The Apostille Convention: Should Ethiopia Join?

By Hami Bogale and Dagnachew Tesfaye

The Convention of 5 October 1961 Abolishing the Requirement of Legalization for Foreign Public Documents also known as the Apostille Convention. The Apostille convention brought about a basic simplification of the series of formalities which complicated the utilization of public documents outside of the countries from which they emanated. Where it applies, the treaty reduces the authentication process to a single formality: the issuance of an authentication certificate by an authority designated by the country where the public document was issued. This certificate is called an Apostille.

The public documents covered under the convention include birth, marriage and death certificates; documents emanating from an authority or an official connected with a court, tribunal or commission; extracts from commercial registers and other registers; patents; notarial acts and notarial attestations (acknowledgments) of signatures; school, university and other academic diplomas issued by public institutions. However, the Apostille Convention does not apply to documents executed by diplomatic or consular agents. The Convention also excludes from its scope certain administrative documents related to commercial or customs operations.

The traditional method for authenticating public documents to be used abroad is called legalization and consists of a chain of individual authentications of the document. This process involves officials of the country where the document was issued as well as the foreign Embassy or Consulate of the country where the document is to be used. Because of the number of authorities involved, the legalization process is frequently slow, cumbersome and costly.

The Apostille Convention reduces the need for double-certification by originating state and that of the receiving state. The convention is applied millions of times each year throughout the world. It greatly facilitates the circulation of public documents issued by a country party to the Convention and that are to be used in another country also party to the Convention.

As of Ferbruary 2021, 120 countries are contracting states to the Apostille convention.

Since the convention greatly simplifies the authentication of public documents to be used abroad, Ethiopians will benefit by joining the convention.

Business Organizations

By Dagnachew Tesfaye
The new Commercial Code Proclamation No 1243/2013 repealed Book I, II and V of the 1960 Commercial Code of the Empire of Ethiopia Proclamation No 166/1960. The effective date of the new Commercial Code (new CC) is from the date of publication in the Federal Negarit Gazette. The repeal of Book I, II and V shall commence from the effective date. A brief discussion shall be done on Book II specifically on general provisions to business organizations.

Definition: A business organization (BO) has been defined in the old Commercial Code(old CC) as an association arising out of a partnership agreement. But now in the new CC a business organization is defined differently. A business organization is an association created by memorandum of association by persons coming together contributing for the purpose of carrying economic activities and of participating in the profits. The term partnership agreement existing in the old CC has been left out and probably substituted by memorandum of association. However, there are exceptions to the above definition. The exceptions are joint venture (JV) and a one-person private limited company. JV is established not by memorandum of association but by a contractual agreement. Such contractual agreement should not be revealed to third parties. The other exception is a one-person private limited company. Association requires two or more persons. However as an exception, a company can be established by a single person. The existence of the exceptions are mentioned in the new CC.

Memorandum of Association: Memorandum of Association (MoA) serves as the formation document of BOs except JV. Template MoA can be prepared by government entities including Ministry of Trade and Industry. However content of the MoA should not limit the right to agree by the partners. Any law or procedure that limit the partners to stick with the template or limit the right to agree on different matters not contrary to law, are null and void, it states. This last part is an addition in the new CC that practically solves problems faced by new entrants in forming company or partnerships.

Different Business Organizations: It used to be 6 types of BOs in the old CC. They were ordinary partnership, joint venture, general partnership, limited partnership, share company and private limited company. Now in the new CC, they became 7(seven) in number. These are general partnership, two types of liability limited partnerships, limited liability partnership, joint venture, share company, private limited company and one-person private limited company. Here in the new CC ordinary partnership is left out. On the other hand limited partnership is broadened to two types of partnerships, namely limited partnership with limited liability and two types of liability limited partnership. A new form of company is introduced namely one-person PLC.

Dissolution for Good Cause by Court: Dissolution of a BO by court happens when there is good cause. Good cause used to include in the old CC infirmity, permanent illness or any other reason incapable of carrying out his duties or serious disagreements existing between partners. Now in the new CC, good cause is only when serious disagreement exists between partners. The rest of the reasons namely infirmity, permanent illness, incapacity to carry out duties were disregarded. Still when there is serious disagreement between the partners, the court should not go automatically to dissolution. If the disagreeing partners can take their share and leave the organization and the rest of the partners can continue the organization, then the organization should continue to exist. Such clarification in the law will enable judges to interpret the law in a more clear and easier way.

Publication of Cancellation of Registration: The old CC state that where a BO is dissolved and wound-up, the existence of the BO shall stop after cancellation has been published in the official commercial gazette. This article has been amended by Commercial Registration and Licencing Proclamation No 980/2016. On the later proclamation on Article 11(7) it is stated that cancellation of registration of BO shall come into force one month after publication of notice of cancellation on a newspaper having wider circulation at the expense of the applicant; in the case of sole proprietor, however, the cancellation shall become effective as of the date of its entry into the register and without the need to publicize. The new CC however state clearly that the legal personality of the business organization shall cease to exist the next day the cancellation of the BO is entered in the commercial register. Then the cancellation of the organization as BO will be publicized by a gazette with wide spread distribution in the locality the main office of the cancelled BO is situated. On whose, the applicant or the government, expense is the publicity by a gazette is done is not clear. Publicity by a gazette, however, is not a requirement for cancellation of registration of all types of BOs. Rather publicity in a gazette happens to simply notify the fact that such a BO has stopped existing.

To sum up, these are some of the additions and deductions that happened on the general section of business organizations in the new Commercial Code.

Document Authentication and Registration

By Mahlet Mesganaw

Authentication and Registration of Documents Proclamation No 922/2015 provide the details in which documents are authenticated and registered. Authentication involves signature and affixing of seal while registration involves giving identification number and deposit of the document.

Organs Vested with Authentication and Registration of Documents: A)The Federal Document Authentication and Registration Agency (FDARA) established under Regulation No 379/2016 takes the primary role of document authentication and registration task under the Federal Government.
B) Ethiopian Embassies and Consular Offices authenticate documents to be sent to Ethiopia.
C) The Ministry of Foreign Affairs (MoFA) authenticate documents stamped by Ethiopian Embassies and Consular offices. MoFA also authenticate documents authenticated by Embassies and Consular Offices of foreign countries in Ethiopia. Moreover documents that are sent abroad and require authentication under the law of the receiving country will be authenticated by MoFA.
D) Commanders of Divisions of the Defense Force shall authenticate documents submitted by members of the defense force who are in active duty.
E) Commanders of Divisions of the Federal Police Commission shall authenticate documents submitted by members of the federal police force who are on active duty.
F) The Ethiopian Investment Commission(Commission) under the Investment Regulation No 474/2020 is given by law under Article 18 a one-stop-service to register memorandum of association and articles of association and their amendments for investments registered under the Commission.
G) The Industrial Park Regulation No 417/2017 provides under Article 15 a one-stop-shop service including authentication of documents including memorandum of association, articles of association and amendments thereof.

Mandatory Authentication and Registration: Under Proclamation No 922/2015 documents that SHALL be authenticated and registered are a) power of attorney or revocation of power of attorney; b) memorandum of association and articles of association and their amendments of business organizations and other associations ; c) documents that shall be required to be authenticated and registered by law. These may include contracts of transfer of immovable properties, contracts to establish collateral or guarantee rights on immovable properties and public wills.

Party Requested Authentication and Registration: The notary shall authenticate and register where parties to a document request for authentication and registration.

Documents presented for Authentications and Registration: Authentication involves new documents submitted for authentication; documents that are already signed and need authentication and registration; copies of documents to be ascertained vis-a-vis the originals; ascertaining the legality of documents; ascertaining the capacity and authority of signatures of a document; ascertaining the conditions of ownership and the owners of certain properties.

Prohibitions against the Notary: Apart from ascertaining its legitimacy, a notary shall not have power to change or cause to be changed the contents of a document submitted for authentication.

Oath and Hearing of Witnesses: Any person may declare the truth of the contents of a document under oath before a notary. In such a case the notary shall write down on the document that he caused the said person to sworn before he made the declaration. Furthermore, a notary shall take the testimony of a witness where he is ordered by a court.

Requirement of Witnesses on a Document: Contracts of transfer of ownership of immovable properties by selling or donation or contracts to establish collateral or guarantee rights on immovable properties and public will shall have two witnesses. Other than the above 3(three) types of documents, other documents may be authenticated and registered without being signed by witnesses.

Confidentiality: A notary shall not give to THIRD PARTIES information which comes into his possession in the course of performing his duties, unless ordered by a court or by a body empowered by law.

Legal Effect of Authentication and Registration: A document authenticated and registered in accordance with the Proclamation shall be Conclusive Evidence of its contents. The document can be challenged only for GOOD CAUSE by the PERMISSION of a court.

Acceptance of an authenticated and registered documents by Government Organs: Any document authenticated and registered by Federal or Regional institution shall be accepted by any federal or regional governments.

Suspension of Authenticated and Registered Document: The Agency may if it is provided with adequate evidence may pass temporary order of suspension on improperly authenticated and registered document. Such suspension shall be given within 5(five) working days from the date of submission of the petition or from the date examination commenced if the suspension is initiated by the institution. During suspension, the document shall be considered as not authenticated and registered.

Duty to go to Court under Suspension: When a document is suspended, the concerned person SHOULD institute a case in court within one month from the date of order of suspension. The court may approve, amend or repeal the order of suspension.

Revoking Order of Suspension: Order of suspension shall be discarded if the court invalidate the order of suspension or if the concerned person DO NOT institute proceedings in a court WITHIN ONE MONTH of the date of suspension.

To sum up, authentication and registration of documents is conducted by government entities. FDARA branches are swarmed by customers. Dissatisfaction is apparent. Besides those that require ascertaining ownership or injunction orders like contracts of transfer involving immovable excluding lease, contracts involving transfer of special-movables, and power of attorney and cancellation of the same, the rest can be done privately. There is a need to outsource or create public-private- partnership or assign part of document authentication and registration by law to private entities. Qualified persons to do the job are licensed attorneys. This will elevate the function of FDARA and contribute to ease of doing business in Ethiopia.

Major Changes on the Federal Courts Proclamation

By Dagnachew Tesfaye
The Federal Courts Proclamation No 1234/2021 (hereafter the Proclamation) is out repealing former Federal Court Proclamations and its amendments namely Proclamations 25/96, 138/98, 254/2001, 321/2003 and 454/2005, effective from January 21,2021. Here are some of the major changes.

  • Federal Courts are endowed with the common jurisdiction of interpreting and observing the FDRE Constitution.
  • Basic or fundamental error of law has not been defined. But now with this Proclamation it is defined. It is defined as judgment, ruling, decision, order or decree a) in violation of the constitution; b) by misinterpreting a legal provision or by applying an irrelevant law to the case; c)by not framing the appropriate issue or by framing an issue irrelevant to the litigation;d) by denying to award judgment to a justiciable matter; e) by giving an order in execution proceedings unwarranted by the main decision; f)in the absence of jurisdiction over the subject matter; g) an administrative act or decision rendered in contradiction with the law; and h) in contravention to binding decision of the Federal Supreme Court Cassation Division.
  • On Criminal Jurisdiction of the Federal Courts, crimes connected with conflicts between various nations, nationalities, ethnic, religious or political groups are included. Also rather than making it an exhaustive list of criminal matters, the Proclamation adds up cases specified by other laws also to make jurisdiction of the Federal Courts on criminal matters.
  • On Civil Jurisdiction of the Federal Courts the following are two matters are added. One, issues in relation to bankruptcy fall under civil jurisdiction of Federal Courts. Two, civil cases arising out of Addis Ababa (AA) and Dire Dawa (DD) are the Federal Court jurisdiction other than those given by the City Charters to City Courts namely change of name, guardianship, marital status certificates, possession or ownership of claims of City administered houses, Edir(associations) cases, and cases of money, contracts, loans involving up to ETB 500,000. And three cases specified by other laws shall also fall under the civil jurisdiction of the Federal Courts.
  • First Instance jurisdiction of the Federal Supreme Court (FSC) shrinks to change of venue issues. This seems to open the door for appeal right unlike the previous Proclamation no 25/96 where offences by federal government officials, ambassadors or consuls or representatives of international organizations were subject to first instance jurisdiction of the FSC. However, the Proclamation maintains cases specified by other laws may be included as first instance jurisdiction.
  • FSC Cassation Division (FSCCD) is clearly empowered to see cases decided by Regional Supreme Court Cassation Divisions i.e cassation over cassation. However such cassation over cassation is limited to basic or fundamental error of law indicated on Article 2(4)(a) violations of the Constitution and (h) in contravention to binding decision of the FSCCD. Moreover basic or fundamental error of law on Article 2(4)(b) i.e. misinterpreting a legal provision or by applying an irrelevant law to the case, can make a Regional cassation decision be seen by FSCCD where such a case have public interest and national importance.
  • FSCCD is empowered to see final decisions rendered by organs vested with judicial power. Also without prejudice to provisions of appropriate law, FSCCD can receive and see final decision rendered by Alternative Dispute Resolution mechanisms regarding cases that may be filed in Federal Courts.
  • Binding precedence of the decisions of the Cassation Division shall start from the date the decision is rendered and not when published.
  • Federal High Court (FHC) first instance jurisdiction on civil matters is increased from the previous ETB 500,000 to now an amount exceeding over ETB 10 million.
  • FHC civil jurisdiction has new addition. Any person, it states, who has vested interest or sufficient reason can institute a case before the FHC to protect the rights of his own or others, using the Civil Code Procedure on Article 176-179. Thus FHC may render decision, judgment or order to protect justifiable human rights specified under Chapter 3 of the FDRE Constitution.
  • On the previous Proclamation, appellate jurisdiction of the FHC was from Federal First Instance Court (FFIC) only. But now cases specified by other laws giving FHC the appellate power are also included here.
  • FFIC appellate jurisdiction was absent previously. Now appellate jurisdiction of the FFIC is added. FFIC shall have an appellate jurisdiction on matters bestowed on it by other laws.
  • The President of the FSC in the previous Proclamation used to have the power to assign judges of the Federal Courts, representative judges of assigned divisions, presiding judges, employ personnel with CONSULTATION with the FHC and FFIC Presidents. Now such consultation is deleted and a full power is assigned to the President of the FSC.
  • The President of the FSC has additional powers in this Proclamation namely ensuring preparation, issuance and implementation of regulations and directives and providing support to Federal Sharia Courts.
  • The Proclamation introduced power and duties of Representative Judges of an Assigned Division. The practice of having a representative for each division was there. But now the representative judge is legally recognized and given specific power and duties.
  • More so the duties of Presiding Judges of the Federal Courts are stated now. Presiding judges were there in executing their duties known in practice but now their duties are clearly provided by law.
  • Divisions of the FSC previously were Civil, Criminal and Labour. And now in the Proclamation, a new division format is introduced namely First Instance, Appellate and Cassation.
  • A Cassation Division (CD) comprising of 7 judges can be created by petition filed by litigating parties or by the court’s own initiation. There should be clear and sufficient reason where changing the previous legal interpretation is so necessary. The unique point here is interpretation of law rendered by CD presided by not less than 7 judges may review the same issue by not less than 7 judges.
  • The CD by 5 judges follow the procedure of written reply and counter reply and the case is decided, unless the CD thinks it is necessary to hear the parties. Such procedure is different for FHC or FFIC where there will be mandatory hearing procedure and no counter reply.
  • FHC and FFIC shall be presided by one judge except for two reasons. One a panel of 3 judges will sit where criminal charge punishable with more than 15 years rigorous imprisonment is the case and second the FSC may order by Directive for certain cases that the cases be seen by a panel of 3 judges.
  • A sign language expert for concerned disabled persons is now included in addition to language interpreter, in which the court has to organize.
  • Time frame is included for a decision requesting a judge to be removed. The decision to remove a judge has to be decided within 15 days from the date of application reached the new division.
  • Penalty for declined request for removal of a judge is increased. The penalty for application without good cause is increased from ETB 500 to a fine between ETB 1000-3000. Where the application to remove a judge is made with the intention to defame or damage the judge’s honor or delaying the proceeding, the fine can reach from ETB 3000-7000.
  • Budgetary Administration Autonomy is clearly stated under Article 36 of the Proclamation.
  • As well as Article 39(1) of the Proclamation provide that Federal Courts shall have independence to recruit, hire, and administer their own non-judicial personnel.
  • Calendar of courts became clear. Federal Courts shall be closed from Nehasse 1 to Meskerem 30. This means the commonly known Yekatit month 15 days closure or opening of the court after closure on Meskerem 18 were disregarded.
  • Members of the PLENUM is expanded to include two judges- one woman and one man, from the FHC and FFIC.
  • The Proclamation included court annexed MEDIATION. Where parties fail to resolve their dispute by mediation, the court proceeding shall continue. Where the parties reach an agreement under the mediation, the mediator shall prepare a settlement agreement, make the parties sign and present it to the judge for endorsement, if it is not legally or morally contrary to law. The endorsed settlement agreement shall be executed like any decision of a court. If the case ends with the mediation procedure, then the court fee shall be returned having deducted costs for the mediation.
  • Parties to a dispute shall have the obligation to conduct their litigation by using information technology the court has introduced. Such clear legal provisions will be an answer for court officials faced with challenges by parties or their lawyers who says there is no law for me to provide for example CD’s containing my written claim or response.
  • An important judicial principle is included in the Proclamation. Decisions of the Federal Courts SHOULD be executed throughout Ethiopia, it says. Any government body, institution or non-governmental organization or person in any region shall have the obligation to execute or cause to execute such order or decision. Failing to obey a court order or decision, hinders the execution thereof or to cooperate or give assistance when so requested can make that individual subject to simple imprisonment not exceeding 2 years or with fine not exceeding ETB 5000.
  • The FSC is vested with the power to establish External Advisory Council.
  • The House of Peoples’ Representative may issue REGULATION for implementation of this Proclamation.
  • The new jurisdiction of the FHC and FFIC shall come to force 6 month after the effective date of the Proclamation i.e. 21 January 2021. So the new jurisdiction for the FHC and FFIC shall commence on 22 July 2021.

Work Permit Administration for Expats Hired by Investment Enterprises

By Mahlet Mesganaw

The Ethiopian Investment Commission(EIC) has come up with a directive namely Regulating the Issuance of Work Permit to Expats Employed in Investments and the Implementation of Knowledge and Skill Transfer from Expats to Ethiopian No 772/2013( hereafter the Directive). The Directive will come into force when registered in the website of the Federal Attorney General. The uploaded date in the Federal Attorney General is April 14/2021.

The Directive applies to expats hired in investments whose administration falls within the mandate of EIC. However, the Ministry of Labor and Social Affairs (MoLSA) will continue to issue work permits for expats employed by investments enterprises licences by the pertinent government organs in pursuance of powers delegated from the EIC and for expats employed by enterprises outside the scope of the powers of the EIC.

The issuance and number of work permits to be issued has been arranged based on the type of work namely top management positions and non-managerial positions. When it is top management positions, issuance of work permits will be automatic. Whereas when it is non-managerial positions, work permit issuance differ based on the investment levels, namely project construction phase, machinery installation phase, commissioning phase, implementation or operation phase and repair, maintenance, training and audit works.

Under the Directive, the requirements to obtain work permit has been exhaustively listed. In addition to that the conditions for renewal of work permit, revocation or replacement of work permit has been stated in detail as well.
The requirements to obtain new work permit include:
1/ duly completed application form; 2/ description of personal profile of the foreign employee; 3/ academic credentials, professional license or certificate of competence and certificate of service of the foreigner authenticated by a competent government body (original and copy); 4/ passport of the foreigner valid for not less than three months;5/ four passport size photographs of the foreigner; 6/ as appropriate, valid work visa (WV), or business visa (BV), or work permit; 7/ if the expat employee engages in health, education or similar sectors, certificate of competence approved by the relevant government office; educational documents, professional license and certificate of service authenticated by an Ethiopian embassy abroad or the Ministry of Foreign Affairs; and support letter; 8/ employment contract between the expat and the enterprise; 9/ as appropriate, investment permit or business license; 10/ receipt showing payment of service charge determined by law; 11/ proof evidencing employment of Ethiopian replacement and assignment – to be operationalized after hiring the expat;
12/ training and knowledge transfer program organized by the enterprise – to be offered to Ethiopian replacement employees;

Except for management and impermanent positions of machinery installation, maintenance, renovation, training, supervision and audit and accountancy, an enterprise shall for all other positions, exercise its best endeavor to explore the availability or otherwise of Ethiopians possessing similar professional competence or experience required by the position or sector prior to hiring any expat. An enterprise hiring expats is obliged to set up and provide on the job training and replace expats with Ethiopians within a defined period of time.

MoLSA will handover all active work permit files that fall under this Directive as well as supporting software to EIC within 6 months.

In conclusion the Directive has put EIC in charge of work permits for investments registered under it. The requirements and number of expats to be employed has been set based on the number of Ethiopians employed. And an obligation to hire Ethiopians first and replace expats with Ethiopians within a defined period of time as been endorsed in the Directive. This Directive adds up to the one-window service in ease of investing in Ethiopia.

Women Workers: Prohibited Jobs

By Mahlet Mesganaw

The Ministry of Labour and Social Affairs (the Ministry) has a registered directive i.e. Jobs that are Heavy or Hazardous to Health or Disturbs the Reproductive Health of Women Workers Directive No 42/2013(here after the Directive). On this directive there are lists of works that are prohibited for women or pregnant women or up to 6 month breast feeding women not to engage in.

The prohibited works include the following:
-mining, underground well or cave excavation;
-mixing, filling or palliating pesticide or herbicides;
-crushing or production of asbestos and asbestos compositions;
-spraying in agricultural plantations pesticides or herbicides or
any works that directly make women or pregnant or beast feeding women to engage with hazardous chemicals or chemical compositions that affect their health or reproductive health.

The Directive also attempts to limit weight mass in lifting, pulling, pushing, carrying for Women Workers.
-For activity using only hands, not more than 15 k.g if the work is continuous or 25 k.g if the work is not continuous.
-For activity using hands only but involves uphill climb or downhill, not more than 10 k.g. weight if the work is continuous or not more than 15 k.g if the work is not continuous.
– If the work involves a one-wheel cart, not more than 50 k.g.

Maximum Exposure Limit should be adhered to for women workers engaging in air borne chemical or radiation susceptible working environment such as iron melting works, electro-mechanical works, battery factories or radiation emitting works.

Annual health check up should be done for women workers engaged in
-works that are done Standing for long period;
-direct contact to bodily fluids or blood in medical institutions
-quarry works;
-asphalt tar boiling or spraying works in road construction;
-cleaning of waste containers, pipes or waste canals ;
-too cold or too hot place of work due to the work behavior and
-works that involve vibration.

The employer is responsible to implement the directive. The employer is obliged to shift women or pregnant workers in the fields of prohibited works to other safe positions without reducing their post or salary. More so the employer should report to the Ministry once every quarter of a year.

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.

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 or 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 the foster child by fulfilling the basic necessity. The support and care cover the psychological and physical health of the child. These responsibility must be completed until the child is re-unified with their biological parents or placed to other permanent alternative program.

Vulnerable Child is a child whose survival and development is jeopardize by certain circumstances and therefore in need of 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 a 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 is to apply on appropriate Federal Government institutions 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 their 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 to be filled 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 fulfill ELIGIBILITY requirements. The registered foster family must have Ethiopian nationality and solely reside in Ethiopia permanently. They should be above 25 years of age. Unless and otherwise there is no option the child must only be given to married persons. Priority shall be given to a family who reside in the area where the foster child resides. 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 home visits to acknowledge their psycho-social and economic conditions in accordance with the check list.

The foster family should PRODUCE Ethiopian nationality identification card, birth certificate, medical certificate, police clearance certificate, marriage certificate and income evidences. Medical certificate should confirms they are completely free from transferable or uncured deceased so as to confirm their health capability to properly raise child

Once the status of the foster family is assessed and completed, then the STATUS OF THE CHILD shall follow. General information of the child namely 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 organized.

TRAINING to the foster family shall be given by the government organ or the institution. Such training mainly consists of proper upbringing and securing children right and other related subjects.

The next step is MATCHING. After organizing the evidences of both the foster family and the child, the INSTITUTION 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 the village of the foster family so as to allow him to be adapt with the community shall be done.

Once the bonding activity is carried out, LEGALLY BINDING AGREEMENT shall be made between the institution and the foster family. If an agreement is signed between the charity institution and the foster family, the concerned governmental institution shall also sign as a WITNESS. 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 continuous 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 while the child is given to the foster family and if the biological parents are capable of raising their child, reunification with biological parents shall be performed by foster care institution.

If the foster family commit child labor, physical or psychological violence, sexual harassment, or any exploitation has been committed by a 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 with 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. Publicly announcing of the Directive and effectively implementing the Directive for the benefit of the vulnerable children are equally important steps.

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.

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.