View From Arada | Jun 19,2021
Sep 18 , 2021
By Yehualashet Tamiru Tegegn
Ethiopia's new arbitration proclamation includes ousting the power of cassation by contractual agreement, which may be challenged sooner or later. Its biggest obstacles are the Amharic version of the constitution and the die-hard position of judges on who ultimately presides over cases of Cassation, writes Yehualashet Tamiru Tegegn (email@example.com), adjunct lecturer at Addis Abeba University and an associate at MTA.
Previously, the rule and regulation of Ethiopia’s arbitration laws were found in the Civil Code and Civil Procedure Code in a somewhat scattered way. The new arbitration proclamation introduced many positive changes, including the principles of separability and competence-competence, non-appealability of arbitration decision, and the possibility of ousting cassation by agreement.
While most of the changes would enhance the effective commercial settlement of disputes, the last one, ousting the power of cassation by contractual agreement, may be challenged sooner or later.
What would be the possible challenges against this?
Anyone who dares to challenge this ouster clause's validity should argue around two issues: constitutionality of this clause and the contradictory nature of the clause with the power of cassation indicated in other laws.
Let us start with the first one. The Amharic version of the Constitution states in the 80th article that the Federal Supreme Court has a power of cassation over any final decision containing a basic error of law. This includes decisions rendered by arbitration and other institutions such as administrative tribunals and religious courts.
Contradicting this, the English version of the same article clearly excludes decisions on a basic error of law coming from “non-court” structures from the Federal Supreme Court’s ultimate power of cassation. While the Amharic version of the Constitution always prevails over that of the English in case of contradiction, one needs to go beyond literal reading of the article to get to the true meaning and essence of the above-cited provision.
One point of view to approach this issue is by following a structural interpretation of the Constitution. The part that talks about the power of cassation falls under Chapter Nine, below the heading of structure and power of the courts and more particularly Article 80 is a discussion about the concurrent power of courts. It will be absurd and illogical to argue that the lawmakers empowered the Federal Supreme Court cassation division to entertain cases emanated from “non-court” out of nowhere when the very article discussed about power and jurisdiction of the court.
The other point of view to approach this issue is from the very purpose behind mandating cassation to review final decisions that contain a basic and fundamental error of law - purposive interpretation of the Constitution. As indicated in the minutes of the Council of Representatives of the Transitional Government of Ethiopia, one of the policy justifications behind introducing the system of cassation is to have a uniform interpretation of laws - federal or regional - throughout the country. To this end, any final court decision in this country shall be reviewed by the Federal Cassation Division provided it contains a fundamental error of law.
The minute clarifies that the power of cassation is to review final decisions coming from courts, not non-court structures. Moreover, uniformity of interpretation and application is not expected when the issue is solely of a private matter to be decided by an organ that the contracting parties chose to settle disputes by their free and full volition. Moreover, there is no uniformity of interpretation to be serve in arbitration when the proceeding is of purely private nature with minimal spillover effect.
Just to paraphrase the wording of Adam Mitzner, author and attorney, mandating uniformity over freedom in arbitration makes no sense and by allowing the parties freedom of contract, they may pursue efficiency and uniformity to the extent they desire. Indeed, there is no uniformity to be served by overriding the interest of contracting parties.
Thus, although the Amharic version is the controlling version, the true meaning and essence of the article are better reflected in the English version. This implies that arguing that ousting cassation by agreement is unconstitutional will not hold water.
Another argument that could be evoked against the law of ousting the power of cassation by contractual agreement argument is the contradictory nature of this clause under the new arbitration proclamation with other laws. This argument may be a result of the definitional aspect of the final decision as envisaged under the proclamation. It defines final decisions as a final judgment, ruling, order or decree that finally disposes the case or the decision, ruling, order or judgment.
Thus, as far as the decision of arbitration tribunals have a basic and fundamental error of law, cassation will have power and competence to review the decision irrespective of the contrary agreement of the contracting parties. The new arbitration proclamation contradicts this by permitting ousting cassation by agreement. The proponent of such reasoning may deepen their argument by citing one of the cardinal rules of interpretation: in case of contradiction between two laws of the same hierarchy the latter prevails over the former.
The federal court proclamation was published on April 26, 2021, and the arbitration proclamation was published on April 02, 2021. Under Ethiopia’s legal system, all federal or regional legislative, executive and judicial organs as well as any natural or juridical persons shall take judicial notice of laws from the date of publication in the Federal Negarit Gazeta. Thus, the Federal Court proclamation is overridden in case of contradiction as it is the one that comes later.
But this argument may not be tenable since the federal court proclamation made it clear that a final decision rendered by an alternative dispute resolution mechanism regarding cases that may be filed in federal courts may be submitted to cassation without prejudice to the provision of appropriate law. When the lawmakers say “without prejudice to appropriate law” it is simply to mean without prejudice what is stated in the new arbitration proclamation with regards to ousting the jurisdiction of cassation by agreement. In fact, the publication of the federal court proclamation was intentionally delayed to make sure its compatibility with other laws that were on the verge of enactments, among others, being the arbitration proclamation.
If the above two are the main plausible arguments for the nullification of ouster clauses of cassation over final decisions of arbitration tribunal as envisaged under the new arbitration proclamation, what possible other grounds may affect its enforceability?
The biggest threat will be coming from the Federal Supreme Court cassation judges who preside over such issues. The Court’s judges have a firm position regarding the basis of cassation to review decisions coming from arbitration tribunals by citing the Amharic version of the constitution, which as argued above does not make sense. This firm stance of the judges is also expressed both in their penned academic works and case-laws.
For instance, Ali Mohammed, when he was Federal Supreme Court judge, in his ground-breaking writing, “Basic Error of Law,” that cassation is mandated to review any final decisions that contain basic and fundamental errors of law to enables it in “absolute perfection of application and interpretation of law in judgment rendering process.”
Various case laws too made it clear that the cassation has the power and the mandate to review any final decision even if the party agreed not to appeal. In a case between National Mining Corporation and Dani Drilling PLC, the parties inserted arbitration clauses in their agreement, which indicated that the arbitration tribunal's decision is final and binding and hence, no appeal is allowed. The cassation decided that the bench has the power to review decisions of the tribunal even if the arbitration clause or submission stipulates otherwise provided that the decision of the tribunal has a basic and fundamental error of law.
The same stance and arguments were reiterated in a case between Consta Joint Venture vs Ethiopia Djibouti railway. As per the contract between the two parties, in the absence of an amicable settlement or settlement by conciliation within the maximum time limits specified, the dispute shall in the case of a transnational contract, be settled by arbitration in accordance with the procedural rules adopted in accordance with a convention which decision is final and binding between the two parties. The tribunal decided in favour of the claimant, although the award-debtor brought a cassation claim for alleged basic and fundamental error of law. The bench assumed jurisdiction even if there was a clear finality clause and reversed the decision of the tribunal.
These all show that providing ouster clause regarding the power and mandate of cassation in a contract may not be validly challenged from the legal point of view. But the strong sentiment and die-hard position of judges who preside over cases brought to cassation may overshadow its interpretation and applicability.
PUBLISHED ON Sep 18,2021 [ VOL 22 , NO 1116]
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