case where the number of workers employed in an undertaking is between twenty and fifty, termination of at least five employees over a continuous period of not less than ten days.


The expression “number of workers” will have the meaning of the average number of the workers employed by an employer concerned within the twelve months preceding the date when the employer took measures of reduction of workers.

Good causes that justify reduction are stated under Article 28(3) as follows:
a) Any event which entails direct and permanent cessation of the worker’s
activities in part or in whole resulting in the necessity of a terminating a contract of employment; b) Without prejudice to the provisions of Article 18 (5) and (6) i.e. ( full or partial suspension, due to force majeure, of the activities of the employer for a period of not less than 10 consecutive days; or financial problems, not attributable to the fault of the employer, that requires the suspension of the activities of the employer for not less than 10 consecutive days) demand fall for the products or services of the employer resulting in the reduction of the volume of the work or profit of the undertaking and thereby requiring termination of a contract of employment; and c) A decision to alter work methods or introduce new technology with a view to raise productivity resulting in termination of a contract of employment.


The general procedure set forth in the Labour Proclamation is that whenever a reduction of workforce takes place, the employer shall conduct consultation with a Trade Union or workers’ representatives.

However, under the Directive, whenever there is no trade union or existing workers’ representative, the workers shall select their representatives using a selection workers’ committee. Those elected worker’s representatives should obtain majority vote of the workers.

Then the employer shall notify the trade union or workers’ representative in WRITING 30 days prior to implementation of the reduction. The content of the letter shall be reasons for the reduction of work force, how many workers will be affected, which positions are affected, how long the reduction lasts and the criteria for the implementing the reduction.

The employer and workers representative or trade unions shall be holding discussion on the reduction or seeking other options available given the status of the employer that can avoid reduction of workers. Such discussion has a time limit. And it should last within 30 days.

The discussion should enable to release those involved in the reduction with pension, if the option is available. If the employer has new positions opened, then so long as those reduced are compatible, the reduced workers will get priority.

In case of comparable skill and rate of productivity, the workers to be affected first by the reduction shall be in the following order: a) Those having the shortest length of service in the Undertaking; b) Those having fewer dependents; c)The reduction shall affected first workers except those that are listed under (d) up to (e) of this Sub-Article; d) Those employees with disability; e) Those who sustained employment injury in the Undertaking; f) Workers’ representatives; and g) Expectant mothers and mothers within four months post-natal.

Before, implementing the reduction, the employer shall NOTIFY in writing Ministry of Labour and Social Affairs office the reasons for the reduction of work force, how many workers will be affected, how many workers are working in the enterprise, which positions are affected, how long the reduction lasts and the criteria for the implementing the reduction.

There are exceptions. The procedure laid down in the Labour Proclamation shall not apply to the reduction of workers due to normal decrease in the volume of a construction work as a result of its successive completion unless the reduction affects workers employed for parts of the work before the work for which they are employed is completed. Here “construction work” includes the construction, renovation, upgrading, maintenance and repair of a buildings, roads, rail-way lines, dams and bridges, installation of machinery and similar works.

To sum up, reduction of workforce should follow the Labour Proclamation 1156/2019 and its implementation directive Directive No 43/2013. The employer should give in writing an invitation for the workers’ representatives for discussion and the Ministry details about the reduction of workforce. The workers should have their representatives assigned to discuss the reduction of work force with the employer. The employer should initiate the procedure 30 days prior to implementing the reduction and the result of the discussion should last within the 30 days.

PARLIAMENT APPROVES THE REVISED ETHIOPIAN COMMERCIAL CODE

The House of Peoples Representative on its session on 25th March 2021, has approved the revised Ethiopian Commercial Code, which has been in place for the last 62 years.
The revised Ethiopian Commercial Code has included new ways of doing business, that will enable the private sector to engage widely, in a less bureaucratic manner with transparency.

Foster Care Directive

By Dagnachew Tesfaye

The Ministry of Women, Children and Youth Affairs (MoWCYA) has come out with a registered directive Directive No 48/2020 namely Directive on Foster Family and Domestic Adoption Services. In this brief article, an attempt shall be made to see what foster care child support looks like only. Domestic adoption process and procedure shall be dealt in another article.

The PREAMBEL says foster care is introduced in this directive to fulfill the promise of the government. The government promised to support vulnerable children locally. Foster care is one of the local support programs.

The directive DECLARES that it generates its powers from the ratified Child Right Convention and African Charter on the Rights and Welfare of the Child.

Thus, before indulging into the details of the directive, it is important to see the definitions given to foster family care, who a vulnerable child is and who are the institutions to implement the foster care directives.


Foster family Care is one of alternative to providing support and care to children lost their family and vulnerable children. It is a temporary alternative program. Foster family care can be either for short or long period. The responsibility of the foster family shall be to properly
raise those children by fulfilling the basic necessity of the foster child.
The support and care in terms of the children psychology and
physical health. These responsibility must be completed until the
children re-unified with their biological parents or placed to other
permanent alternative program.

Vulnerable Child are children whose survival and development is
jeopardize by certain circumstances are therefore in need alternative care
services. Those includes: a. Abandoned Children; b. Single or double orphan; c. Non-orphan whose parents are unable to support the child due to illness, physical disability and mental impairment; d. Street children; e. Children living in orphanage; f. Abandon children due to their biological parents displacement; g. Children who are not getting support from their biological parents due to economical deprivation; and h. Children neglected by their biological parents ;

Institution means government or charity organizations which have an
authority and license from federal government to perform domestic
adoption and foster care service.


The SCOPE of the directive shall apply on appropriate Federal Government
intuitions and charity organizations authorize to perform foster and
adoption services as per the Federal Government. Based on this directive, regions and city administration may prepare own
directive taking in to account their context.

The first thing to do is REGISTRATION. Registration at the institution as an interested foster family. The institutions shall have responsibility to prepare registration form and to fill by potential families. The registration must also include the foster family needs, including age, gender, health status and other conditions of the child.


The registered foster care family should be ELIGIBLE. The registered foster family must have Ethiopian nationality and solely reside in Ethiopia
permanently ; Above 25 years of age; Unless and otherwise there is no option the child must only be given to married persons. Family who reside in the area where the foster child resides shall get priority. Family must duly approve their willingness by written consent to foster the child. Family shall have sufficient economical capacity to raise the child. Foster family should be a person who has not convicted by a court of competent jurisdiction for offenses related children. Family must have medical certificate that enables them to raises the child.


After making sure that the eligibility requirements are fulfilled, before the concerned authority placed the child to foster family, a HOME STUDY shall be dome. The concerned organ shall assess the foster family by attending at home to acknowledge their psychosocial and economic conditions in accordance with the check list.

The foster family should PRODUCE Ethiopian nationality identification card, Birth certificate, Medical certificate that confirms they are completely free from transferable or uncured deceased so as to confirm their health
capability to properly raise children, Police clearance certificate, Marriage certificate and Income evidence.

Once the status of the foster family is assessed and completed, then the STATUS OF THE CHILD shall follow. General information of the child; gender, age, language, religion (for a child capable of expressing himself/herself), place of birth and other related information, residential address of the child, birth certificate of the child, family status of the child (abandon, single or double orphan) and other related status shall be organized. The child physical, mental, psychological and health status, educational status of a child, economical status of a child, (for example acquiring property through inherits or grant) shall also be identified. If the child is found abandoned, name and address of the person who found the child, date, place and other related information’s must be provided.

TRAINING to the foster family shall be given by the government organ or the institution. Such training mainly consists of proper upbringing and maintenance of a child definition of trustee adaption family protection and securing children right and other related subjects by providing continues
trainings.

The next step is MATCHING. After organizing the evidences of both the foster family and the child, the INISTITUTION shall made matching the child with suitable family.

Then CREATING ATTACHMENT AND BONDING shall follow. Matching and bonding involves introducing physically the child with the foster family, the biological children of the foster family with the child, taking the child to at the village of the foster family so as to allow him to be adapting with the community shall be done.

After the bonding activity carried out, LEGALLY BINIDING AGREEMENT shall be made between the institution and the foster family. If an agreement signed between the charity institution and the foster
family, the concerned governmental institution shall also singe as a
witnesses. After the agreement is concluded, in order to protect economic and social rights of the child, the foster family may present its petition of
GUARDIANSHIP to the competent court of law.

After the placement is done, the concerned institution shall provide
continuously SUPPORT and FOLLOW UP to ensure the right and welfare of
the child is reasonably maintained.

TRANSITION of foster care service to other alternatives may be implemented. If the biological parents exist and while the child is given to the foster family temporally and biological parents capable to raise their child, reunification with biological parents shall be performed by foster care institution.


If the family committed child labor, physical and psychological
violence, and also the cause of their negligence to the child, sexual
harassment and violence occur, or any exploitation has committed by
the family member or by others, then if such incidents confirmed by
the concerned institution without the prejudice of legal liability the CONTRACT WILL BE TERMINATED.

To sum up, the MoWCYA has come out for the first time BINDING details of foster care implementation procedure. From the registration of interested foster family to required assessments and documents, to signing a foster care contract agreement has been stated under Directive 48/2020. It is a commendable act in the right direction.

The 1960’s Commercial Code vis-a-vis the Draft Commercial Code

By Hami Bogale

This article will focus on the planned change to the 1960 Commercial Code of Ethiopia. In the new draft Commercial Code, although commerce has existed since the ancient times, there has been more advancement with new technologies. This draft Code would set a groundwork for the enlargement of the economic sector of the country and would made new advancements and for the country to get closer to the fastest innovations and advancements of the world.
The Commercial Code should be amended because of the following reasons
• For the establishment of new companies
• For formation of new jobs
• To be competitive in the arena of the global world
• To make vague provision clear and understandable
• To constitute or establish virtual companies, digital banking system etc..
The Commercial Code of Ethiopia was first introduced in the early of 1960’s. The Commercial Code constitutes articles that are related with commerce and business. But Ethiopia needs up-to-date and developed rule of law to progress with the rest of the world. The recent regime after implementing the constitution; there were encounters to review certain laws of the land. The Commercial Code was one of the laws that were appointed by law scholars to be revised. There were strong recommendations and suggestions from different legal advocates and also from different sector of companies that are established in the country, which the Commercial Code seems to be backward for the modern time. The draft code will have significant modifications and also introduces new technological advancements in the country.
Under the new draft Commercial Code there are numerous changes suggested with regards to the Ethiopian economic development. The new draft has innovative commercial structures that were not included in the previous Commercial Code. The 1960’s Commercial Code miss out some important issues which were seen in the
– Life insurance; the description of insurance and insurance strategy against unforeseen accidents is not efficiently stipulated under the Commercial Code. There should have been a clear explanation about unexpected accidents. Elements of accidents should have been cleared.
– Bankruptcy
– Company law; private limited companies (PLC) has been intensely aggregating in our country but there seems to be some difficulties with the articles of the Commercial Code that govern this specific companies. Specifically the articles that are related with mandatory legal requirement, capital, limited liability of members and etc….
The new draft code seems to touch up on the significant problems were stipulated in the 1960’s Commercial Code. The new draft has come up with the following resolutions and new introductions.
• Individual PLC; this new type of organization permits that one person can establish a company. The previous code only permits minimum of two person to establish a private limited company
• Introduction of board of directors even if the board of directors is not shareholders. The new draft states that board of directors may be or not be shareholders.
• Business owners can use their business as collateral. Business owners can use their business as a collateral to ask for loan from banks
• Companies are obliged to keep records and organization of the company.
• Foreign companies are permitted to function in Ethiopia
• In the previous Commercial Code articles of association was a mandatory requirement for establishment of a share company. Under the draft code, articles of association are no longer a mandatory task to fulfill establishment of shareholding companies.

Conclusion
The 1960’s Commercial Code of Ethiopia has governed the commerce sector of the country for over 50 years. The 1960’s Code was first introduced in the reign of the emperor. This generates an obvious difficulty to the modern day commerce and business. As companies generally are increasing with number and recent technologies, they need an up to date law that governs them which goes in parallel with the modern introduced innovations. As a result there were several demands on the side of the law scholars and also startup companies that the 1960’s Commercial Code is regressive for the current time.
After several attempts, the new draft Code was presented. This new code consists of many changes in the previous code and also introduced new features to the procedure of the commerce in the country. This starts new advancements in the sector of commerce and it would be a great advantage for new companies to emerge in the country since the law has introduced different kinds of policies.

Deceased Body Transport, Burial and Inheritance

The Ethiopian Ministry of Foreign Affairs ( hereafter MoFA) on its Registered Directive No 523/2013 (hereafter the Directive) has provided the procedure how bodies of those who deceased abroad will be brought to Ethiopian or buried where they passed away and how inheritance issues are resolved.


The Directive states details on the requirements to be fulfilled to send deceased bodies for burial to Ethiopia from abroad. The requirements are as follows:
-the applicant who is seeking the service has to apply, fill the form and provide necessary documentations;
-full name of the deceased, passport number and his/her nationality, residence or work address(if known) and where the deceased body is found;
-full name, phone number, valid passport copy or Woreda Id/Kebele Id of the relative or proxy or concerned party who wish to transport the deceased body to Ethiopia. Also a support letter attesting being relative;
-if there is no relative or proxy or concerned party, the Ethiopian Consulate shall appoint a person from its staff to follow up the matter or follow up the rules of procedure of the country where the deceased has died, to finally transport the body for burial in Ethiopia.
-evidence should be brought to the Consulate by the relative or successor of the deceased as to being the successor of the deceased.
-costs and expenses for transport of the deceased shall be borne by the relatives of the deceased. If the relatives cannot cover the costs, then the employer of the deceased shall cover the expenses. If this cannot happen, then a call for support for Ethiopian Community or Ngo’s or individual sponsors shall be sought.

When an Ethiopian national residing abroad is going to be buried at the place of death, in addition to the above requirements,
-the applicant has to produce succession court papers from the First Instance Courts attested by Supreme Court, authenticated by MoFA and
– a video or photograph that shows the burial or funeral.


The Directive also gives directions as to what happens when there is no relative coming forward for a deceased Ethiopian National abroad.


The Directive also forwards to the law to mediate the dispute among relatives as to sending the deceased body to Ethiopia for burial or not.


Concerning inheritance of the deceased’s property, salary, insurance or money in the country where he/she dies, those who claim as successors should produce the following documents:
-court declaration of succession, translated into the working language of the country where he died, authenticated by MoFA in two copies;
-a power of attorney to the consulate or third party translated in the working language of the country where he/she died, authenticated by MoFA in two copies;
-details about the deceased and the applicant;
– the deceased’s property lists, where it is found and name of the authority to be requested;
-deceased’s passport copies of the first three pages in two copies and the applicant’s ID or passport copy of the first three pages.

The property, salary or insurance money shall be sent to the successors once the successors produce court papers on the liquidation of the deceased’s property.


The Directive has been registered by the Federal Attorney General as per Federal Administrative Procedure Proclamation No 1183/2020 which makes it valid and effective.

Online Trade Registration and Licensing Services(OTRIS)

The Ministry of Trade and Industry of Ethiopia has commenced an online business registration portal. The online business registration enables interested traders to find a unique name for their company, registration of the same, acquiring commercial registration and business licenses and renewal of various licenses. Physical appearance will be required at the Federal Document Registration and Authentication Agency for Memorandum of Association and Articles of Association authentication for companies, with Tax Authorities for acquiring Tax Identification Number, Value Added Tax or Turn Over Tax certificates and Competency Offices for business that require competency certificates. Such a measure by the Ministry will contribute a lot to ease of doing business in Ethiopia.

Inter-Country Adoption Allowed for Foreign Nationals of Ethiopian Origin

By Dagnachew Tesfaye

The Federal Supreme Court Cassation Bench on Cassation File No 189201 on March 11,2020 Volume 24 made a landmark decision in favor of allowing adoption by foreign nationals of Ethiopian origin.

The Revised Family Code Amendment Proclamation No 1070/2018 on its preamble and to some extent on its content held the idea of prohibition of adoption by foreign nationals. The term ‘foreign nationals’ was not defined. There was a question as to whether ‘foreign nationals’ include foreign nationals of Ethiopian origin that acquire yellow card.

The case decided by the Federal Supreme Court Cassation Bench on File No 189201 gave an interpretation to the question. The Cassation Decision state that Foreign Nationals of Ethiopian Origin are allowed to adopt Ethiopian children. The Revised Family Code Amendment Proclamation No 1070/2018 do not prohibit foreign nationals of Ethiopian origin from adopting Ethiopian children.

To reach the decision the Federal Supreme Court Cassation bench looked closely into the Ethiopian Children Policy document, the Diaspora Policy document, the best interest of the child and especially Article 36(5) of in the FDRE Constitution, Child Right Convention Article 20-21 and African Charter on the Rights and Welfare of the Child Article 24 , the Revised Family Code of Ethiopia Proclamation No 213/2000, Foreign National of Ethiopian Origin Proclamation No 270/2002, and Banking Amendment Proclamation No 1159/2019, that shows the trend of the government of Ethiopia in allowing economic participation of Foreigners of Ethiopian origin in the banking sector.

The Cassation Bench reached to the conclusion that foreign national of Ethiopian origin can adopt an Ethiopian child. The position of the Federal First Instance and Federal High Court, that a foreigner with Ethiopian origin cannot adopt an Ethiopian child is dismissed by the Federal Supreme Court Cassation Bench. The Interpretation of the law by the Federal Supreme Court Cassation Bench, as per Federal Courts Reamendment Proclamation No 454/2005, is binding on federal as well as regional courts of all levels.

To sum up, the Federal Supreme Court Cassation Bench by a legally binding interpretation has filled the legislative gap that happened on Proclamation no 1070/2018 and allowed foreigners of Ethiopian origin who has the valid yellow card, to adopt Ethiopian children.