By Dagnachew Tesfaye, Managing Partner at DMLF The Ethiopian Civil Society Organization Proclamation Number 1113/2019(the Proclamation), done as of March 12,2019, is enacted to regulate civil society organization. This Proclamation has allowed civil society organizations to engage in income generating business activities. To regulate in detail the business engagement of …
The Ethiopian Civil Society Organization Proclamation Number 1113/2019(the Proclamation), done as of March 12,2019, is enacted to regulate civil society organization. This Proclamation has allowed civil society organizations to engage in income generating business activities. To regulate in detail the business engagement of civil society organizations, the Authority of the Civil Society Organization has issued Civil Society Organizations Income Generating Activity Directive Number 937/2022, done as of December 22/2022(hereafter the Directive). This brief article shall look into how these income generating companies are established and regulated.
Permission to Engage in Income Generating Business Activities
The Proclamation allows any civil society organization to engage in any lawful business and investment activity in accordance with the relevant trade and investment laws in order to raise funds for the fulfillment of its objectives. An Organization which engages in income generating may do so by establishing a separate business Organization (company), acquiring shares in an existing company, Collect Public Collections or operating its business as a sole proprietorship.
Any civil society organization first needs to have authorization in its bylaws to engage in income-generating activities. The decision to establish a business company may be passed by the governing body of a civil society organization or by a body authorized by the organization’s bylaws. Funds used for the establishment, registration and enforcement of related issues shall be covered by the civil society organization.
Types of Business Organizations
The organization may establish an independent business organization that generates income for the organization in accordance with the Commercial Code of Ethiopia Proclamation 1243/2021 and the Commercial Registration and Licensing Laws namely the Commercial Registration and Business Licensing Proclamation No. 980/2016 (as amended by Proclamation No. 1150/2019), the Commercial Registration and Business Licensing Council of Ministers Regulation No. 392/2017 (as amended) and the Directive to Provide for Commercial Registration, Licencing and Post Licensing Inspection Number 935/2022. The recognized types of business organizations are Share Company; Private Limited Company; and One Person Private Limited Company. The Proclamation allows in addition to the above, sole proprietorship.
Company name
The name of a business established by any organization must be different from the name of the organization the civil society organization establishes. Therefore, the civil society business organization can choose any name other than its name as per the legal requirements of names under the relevant laws.
Business Objectives
There is no limitation on the type of business objective the civil society business organization can engage in, as long as it is a lawful business. The only compliment the Directive has regarding business objectives is that the service provided by the business or the goods it provides should take into consideration the disabled and the community members who need special support.
Members of the Business Organization
The Directive permits two or more civil society organizations to establish a business. On the other hand, there is no restriction as to who should be a member or partner of the civil society business organization. The members could be individuals, other business organizations or civil society organizations.
Capital Contribution of the Business
The initial capital of a civil society business organization may be paid from a program or from money borrowed from a bank or from another source. This capital contribution is subject to any restrictions set by donor organizations regarding the utilization of donated money. The civil society organization must guarantee that the budget allocated as capital contribution does not affect the organization’s mission and work activities.The capital allocated for the establishment of a business shall be allocated as a program or project cost. However, if the capital is found to be more than the amount allowed for program or project cost, the cost above this amount shall be charged as administrative cost.
Management of the Business Organization
The management of a business organization may take the form of a board of directors or general manager. The staff of the civil society organization can be assigned for the double task of managing the civil society business organization. However the only restriction posed by the Directive is that when it is decided to appoint a member of the management of a civil society organization as a member of the board of directors of a business company, it should be ensured that the activities of the civil society organization will not be disrupted.
Business Profit Allocation
Unlike any ordinary commercial business, the unique nature of a civil society business organization calls for the utilization of profits disbursed for funding the civil society organization objectives. Profits from a business established by the organization as dividends or in any other way should be fully used to cover program or administrative expenses of the organization. Despite this fact, however, it is possible to spend some of the profit for the business by the decision of the body authorized by the relevant law or the by-laws of the business company, which is more beneficial to the organization. The financial statement submitted by the company should show the situation in which the profit obtained is earned and used or spent.
Formation Notification and Annual Reporting
A civil society organization that has established a business company must notify the authority within fifteen working days of the business company starting to operate. Along with the letter announcing the establishment of the business company, the business license of the organization, certifications of qualification (if any), as well as the Memorandum of association and bylaws should be submitted. Similarly an organization that has purchased shares must notify the authority of the purchase of shares within fifteen days.
Reporting of the company under which the business is based must submit a separate financial statement of the business along with the annual financial statement and performance report.
Restrictions and Incentives
There are a number of restrictions in doing business by a civil society organization. First is the use of assets and resources of any organization and business should not be mixed in any way or the assets of one should be used for the service or activities of the other. Second, an Organization engaged in income generating activities shall open a separate bank account and keep separate books of account for its business in accordance with the relevant commercial and tax laws. And three the income and resources that are acquired from income generating activities shall not be transferred or shared for the benefit of members or workers of the organization. Finally incentive wise, the Authority facilitates the situation where organizations engaged in business activities that support the government’s policy and strategy get incentives.
Buying Shares, Stock from an Existing Business
Any organization can buy shares from an existing business established by another organization or from any other business. If the business finds it profitable, the civil society organization can use the profit from the shares it buys to buy more shares.
To sum up, the Civil Society Organization Proclamation and subsequent Directives are issued to allow a civil society organization to engage in income-generating activities, in accordance with the relevant business license and registration laws. The civil society business organization carries out income-generating activities by establishing new businesses (companies), holding shares in existing businesses, collecting public contributions, or conducting business as a sole proprietorship.
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The Federal Supreme Court Cassation Division on Cassation on File No. 185895 dated 24/02/2021, passed a binding decision as to whether an agreement on property of the man and woman made during an irregular union that lasted more than three years is required to be presented to court for approval, in order for such an agreement to have legal effect.
Background
The case is between applicant W/ro Alemitu Gonfa and respondents who are successor of Ato Birhanu Degafa. W/ro Alemitu and Ato Birhanu were in an irregular union relationship without concluding a valid marriage for more than ten years, starting in 1994 and ending in 2008. During this period, the applicant and Ato Birhanu managed to own a house registered in the name of the applicant. Ato Birhanu also made an agreement with the applicant on 27/11/2012 that made the contentious house for the case, the personal property of W/ro Alemitu Gonfa. They also stated that the house was constructed and bought by the personal money of W/ro Alemitu. This agreement was signed in front of elders as witnesses. The heir of Ato Birhanu opposes this agreement by stating that the agreement was not approved before a court of law in light of family law. Since the house came into existence during the period of the irregular union, the house is common property of both Ato Birhanu and W/ro Alemitu, they argued.
First Instance, Appeal and Cassation at Oromia
The case was filed at Finfine Zuriya Oromia Special Zone High Court by the respondent. The suit by respondents was to take half of the property, including the house of their father, from the common property. The applicant responded that the house is her personal property, not common property, by producing the agreement that was made with the deceased Ato Birhanu. The agreement made by Ato Birhanu states that the house is the personal property of W/ro Alemitu and was also constructed with her personal money. The Respondent objects to the agreement by stating that the agreement has not been approved by a court of law according to family law. Hence, the agreement has no legal effects. They argued the house is common property of both. Finfine Zuriya Oromia Special Zone High Court, after reviewing the case with relevant laws, decided that the house is personal property of W/ro Alemitu Gonfa according to the agreement made with Ato Birhanu. The court ordered the applicant to take half of other assets other than the house. By opposing the decision of Finfine Zuriya Oromia Special Zone High Court , the respondent filed an appeal to the Oromia Supreme Court.
The Oromia Supreme Court, after accepting the application by the respondent and then the response by the applicant, decided the case. The court argued that if an irregular union lasted for more than three years, the union created common property between people who lived in this union according to Oromia Regional State Family Law. The Oromia Supreme Court also added that in this case, the respondent and Ato Birhanu lived in the union for 10 years. Hence common property was created. With regard to the agreement concluded between the deceased Ato Birhanu and the respondent, the court argued that the agreement has to be approved by the court in accordance with Oromia Family Proclamation 83/96 Articles 89. But in this case, the agreement was not approved by the court of law. So the court decided the agreement has no legal effect. The house is the common property of both people. And the court reversed the decision of the lower court by making the house common property.
The applicant, by opposing the decision of the Oromia Supreme Court, applies to the Oromia Supreme Court Cassation Bench by stating the Supreme Court has committed an error of law by applying the formality set for marriage to an irregular union. The Oromia Supreme Court Cassation Bench decided in support of the decision of the Oromia Supreme Court by arguing there was no error of law committed.
Federal Supreme Court Cassation Division
The applicant filed to the Federal Supreme Court Cassation bench an application opposing the decisions of the Oromia Supreme and Cassation Court decisions. The content of the applicants application consists of arguments such as the house in contention is in the name of the applicant, the deceased has not contributed any money for the house and signed an agreement attesting the house is the personal property of the applicant. The Oromia Supreme Court decision reversing the High Court decision is wrong. Thus, the error of law committed by the Oromia Supreme Court needs to be rectified. The Cassation bench screened the case and has framed the issue of whether an agreement signed between irregular union couples need to be approved by a court of law as married spouses. Hence, the respondents were called to submit their response. On the respondents’ response they argued that their deceased father and the applicant lived for 15 years, their deceased father added money of his own with the compensation money the applicant received for eviction, bought a plot of land and built the house in contention. There is no agreement signed stating the house is the applicant’s property. If there is an agreement, that agreement is not registered in court of law. Therefore, they argued the final decision of the Supreme Court of Oromia was correct. The applicant also gave a reply. The applicant further explained her application.
The Federal Supreme Court Cassation Bench, after reviewing the facts of the case and relevant family law provisions, by a majority decision of four judges, decided the case. The court argued that the Oromia Family Code Proclamation No 69/1995 Article 132 and 133 state that if a man and a woman live for more than three years in an irregular union, the properties they acquire shall be common properties, unless otherwise an opposing evidence is produced. When there is common property, the liquidation of the common property shall follow that of the marital liquidation of property provisions. Article 89 declares that agreements made during marriage have no legal effect unless otherwise the agreement is approved by a court of law.
Cassation bench argues that any agreement made during an irregular union or marriage has to be approved by a court of law. The law provides such a legal requirement to prevent undue influence made by one party on the other during the agreement making process. Requirement of approval ensures that the requirement of approval by the court of law is also to ascertain whether the agreement is based on the free will of the agreement maker. Legislative bodies also provide such a legal requirement to protect the parties from undue influence during the process of agreement. This legal obligation also works for irregular unions. The Federal Cassation Bench decided that the agreement made by the deceased was defective since it was not approved by the court of law. The Federal Cassation Bench by majority vote decided in support of the conclusion reached by the Oromia Supreme Court and the Oromia Supreme Court Cassation Bench. Hence, the court has decided that the house is common property of both Ato Birhanu and W/ro Alemitu since the agreement made with regard to the house was not approved by the court of law.
From among the five judges of the Federal Supreme Court Cassation bench, one judge argued holds a dissenting opinion. The dissenting judge argues that the requirement of approval of agreement by the court of law is only for spouses who have concluded valid marriage, and not for people who live in irregular unions without concluding valid marriage. According to this judge, the Family Law of Oromia Region on Article 132 doesn’t specifically state the requirement of approval of an agreement by court of law. Rather the law upholds the agreement of the man and woman in the irregular union. Therefore there is no mandatory law that obliges agreement made by people who live in irregular unions for more three years to go to court for approval of the agreement. Thus the judge argued the requirement of approval is the rule set for marriage, not for irregular unions.
Conclusion
An agreement made by spouses or couples during marriage or irregular union of more than three years, with regard to their property, should be approved by a court of law. The law imposes such an obligation to protect the parties from any undue influence and to make sure parties make the agreement with their full consent by requiring them to approve the agreement before a court of law. Legislators also provide such legal requirements to protect the rights of the parties from any violence and undue influence. Hence, for people who lived in an irregular union for more than three years, to make a valid agreement with regard to their common property, such agreement has to be approved by a court of law.
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Irregular union is a relationship that is similar to marriage but actually it is not a marriage. Irregular union also produces legal effects. Ethiopian Federal Family Law recognizes the existence of irregular unions and as a result attached some legal consequences to the union. Some of these effects are similar to that of marriage. We shall briefly be looking on to irregular union as envisaged under the Revised Family Code Proclamation No.213/2000(RFC).
Definition
Irregular union is when the man and the women live together as husband and wife without concluding valid marriage. The most important elements of irregular union are: the man and the woman must live together as husband and wife and the man and the woman have never concluded a valid marriage. If a man and a woman live in such a manner, it is said that they keep up an irregular union with each other. However, the mere fact that a man and woman exercise sexual relations repeatedly in a manner that is known to other persons, is not sufficient by itself to constitute an irregular union. To constitute an irregular union, the way these persons live must be analogous (similar and comparable) to that of married persons.
Proof of Irregular Union
According to Article 106 of the RFC, an irregular union is proved by the possession of the status of the union. Possession of status of persons living in an irregular union means that when, although they are not married, the man and woman behave like married persons, their relatives, and community members also consider them as married couple. When such facts exist, the man and the woman will have the status of persons living in an irregular union. When it is said members of families, it means members of both the man and the woman. Since the relation is analogous to marriage, the law expects that members of the families of the man and the woman could know the relation. Hence, if one of the parties is capable of providing the existence of the state of fact of an irregular union, the court shall presume that the man and woman live in an irregular union. However, the above presumption is subject to rebuttal by producing counter reliable evidence or proof.
Effects of Irregular Union
Bond of Affinity
Unlike marriage, irregular union does not create a bond of affinity between the man and the relatives of the woman or between the woman and the relatives of the man. However, the provisions concerning impediments to marriage in the case of affinity in the direct line shall apply in the case of irregular union. Article 9 of the RFC prohibition to married couples shall apply to irregular union. As a result, a man cannot marry the sister of the woman with whom he is engaged in an irregular union. Similarly a woman cannot marry the brother of the man with whom she is engaged in irregular union.
Community of Property
According to Article 102(1) of the RFC, if the relationship of the man and the woman in the irregular union has lasted for at least three years, a community of property shall be created between the man and the woman. Whatever property acquired during the union shall be the common property of the man and the woman. Unlike the case of marriage, a community of property shall not begin at the first date of their relation. The man and the woman should live at least for three years continuously so that their relationship would result in a common property. However, once they have lived for three years, the community of property shall be effective from the time of commencement of the relation. The provisions of community property of married couples shall also apply to the man and the woman who live in an irregular union.
Termination of Irregular Union
Article 105 of the RFC provides as to how irregular union can be terminated. Unlike marriage, there is no need to go through a certain formal procedure to dissolve or terminate the relationship that is created as a result of an irregular union. Therefore, the man and the woman can put an end to their union at whatever time they like. They can terminate such a union either by their joint agreement or by a unilateral decision of either of them. The party who is terminating the union by his decision is not liable to pay compensation to the other party, unless he commits fault.
Conclusion
Irregular union is the fact of living together by a man and a woman without concluding marriage. The man and the woman live just in the same manner as married persons. Regulation of irregular unions is very essential to protect the interests of both parties and to prevent violations of rights committed in this union. The Ethiopian Revised Family Law provides a legal framework to regulate irregular unions in proving the existence of the union, creation of bond, the time at which common property is created and termination of the union.
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The Revised Family Code Proclamation No 213/2000 incorporates provisions of settlement of disputes through arbitration for disputes of marriage. One form of arbitration is an attempt to reconcile issues of divorce of the spouses. The arbitrators attempt to persuade the spouses to renounce their petition of divorce. The next area in which arbitration is cited is for the purposes of resolving disagreement during marriage. The third area in which arbitration is mentioned is during conditions of divorce. These provisions for settlement of disputes through arbitrators are briefly discussed herewith.
Arbitration to Reconcile Marital Relations
Arbitration proceeding is an option that comes after a petition for divorce is filed in courts of law. Final decision of ordering divorce is vested in courts only. However a judge who has received a petition of divorce shall attempt to speak to the spouses individually or together to renounce the divorce petition, solve their dispute amicably and continue their married life. When the attempt by the judge does not bear fruit or is likely to fail, then the judge is at liberty to order the spouses to settle their disputes through arbitrators of the spouses own choice.
The appointment of arbitrators, discharge of their obligation and failure to resolve the dispute amicably is dealt under Articles 119-122 of the Revised Family Code. The spouses shall appoint one or more arbitrators and submit within 15 days from the date they were told to do so, the names of the arbitrators to the court. On receiving the list of arbitrators or when the arbitrators appear before the court, the court shall make a record forthwith and give direction as to how the reconciliation has to proceed. The court can order the arbitrators to submit the result of the arbitration or the attempt of reconciliation within three months.
The judge is at liberty, where it deems necessary, examine the progress of the arbitration and make orders for submission of periodical reports thereon. Where the court is of the opinion that the spouses may settle their dispute through arbitration, the judge may, having regard to the progress of the arbitration, give additional time of not more than one month.
It is the responsibility of the arbitrators to make an effort to reconcile the spouses and to make them renounce their petition for divorce. If the arbitrator’s attempt is successful, then the spouses can submit the report of the arbitrators together with an application for their divorce file to be closed. Where the arbitrators have concluded that the dispute cannot be solved except by divorce, they shall report the result of their attempt to the court without delay. The arbitrators shall have no power to give any order or decision concerning the spouses except persuading them to resolve the issue through arbitration.
In cases where the arbitrators have failed to submit reports, the court shall close the case. Where the spouses or one of them have petitioned the court to reopen the case within one month from the date of the closure of the case by stating the reasons for not submitting the report and that the issue has not been settled through arbitration, the court may reopen the case and give appropriate decision. The closure of the case may not stop the spouses or one of them from submitting a new petition and request for their case be reconsidered.
Arbitration on Disagreements During Marriage
Arbitration and Conciliation Working Procedure Proclamation No 1237/2021 provides that divorce is a non-arbitrable matter. Similarly the Revised Family Code on Article 117 states that only the court is competent to decide on divorce and effects of divorce. Nonetheless Article 118 of the Revised Family Code declares that without prejudice to the power of the court to decide on divorce, disagreements of spouses during marriage can be decided by arbitrators chosen by the spouses. Any party who is dissatisfied with the decision of arbitrators may appeal to a court having jurisdiction. The court, having examined the petition, may approve, amend or reverse the decision of arbitrators. Such a decision of the court shall be final.
Arbitration on the Legal Effects of Divorce Decision
Where the marriage is dissolved by divorce, the court shall request the spouses to agree on the conditions of divorce. The court gives not more than 6 months for the settlement of conditions of divorce. The conditions of divorce include apportioning of property, guardianship of children and maintenance payment arrangement. Where the spouses are not willing to agree or have failed to agree, the court shall, by itself, or through arbitrators, or experts appointed by the court, or by any other means the court thinks appropriate, decide on the conditions of divorce. Article 83 sub-article 3 of the Revised Family Code provides that the conditions of divorce agreed upon by the spouses or decided by arbitrators or experts shall be submitted to the court for approval.
To sum up, arbitration during marriage and divorce is mentioned in the Revised Family Code in a number of articles. The word ‘arbitration’ may not be the right term for those cases of persuading the spouses to renounce their petition of divorce. Mediation or mediator or conciliation or conciliator or court supervised mediation may have been the right term, as the duties of the ‘arbitrators’ is NOT to decide but to reconcile. Free University of Amsterdam on its training manual for mediation asserts that ‘Mediation is often called a win-win process in contrast with legal action which one party must lose; mediation recognizes legitimacy of both parties’ self-interests and seek ways to reconcile them’.Regarding marital disagreement, as any disagreement, can be presented for an arbitration. Such arbitration decisions can be appealed to a court of law and the court may approve, amend or reverse the decision of the arbitrators. Similarly conditions of divorce may also be entertained by arbitrators. The decision of the arbitrators shall be presented to the court for approval. Hence, the establishment of arbitration centers as envisaged by Proclamation No 1237/2021 together with mediation centers will contribute greatly to realize the objective of the family law and constitutionally protected family unit, i.e marriage.
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The FDRE House of Peoples Representative on March 12, 2024 appointed 16 judges for judgeship at the Federal Supreme Court. The Constitutional procedure for appointment of Federal Judges is that the Federal Judicial Administration Council shall select candidates. Then the Prime Minister shall submit these candidates to the House of Peoples’ Representatives for appointment. Accordingly, 3 women and 13 men were appointed Federal Supreme Court Judges. The Federal Supreme Court has first instance jurisdiction, appellate jurisdiction and power of cassation, as per Federal Courts Proclamation No 1234/2021.
The FDRE Constitution on Article 79 Sub-article 3 guarantees that judges shall exercise their functions in full independence. Judges are expected to be directed solely by the law.
No judge shall be removed from their duties before the judge reaches the retirement age determined by law. The current Public Servants’ Pension Proclamation No 1267/2022 specifies 60 years, as the retirement age of a public servant, that includes judges as well. The FDRE Constitution states that such a retirement age that is determined by law cannot be extended for a judge.
However, there are exceptions whereby a judge is removed from office prior to retirement age. These include where the Judicial Administration Council decides to remove the judge for violations of disciplinary rules or on the ground of gross incompetence or inefficiency; or where a judge can no longer carry out his/her responsibilities on account of illness. Such assessment and decision of the Judicial Administration Council has to be approved by the majority vote of the House of Peoples Representative.
Arbitration is a consensual dispute resolution process based on the parties’ agreement to submit their disputes for resolution to an arbitral tribunal, usually composed of one or three independent arbitrators appointed by or on behalf of the parties. Arbitration can also be defined as the resolution of a dispute by a privately appointed third-party decision-maker. Arbitration is a mechanism for settling disputes. If there is no dispute, there can be no arbitration. Arbitration is known for its procedural flexibility, which allows parties to engage in an efficient, confidential, and fair process leading to a final, binding, and enforceable award. From an international perspective, arbitration awards are enforceable in over 150 countries around the world due to the application of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). Currently, both at the national and international level, arbitration is becoming one of the most preferable dispute settlement mechanisms. As compared to formal court proceeding arbitration, arbitration is flexible, saves a lot of costs, and enables the parties to resolve their dispute in an amicable manner. At the international level, arbitration is also one of the areas showing good progress and advancement. Countries are signing different bilateral and multilateral agreements with each other to regulate and facilitate transactions and dispute settlement.
Characteristics Feature of Arbitration
Arbitration is a mechanism for resolving disputes in accordance with the rules and principles of the law. It is a right-based mechanism. Rules and principles of law may sometimes be chosen by the parties. In contrast, other alternative dispute settlements, like mediation and conciliation, shall not be bound to be governed by any other substantive or procedural laws.
Arbitration is consensual as far as its initiation is concerned; an agreement to arbitrate is the cornerstone of arbitration. There are exceptions for this consensual nature of arbitration under Cooperative Society Proclamation 985/2016 and National Payment System Proc. 718/2012.
Arbitration is a private procedure. The reason it is called a private procedure is that several issues are determined by the parties. The parties organize the tribunal, the parties determine the jurisdiction, and the parties with the tribunal determine the venue, the language, the time, etc. of arbitration. For this reason, arbitration is called a private procedure.
Arbitration leads to a final and binding determination of the rights and obligations of the parties. The process and outcome of arbitration are binding on the parties. Sometimes it is also final and non-appealable.
Advantages of Arbitration as Compared to Court Litigation
Arbitration permits the parties to choose people with specialized knowledge to judge their dispute. Judges in state courts are less likely to acquire the same degree of expertise in the technical aspects of the transactions that come before them, as are the lawyers who represent the parties and who may later serve as arbitrators in similar transactions. In construction arbitration, there may be engineers or architects as well as lawyers serving as arbitrators.
The procedure in arbitration is flexible and can be adapted to the needs of the particular dispute. Due to the flexibility and finality of arbitration proceedings, resolving disputes through arbitration may often be quicker and cheaper than resolution through court litigation or other means of dispute resolution.
Arbitration is not subject to appeal on its merits unless otherwise agreed upon by the parties. What the parties lose in legal security, because errors made by the tribunal in the application of the law cannot be corrected, they gain in the reduced amount of time required to reach a final decision and reduced costs.
Faster decisions and lower costs as compared to litigation in the courts have been one of the traditional arguments in favor of the arbitration-stamp duty proclamation. Faster decisions and lower costs as compared to litigation in the courts have been two of the traditional arguments in favor of arbitration.
international Commercial Arbitration
In international transactions, people and different international organizations also resort to international commercial arbitration. In international commercial arbitration:
Litigating in foreign courts is unthinkable. While that is good for one party to the transaction, it is not so good for the other party, who faces all the difficulties of litigating in an unfamiliar procedure, in a language that may be foreign and may not be the language of the contract, and not being able to use its lawyers who are familiar with the company. It is also not irrelevant that one party is staying at home while the other party is staying in a foreign country, with all the inconvenience and expense that entails.
Arbitration reduces inequalities. Arbitration of disputes among organizations or people living in different countries is a means to reduce the inequalities. While it is possible for the arbitration to take place in an arbitration organization located in the home country of one or the other party, it is also possible for the arbitration to be administered by an arbitration organization located in a third country.
When the state is a party, a foreign court is even more unattractive. There are special concerns about the partiality of the courts when the state is a party to the dispute. The state has too many means to influence decisions in its own courts for foreigners to feel comfortable litigating against it there. This factor is the major reason for the extraordinary increase in the number of bilateral investment treaties in recent years in which foreign investors have the option of instituting arbitration in one of several arbitration forums outside the host state.
Ease of enforcement: A final reason for the current popularity of international commercial arbitration is the comparative ease of enforcement of an award as compared to the enforcement of a judgment of a foreign court.
Different Types of Arbitration
There are different types of arbitration that deal with different subject matters. These types of arbitrations include:
Commercial arbitration
Investment arbitration
Commodity arbitration
Sports arbitration
IP Arbitration
Public law arbitrations
International arbitrations
Major Concepts /Issue in Arbitration
There are four (4) major concepts or issues in arbitration. These are: arbitrability, jurisdiction, arbitration agreement, and separability. Let’s consider each of them briefly.
Arbitrability: In Ethiopia, arbitrability is simply the notion of whether a dispute falls within the category of disputes that can be resolved by arbitration. What disputes are not arbitrable in Ethiopia are listed under Article 7 of Arbitration and Conciliation Working Procedure Proc.1237/2021. This includes divorce, adoption, guardianship, tutorship, succession, criminal cases, tax cases, judgments on bankruptcy, decisions on the dissolution of business organizations, all land cases, including leases, administrative contracts, except where permitted by law, trade competition and consumer protection, and administrative disputes falling under the powers given to relevant administrative organs by law.
Jurisdiction: Jurisdiction refers to the scope of powers of the arbitration tribunal. Article 19 of Proclamation 1237 provides that the arbitral tribunal can determine its own jurisdiction. With regard to an objection against the decision of the tribunal on its jurisdiction, Art. 19(5) provides that an objection against the decision of the tribunal on its jurisdiction shall be submitted to the First Instance Court within one month from the date of rendering such a decision. The submission of an objection in accordance with Sub-Article (5) of this Article shall not prevent the tribunal from continuing with the arbitration proceedings and rendering an award according to Article 19(6). The implication of Art. 19(5) and 19(6) is that arbitration will not be stayed because of a jurisdictional objection. The implication is that defendants will not delay arbitration by raising jurisdictional objections. The tribunal may go on and issue its award, and the court may rule that the tribunal doesn’t have jurisdiction. In which case, the award will be void.
The arbitration agreement: An arbitration agreement is an agreement to submit present or future disputes between the parties to arbitration. The notion of an arbitration agreement comprises two basic types: a) A clause in a contract by which the parties to a contract undertake to submit to arbitration the disputes that may arise in relation to that contract (arbitration clause); or b) An agreement by which the parties to a dispute that has already arisen submit the dispute to arbitration (submission agreement). The arbitration agreement has to be in writing in light of Art. 6 of Proc. 1237/2021. An arbitration agreement has to be written, signed, and attested by witnesses in light of Article 6 of Proc. 1237/2021. Arbitration agreement can be made by electronic means such as emails, telegrams, etc. that can be retrieved.
The Arbitration Tribunal: The Arbitration Tribunal is a sole arbitrator or a panel of arbitrators that hears the case and makes the award or other necessary orders. With regard to the appointment of arbitrators, contracting parties are free to agree on the procedure for the appointment of arbitrators, whether by arbitration centers or by a third party, in light of Article 12 of Proc. 1237/2021. Objection is possible if there are circumstances that create justifiable doubts as to impartiality, independence, or fulfillment of the criteria stated in the arbitration agreement. where one of the contracting parties fails 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 the case of a sole arbitrator, the First Instance Court shall appoint such arbitrator upon the request of one of the parties. Once arbitrators are appointed, they have their own rights and duties.
Right of Arbitrators
Right to fee
Duties of Arbitrators
The duty to be and remain impartial and independent
The duty to conduct the arbitration in an efficient manner
Duty to decide the case expeditiously
Not meet any of the parties separately.
Not to receive any gifts from the parties
Decision of Arbitration Tribunal
The arbitrator tribunal, after reviewing substantive parts of the issue final, gives an award. Award is a generic term denoting the decisions of the arbitral tribunal. On the other hand, an order is a decision of the tribunal determining the procedural direction of the proceeding (procedural orders). An award has the aspect of finally disposing of a particular issue in dispute between the parties. In arbitration, both judgment and decree are called awards.
Status of the decision Arbitration Tribunal in Light of Arbitration and Conciliation, Working Procedure Proclamation, Proc. No. 1237/2021
One of the characteristics of arbitration is that it leads to a final and binding determination of the rights and obligations of the parties. Arbitration leads to a final and binding determination of disputes. Article 44(6) also provides that any decision of the arbitral tribunal shall be deemed to be a decision given by a court, shall be binding on the parties, and prevents bringing suit on similar matters between such parties.
Appeal and Cassation Review With Regard to Arbitral Award
Before Proclamation No. 1237/2021 came into force, there was controversy and uncertainty about whether the decision of the arbitrator tribunal was subject to appeal or not, even in the absence of agreement parties. The Federal Cassation Bench also considered several cases, even in the presence of an agreement between parties, to appeal to a formal court after the tribunal rendered the decision. This issue and uncertainty were resolved after the coming into force of Proclamation No. 1237/2021.
Appeal under Proclamation No. 1237/2021
According to Proclamation No. 1237/2021, Article 49 an appeal is not automatically available; it depends on the presence of an agreement. Article 49(1) states that unless the contracting parties agree otherwise in their arbitration agreement, no appeal shall lie to the court from an arbitral award. In the absence of agreement between the parties, there is no appeal. With regard to an error of law, parties can exclude cassation by agreement. Article 49(2) of Proclamation 1237/2021 provides that unless there is agreement to the contrary, an application for cassation can be submitted where there is a fundamental or basic error of law. According to the above provision, cassation review is available unless excluded by agreement.
Article 49(3) provides exceptions for exceptions. It provides grounds on which appeals are never allowed, even if the parties agree to appeal. These are:-
Appeal on arbitration on equity, According to Art. 41(5), an arbitral award may be granted based on equity or known commercial practices where such power is expressly given to the tribunal by the contracting parties or the applicable law authorizes such application. With regard to such an arbitral award, parties cannot appeal even by entering into an agreement.
Arbitration on agreed terms/consent award: According to 43, when contracting parties have resolved their dispute by agreement before an arbitral award is rendered on the subject matter of the arbitration, parties cannot appeal to court by opposing such a decision even by entering into an agreement.
Arbitration without reason: according to Art. 44(2), contracting parties may agree not to disclose the reason or whether the arbitral award is granted based on mutual consent. With regard to such decisions, parties cannot appeal to the court even after entering into an agreement.
In light of Article 49(3) of Proclamation 1237/2021, parties cannot appeal on the above-listed grounds even by entering into an agreement. Article 49(3) limits parties’ autonomy by limiting their contractual power with regard to appeals.
International conventions on Recognition and Enforcement of foreign arbitral awards
There are different international conventions and treaties with regard to recognition and enforcement of foreign arbitral awards. Let’s briefly consider the New York convention.
The NY Convention has two objectives:
The recognition and enforcement of arbitral agreements
The recognition and enforcement of arbitral awards
The Convention is an international treaty and thus part of public international law. Article I(1) of this convention also provides that the Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, arising out of differences between persons, whether physical or legal. It also applies to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought. On 24 August 2020 Ethiopia acceded to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention“).The ratification of the NYC comes at a time where the country is undertaking major economic and legal reforms including the privatization and liberalization of mega sectors. It also plays a significant role in attracting foreign investors and creating a good environment for investment.
Investment Arbitration
Ethiopia’s special law includes arbitration as an alternative dispute settlement mechanism. A case in point is the Investment Proclamation Procl.No. 1180/2020.
Ethiopia recently enacted a new investment law with the purpose of promoting investment and encouraging foreign investors to invest in Ethiopia. The new investment proclamation introduces several changes, like using a negative listing approach with regard to areas of investment those foreigners can invest in, which is a provisionally positive listing approach. Other than areas reserved for domestic investors, foreign investors can invest in any area. To be more specific, the new investment proclamation also introduces provisions that deal with arbitration, which allow investors to resolve the dispute through arbitration in light of Articles 28(2, 3).Investment Proclamation under Article 28(2) provide that the Federal Government may agree to resolve investment disputes involving foreign investments through arbitration. The inclusion of such provisions in investment law plays a significant role in creating a favorable environment for investment. Another important provision is Article 28(3) of the investment proclamation, which provides that where a foreign investor chooses to submit an investment dispute to a competent body with judicial power or arbitration, the choice shall be deemed final to the exclusion of the other. Currently, at the international level, arbitration is becoming an effective and widely used dispute settlement mechanism. Investors also prefer arbitration over formal court proceedings due to several factors we mentioned above. Hence, recognition of arbitration in investment law is a good legal reform to attract foreign investors.
Conclusion
Arbitration is a formal method of alternative dispute resolution (ADR) involving a neutral third party who makes a binding decision. The dispute will be decided by one or more persons (the ‘arbitrators’, ‘arbiters’, or ‘arbitral tribunal’), which renders the ‘arbitration award’. Parties often seek to resolve disputes through arbitration because of a number of perceived potential advantages over judicial proceedings. Arbitration is often faster than litigation in court. Arbitral proceedings and an arbitral award are generally non-public and can be made confidential. Because of the provisions of the New York Convention of 1958, arbitration awards are also generally easier to enforce in other nations than court verdicts. In most legal systems, including Ethiopia, there are very limited avenues for appealing an arbitral award, which is sometimes an advantage because it limits the duration of the dispute and any associated liability. Hence Arbitration is becoming the most preferable dispute settlement method, and Ethiopia also recognizes arbitration under Proclamation 1237/2021 and different other special laws like investment law.
For arbitration related inquiries, you may contact us at info@dmethiolawyers.com
Women, Business and the Law (WBL) 2024 is the 10th in a series of studies measuring the laws that affect women’s economic opportunities in 190 economies of the world. This year’s edition will be out in March 2024. For more than a decade, WBL has analyzed the laws and regulations that affect women’s economic opportunity. However, laws alone are not enough to improve gender equality. Their implementation and enforcement are critical to the full realization of women’s rights.
As a result, WBL 2.0 was introduced. The new additions as indicators are Safety and Childcare. The previous namely mobility, workplace, pay, marriage, parenthood, entrepreneurship, asset and pension remain intact. This year’s edition goes beyond what is there in the law; it further looks into implementation on the ground.
This 2024 edition of WBL is coined in two versions of the legal index. The first WBL 1.0 is to update data within reforms implemented from Oct 2,2022 to Oct 1,2023. WBL 2.0 on the other hand is a new index that includes additional indicators of safety and childcare.
The WBL 2.0 looks into a)the legal framework (measures the state of the law within a given economy in relation to a specific right), b)Supportive framework (capture the existence of policy mechanisms to implement rights) and c) Expert Opinions( shed light on the progress towards realizing a particular right).
Consequently, Ethiopia scored 80.0 on WBL 1.0 legal framework but scored 60 on WBL 2.0 legal framework score, 30.8 on WBL 2.0 Supportive Framework and 43.1 on WBL 2.0 Expert Opinion Score. Italy has the highest WBL 2.0 legal framework score of 95.0, whereas 15.0 on WBL 2.0 legal framework score is by West Bank and Gaza.
The Transaction of Minerals Ratification Proclamation No. 1144/2019 governs the transaction of minerals resources after production. The Proclamation covers all transactions of minerals produced from all mining operations conducted in Ethiopia. The FDRE Constitution provide that the rights to ownership of all natural resources of Ethiopia is exclusively vested in the government and its people. Accordingly it has become necessary to regulate the transaction of minerals by a proclamation. We shall briefly look into the competency requirements, licenses required, eligibility, duration of licenses and a brief conclusion shall follow.
Authority and Ministry
The licence issuing Authority and the Ministry mentioned in the Proclamation are the Ministry of Trade and Regional Integration and the Ministry of Mines, respectively. These Federal organs issue mineral refining, smelting for metallic and associated minerals and mineral exporters certificate of competence. Licences and certificates other than the once given to the authority or Ministry are given by the Regions.
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 regarding eligibility 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.
In conclusion, the Transaction of Minerals Proclamation aims to modernize the mineral transaction scheme so as to create proper structure that enhances the contribution of the mining sector to the economy of Ethiopia. The Proclamation also enables investors engaged in mineral transactions perform their rights and obligations as per the rules and regulations.
For any Mining related inquiries, you may contact us at info@dmethiolawyers.com
By Dagnachew Tesfaye, Managing Partner at DMLF The Ethiopian Civil Society Organization Proclamation Number 1113/2019(the Proclamation), done as of March 12,2019, is enacted to regulate civil society organization. This Proclamation has allowed civil society organizations to engage in income generating business activities. To regulate in detail the business engagement of civil society organizations, the Authority…
By Geda Yoseph, Associate at DMLF Introduction The Federal Supreme Court Cassation Division on Cassation on File No. 185895 dated 24/02/2021, passed a binding decision as to whether an agreement on property of the man and woman made during an irregular union that lasted more than three years is required to be presented to court…
By Geda Yoseph, Associate at DMLF Irregular union is a relationship that is similar to marriage but actually it is not a marriage. Irregular union also produces legal effects. Ethiopian Federal Family Law recognizes the existence of irregular unions and as a result attached some legal consequences to the union. Some of these effects are…
By Mahlet Mesganaw, Partner at DMLF The Revised Family Code Proclamation No 213/2000 incorporates provisions of settlement of disputes through arbitration for disputes of marriage. One form of arbitration is an attempt to reconcile issues of divorce of the spouses. The arbitrators attempt to persuade the spouses to renounce their petition of divorce. The next…
By DMLF The FDRE House of Peoples Representative on March 12, 2024 appointed 16 judges for judgeship at the Federal Supreme Court. The Constitutional procedure for appointment of Federal Judges is that the Federal Judicial Administration Council shall select candidates. Then the Prime Minister shall submit these candidates to the House of Peoples’ Representatives for…
By Geda Yoseph, Associate at DMLF Introduction Arbitration is a consensual dispute resolution process based on the parties’ agreement to submit their disputes for resolution to an arbitral tribunal, usually composed of one or three independent arbitrators appointed by or on behalf of the parties. Arbitration can also be defined as the resolution of a…
The National Payment System Proclamation No 718/2011 has been amended. The amendment proclamation is the National Payment System(Amendment) Proclamation No 1282/2023. The latter Proclamation was made in Addis Ababa, on February 3/2023. The objective of Proclamation 1282/2023 is to accommodate the developments, changes and innovations in the National Payment System. Since the amendment Proclamation, the National Bank of Ethiopia (NBE) has issued Licencing and Authorization of Payment Instrument Issuers Directive No ONPS/09/2023, effective as of October 6,2023. Regarding payment system operators, the Licencing and Authorization of Payment System Operators Directive No ONPS/02/2020 govern the operators. A brief overview of these laws shall be dealt hereunder.
Payment Instrument Issuer and Payment System Operator
The National Bank of Ethiopia is entrusted to regulate the sector. The NBE shall receive any application from any interested party to be a payment instrument issuer or payment system operator. Payment Instrument Issuer can be a company, or a government owned enterprise or a bank or micro finance institution authorized by the NBE to issue payment instruments. Whereas a Payment System Operator could be a financial institution or any other company licensed or authorized to establish and operate a payment system including routing, matching, clearing, netting and settlement of payment instructions or government securities.
Licencing and Authorization
Among several general requirements, some of the sector specific requirements shall be the focus. A business organization that wishes to acquire a license for payment instrument issuer or a payment system operator shall be obliged to form a subsidiary company exclusively for the business objective of performing payment system operation or payment instrument issuing. The applicant should fulfill minimum paid up capital.
The NBE has put a minimum paid-up capital of ETB 50 million or its equivalent in foreign currency for payment instrument issuer on Directive No 09/2023 Article 4 sub-article( 5).The contribution has to be in cash. The cash has to be deposited in a blocked account in a bank in the name of the payment instrument issuer. NBE shall respond to such applications within 60(sixty days).
Similarly, according to Directive No ONPS/02/2020, an applicant intending to be licenced as a payment system operator shall be established as a company, have a minimum of 10 shareholders to operate more than one system, capital of not less than ETB million if it is a switch, ETB million capital, if it is an automated teller machine operator, ETB 10 million capital, if it is a point of sale device orator and ETB 3 million if it is a payment gateway operator.
The national switch operator on the other hand is required to have ownership by a person limited to 40%. The national switch operator shall be only owned by financial institutions and the NBE. The ownership by a natural person is limited to 1 share at the time of entry and have 1 more share every time new shares are sold thereafter. When the ownership is by an institutional shareholder other than the NBE, the ownership is limited to 5%. The national switch operator shall have a paid up capital of ETB 300 million.
Foreign Nationals
Foreign Nationals may be allowed to engage in a payment instrument issuer business or a payment system operator business. Such foreign-owned companies are required to raise capital fully in foreign currency. In the case of collaboration with Ethiopians, the foreign partners are required to contribute in foreign currency to the extent of their aggregate percentage holding.
Investment Protection Fee
Investment Protection Fee has been defined in the Proclamation 1282/2023 as an amount of money paid to the government by foreign nationals who invest in businesses that are reserved for domestic investors only. Hence the foreign-owned company is required to pay not only a licence or authorization fee but also an investment protection fee. The NBE shall determine from time to time the amount of the investment protection fee.
Rejection of Licencing
The NBE may reject an application for authorization or licensing for payment instrument issuer and payment system operator. These rejection points have been included in NBE Directive No. ONPS/09/2023 and NBE Directive No.02/20 . Such a rejection is appeal-able.
Pilot Trial and Grant of Licence
Based on the result and assessment of pilot trial period of 30 -60 days for payment system operator and 6-9 months for payment instrument issuer, the NBE may grant full licence.
In conclusion, the amendment in the proclamation and issuance of Directives on the payment system signifies a big step in Ethiopia’s endeavour to improve and innovate the financial regulatory landscape.
For any related inquiries, you may contact us at info@dmethiolawyers.com
By Dagnachew Tesfaye, Managing Partner at DMLF The Ethiopian Civil Society Organization Proclamation Number 1113/2019(the Proclamation), done as of March 12,2019, is enacted to regulate civil society organization. This Proclamation has allowed civil society organizations to engage in income generating business activities. To regulate in detail the business engagement of civil society organizations, the Authority…
By Geda Yoseph, Associate at DMLF Introduction The Federal Supreme Court Cassation Division on Cassation on File No. 185895 dated 24/02/2021, passed a binding decision as to whether an agreement on property of the man and woman made during an irregular union that lasted more than three years is required to be presented to court…
By Geda Yoseph, Associate at DMLF Irregular union is a relationship that is similar to marriage but actually it is not a marriage. Irregular union also produces legal effects. Ethiopian Federal Family Law recognizes the existence of irregular unions and as a result attached some legal consequences to the union. Some of these effects are…
By Mahlet Mesganaw, Partner at DMLF The Revised Family Code Proclamation No 213/2000 incorporates provisions of settlement of disputes through arbitration for disputes of marriage. One form of arbitration is an attempt to reconcile issues of divorce of the spouses. The arbitrators attempt to persuade the spouses to renounce their petition of divorce. The next…
By DMLF The FDRE House of Peoples Representative on March 12, 2024 appointed 16 judges for judgeship at the Federal Supreme Court. The Constitutional procedure for appointment of Federal Judges is that the Federal Judicial Administration Council shall select candidates. Then the Prime Minister shall submit these candidates to the House of Peoples’ Representatives for…
By Geda Yoseph, Associate at DMLF Introduction Arbitration is a consensual dispute resolution process based on the parties’ agreement to submit their disputes for resolution to an arbitral tribunal, usually composed of one or three independent arbitrators appointed by or on behalf of the parties. Arbitration can also be defined as the resolution of a…
Bitcoin is the first decentralized digital currency that allows peer-to-peer transfers without any intermediaries such as banks, governments, agents, or brokers, using the underlying technology of blockchain. Anyone around the world on the network can transfer Bitcoins to someone else on the network regardless of geographic location; you just need to just open an account on the Bitcoin network and have some Bitcoins in it, and then you can transfer those Bitcoins. Bitcoin can be used for online purchases and or as an investment instrument. Primarily it’s used to buy goods and services. On the other hand, Bitcoin mining refers to the process of validating and recording transactions on the Bitcoin network. The primary purpose of Bitcoin mining is twofold: validating transactions to prevent fraud and adding new blocks to the blockchain, thereby creating new Bitcoins in a decentralized manner.
Trading of Bitcoins and other cryptocurrencies remains mostly as an unregulated activity. Cryptocurrencies have three core characteristics: decentralized, unregulated, and quasi-anonymity. However, this does not mean that cryptocurrencies do not have self-regulation protocols. Cryptocurrencies such as Bitcoin have their own self-regulating protocol. Bitcoin is an internet-based cryptocurrency. Individuals can earn Bitcoin by trading, mining,and payment for services. As of January 2020, over 160 international branded companies accept Bitcoin for their services and products. This indicates that cryptocurrencies are becoming the payment system of future generations.
Advantages of Bitcoin
Both Bitcoin and traditional currency are similar in that both are a store of value, they differ in many ways. First things first, Bitcoin is the first and most recognized cryptocurrency, a digital currency that is secured by cryptography. Bitcoin has several advantages as compared to traditional fiat currencies, assets can be transferred faster on the bitcoin network. The system also has lower transaction fees, because it’s decentralized and there are no intermediaries, and it is cryptographically secure; the identities of the sender and the receiver are kept hidden, and it is impossible to counterfeit or hack the transactions. Plus, all the information is available on a public ledger, so anyone can view the transactions. Hence, Bitcoin plays a significant role in attracting investors from different countries by facilitating financial transactions.
Bitcoin in Ethiopia
Bitcoin is a simple and secure way to enter crypto mining. Ethiopia has now seen Bitcoin networks and clubs, such as Bit Club and AWS Mining, across the country, and more and more people are investing in them. In February 2024, it has been reported that the Ethiopian Government’s investment arm, Ethiopia Investment Holding (EIH) signed a Memorandum of Understanding with Honk-Kong-based West Data Group’s Center Service PLC to commence mining bitcoin. Moreover, according to the Reporter, in May, 2018, a Memorandum of Understanding (MoU) was signed between the Ethiopian Ministry of Science and Technology (MoST) and Input Output Hong Kong (IOHK) for the use of blockchain application platform called Cardano, a type of blockchain record management platform used in Ada cryptocurrency.
Bitcoin Mining
According to data from Bitcoin mining services company Luxor Technologies, in 2023, Ethiopia ranked fourth behind the USA, Hong Kong, and Asia as one of the top destinations for Bitcoin mining rigs. Russian bitcoin mining company Bitcluster has already built the first bitcoin mining facility, and companies such as Hashlabs Mining have started building bitcoin mines in Ethiopia for their global clients. Ethiopia is positioning itself as a leader in the data center space in Africa, which is estimated to grow to $5.4 billion by 2027, according to Aritzon Advisory and Intelligence. The economic benefits of Ethiopia strategically leveraging its abundant energy resources for Bitcoin mining are vast and far-reaching. It is only a matter of time before other African nations join the bandwagon.
Regulating Bitcoin
In order to determine the legal status of bitcoin under the current Ethiopian legal framework, it is important to review the proclamation that establish the NBE ,the National Payment System Proclamation and proclamation that establish Information Network Security Administration (INSA). According to the National Bank of Ethiopia Establishment Proclamation, Proclamation No. 591/2008, Article 5(1), the NBE has the power and duties to coin, print, or cause to be coined, printed, and circulated the legal tender currency. This provision does not talk about bitcoin and other cryptocurrencies .The NBE also made a statement regarding cryptocurrencies in 2022, which states that the use of Bitcoin and other digital currencies for transactions is illegal in Ethiopia, warning that violators will face strict action. The National Bank of Ethiopia (NBE) also added that it will take “legal measures” against anyone found to be using cryptocurrencies for transactions in the country. “Birr is the only legal currency in Ethiopia, and all financial transactions shall be effected through it’’ said NBE. The NBE stressed that there is still no officially recognized cryptocurrency exchange in Ethiopia.
The Information Network Security Administration (INSA) stated on August 24, 2022, that “individuals and entities” involved in “crypto operations” must register with the authority within 10 days. The “urgent notice” comes after parliament amended INSA’s mandate to “regulate and control cryptographic products and their transactions”. Proclamation No. 808/2013, which established INSA, under Article 6(9), provides that the agency shall have the powers and duties to regulate cryptographic products and their transactions, set necessary criteria and develop operating procedures, and develop and implement cryptography infrastructure.
The other legal framework is the Ethiopian National Payment System Proclamation (Amendment) Proclamation No. 1282/2022. Under Article 2(20), the Proclamation defines a payment instrument as any instrument, whether tangible or intangible, that is issued against the receipt of a fund equivalent in Ethiopian Birr that enables a person to obtain money, goods, or services or to otherwise make payments, which include electronic money and cards. This definition is based on traditional currencies rather than emerging cryptocurrencies like bitcoin. Article 5 of this Proclamation also states that no person except the National Bank may be an operator or issuer of payment instruments unless such person is licensed or authorized by the National Bank.
Conclusion
There are strategic deficiencies in the country’s legal norms to govern Bitcoin. Ethiopia has not enacted a law that allows the use of cryptocurrencies. However, Bitcoiners are engaged in expanding the business in the country. Bitcoiners inspire Ethiopians to partake in the Bitcoin business either by buying Bitcoin or through engagement in mining. Signing a memorandum of understanding with different organs is not enough; providing an effective, efficient, and adequate legal and institutional framework for the implementation and regulation of the agreement is very important. Thus, the Ethiopian government should consider enacting a law that comprehensively governs bitcoin. Along with this, improving the capabilities of financial institutions, law enforcement agencies, and regulatory authorities is crucial to deal with the bitcoin system.
For any related inquires, you may contact us at info@dmethiolawyers.com
By Dagnachew Tesfaye, Managing Partner at DMLF The Ethiopian Civil Society Organization Proclamation Number 1113/2019(the Proclamation), done as of March 12,2019, is enacted to regulate civil society organization. This Proclamation has allowed civil society organizations to engage in income generating business activities. To regulate in detail the business engagement of civil society organizations, the Authority…
By Geda Yoseph, Associate at DMLF Introduction The Federal Supreme Court Cassation Division on Cassation on File No. 185895 dated 24/02/2021, passed a binding decision as to whether an agreement on property of the man and woman made during an irregular union that lasted more than three years is required to be presented to court…
By Geda Yoseph, Associate at DMLF Irregular union is a relationship that is similar to marriage but actually it is not a marriage. Irregular union also produces legal effects. Ethiopian Federal Family Law recognizes the existence of irregular unions and as a result attached some legal consequences to the union. Some of these effects are…
By Mahlet Mesganaw, Partner at DMLF The Revised Family Code Proclamation No 213/2000 incorporates provisions of settlement of disputes through arbitration for disputes of marriage. One form of arbitration is an attempt to reconcile issues of divorce of the spouses. The arbitrators attempt to persuade the spouses to renounce their petition of divorce. The next…
By DMLF The FDRE House of Peoples Representative on March 12, 2024 appointed 16 judges for judgeship at the Federal Supreme Court. The Constitutional procedure for appointment of Federal Judges is that the Federal Judicial Administration Council shall select candidates. Then the Prime Minister shall submit these candidates to the House of Peoples’ Representatives for…
By Geda Yoseph, Associate at DMLF Introduction Arbitration is a consensual dispute resolution process based on the parties’ agreement to submit their disputes for resolution to an arbitral tribunal, usually composed of one or three independent arbitrators appointed by or on behalf of the parties. Arbitration can also be defined as the resolution of a…