ADDIS ABABA UNIVERSITY

SCHOOL OF LAW AND GOVERNANCE STUDIES

SCHOOL OF LAW

Conflict of laws group assignment on Choice of law on property

Name ID.No
1. Girmaw Wendimhunegn ............................... UGR/2015/13
2. Manyinges Yibeltal ................................... UGR/0740/13
3. Mulugeta Eshetie ..................................... UGR/6475/13
4. Mustefa Yusuf ........................................UGR/ 3860 /13
5. Wudineh Yosef .........................................UGR/3172/13
6. Tewedros Kassa.......................................UGR/9148/13
7. Zekarias Alewuket ......................................UGR/6398/13

Submitted to: Mr. Getachew G.

Submission Date: 01 /01/2024

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Choice of Law in Property Transactions in Common and Civil Law Legal System
and the Draft Code of Ethiopian Private Law
Introduction
The choice of law in property transactions is a crucial aspect of private international law, as it
determines the legal framework governing the rights and obligations of parties involved in
immovable and movable property transactions. Both common law and civil law legal systems
have developed principles and rules to address the choice of law in property matters, although
they may approach the issue from different perspectives.
In the common law legal system, the choice of law in property transactions is primarily
determined by the lexi situs principle, which dictates that the law of the jurisdiction where the
property is located governs issues such as transfer of property, rights and obligations of property
owners, and resolution of property disputes. This principle is well-established in common law
jurisdictions and provides predictability and certainty in property transactions.

Similarly, in the civil law legal system, the choice of law in property transactions is often
governed by the law of the jurisdiction where the property is situated. However, civil law
systems may also consider other factors such as the nationality or domicile of the parties
involved in the property transaction. This approach reflects the civil law emphasis on party
autonomy and the application of personal law in determining property rights.

Draft Code of Ethiopian Private International Law, Ethiopia has been in the process of drafting a
comprehensive private international law code that addresses the choice of law in both immovable
and movable property transactions. The draft code aims to provide a clear and harmonized
framework for determining the applicable law in cross border property matters.
The draft code takes into account various factors that may influence the choice of law in property
transactions, including the location of the property, the nationality or domicile of the parties, and
any contractual agreements between the parties. It also considers the public policy of Ethiopia
and the need to ensure fairness and justice in property transactions involving foreign elements

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 Rules governing movable and immovable things

In the common law world it is a rule of great longstanding that the applicable law for
determining questions relating to immovable is the law of the place where it is, the Lexi situs, or
as it is sometimes put the Lexi rei setae. 1 This applies to transactions on death as it does to those
inter vivo. Immovable property is under the direct control of the legal system in force where the
immovable is. And, unlike movable property, land has an almost mystical importance in the
concept of nationhood, and is thus to be protected from the influence of alien ideas, including its
law.2

Looking to the civil law, the French choice of law rule for immovable – whether the dealing is
interring vivo or on death – is the same pragmatic one as in England, i.e. that the Lexi rei setae
should apply. This is express for immovable situated in France and derived from case law for
other cases.

Movable property in common law: most questions about choice of law in relation to tangible
movables concern dealings with them, such as using them as security or transferring them
outright, whether inter vivo or on death. In English law there are not many authorities on the
point, but there are at least three theories, each with some support. They are (1) the law of the
domicile of the owner, (2) the proper law of the transfer (or other dealing), and (3) the Lex situs.
The first of these is accepted to govern questions of substance in the case of transfer on death.
there are dicta in old cases in favor of applying it to inter vivo transfers as well, but none in
modern times, and the weight of authority takes a different view. The second theory would be
advantageous in cases where a single transaction dealt with things in different places, or with
things actually in transit, but less useful where the same thing were subject to two or more
simultaneous transactions governed by different laws. Moreover, in some cases, where there
were various international factors involved, it might be difficult to know which the proper law
was. It is however probably the best theory for dealing with the contractual – as opposed to

1
Story, Commentaries on the Conflict of Laws, 8th ed 1883, ss 428, 444.
2
Paul Matthews, The Jersey Law Review – June 2005 CHOICE OF LAW IN PROPERTY TRANSACTIONS IN JERSEY LAW

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proprietary – consequences of the transaction. But the third theory provides the most certainty,
and is the one nowadays preferred by common law courts for inter vivo transactions, whether the

situs remains constant at all material times, or changes. 3 In relation to intangible movables,
ascertaining the situs is sometimes problematic. Hence the Lex situs is not the appropriate test.
Instead, the English courts in the past usually applied that of the place where the dealing itself
takes place, the Lex loci acts. But there was strong academic support for a different test. This was
the proper law of the transaction by which the right was created.4

Movable property in civil law: In French law the choice of law rule is the same for inter vivo
dealings with tangible movable property as for immovable, i.e. the Lex rei sitae. Thus the effects
of a pledge of movables situated in France must be governed by French law alone. However in
cases of sale it may be necessary to draw a distinction between the terms of the transfer of
ownership of the goods (which are regulated by the proper law of the contract) and the protection
of the property rights involved (which are governed by the Lex rei setae). It is slightly more
complicated for inter vivo dealings with intangible movables. In France the original rule was that
they were generally governed by the Lexi rei situs of the property affected by them, although the
Rome Convention approach has now superseded this where the convention applies. But
intellectual property rights are governed by relevant international conventions, and protection
against infringing acts done in France is regulated by French law.5

In both the United States and the European Union, the predominant choice-of-law rule for issues
about immovable property has been that the applicable law is the Lexi rei setae —the law of the
place where the property is located. In the United States this rule is expressed primarily in state
common law and in Restatements, whereas in the European Union it is largely codified in the
national law of Member States.6

When a dispute arises involving movable property with connections to multiple jurisdictions,
determining the applicable law becomes a complex yet crucial exercise. In the case of movable
property, this choice of law can depend on multiple factors, including: Location of the property,
3
Cammell v Sewell (1860) 5 H & N 728; Winkworth v Christie [1980] Ch 496
4
See Cheshire and North, Private International Law, 13th ed 1999, 957-58.
5
France ratified the Convention on 10 November 1983, having been authorised to do so by Loi 82-523 of 26 June
1982, and it came into force for all contracting states on 1 April 1991.
6
D’Avout, L., «Property and proprietary rights», in Basedow, J., Rühl, G., Ferrari, F. and de Miguel Asensio, P. (eds.),
Encyclopedia of Private International Law, Edward Elgar Publishing, 2017, p. 1429

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Domicile of the owner and other connecting factors: Different legal systems have adopted
diverse approaches to resolving conflicts of laws regarding movable property for instance:

Common Law countries like English law has traditionally favored the Lexi situs rule for
property questions, although exceptions and modifications exist. Whereas Civil Law Continental
European systems often employ the Lex domicile rule for movables, particularly regarding
ownership issues, however, exceptions often arise for intangible rights or situations with strong
connections to other jurisdictions.

When it comes to immovable property, like land and buildings, their fixed nature casts a long
shadow on legal disputes that cross national borders. Unlike their moveable counterparts, these
assets are deeply intertwined with the fabric of a specific jurisdiction, demanding a distinct and
often complex approach in conflict of laws.

The Draft Code of Ethiopian Private International Law

Rules Governing Choice of Laws in Relation to Procession and Ownership of Properties

The Federal Draft Conflict of Laws Proclamation has got some provisions dealing with choice of
law in property.

A cursory examination of Articles 69–72 indicates that the drafter's approach to classifying
properties into incorporeal and corporeal categories.

Ownership, possession, and any rights in rem relating to corporeal property shall be governed by
the law of the place where the property is situated, states Article 69 of the draft. The plain
meaning of this clause makes it clear that the law of the situs will control all issues pertaining to
ownership, possession, and other rights in rem, such as servitude, bare ownership, and usufruct,
as well as rights resulting from mortgages, pledges, and other legal transactions involving both
moveable and immovable corporeal properties.7

One significant exception to the situs's general rule of law, which governs all issues pertaining to
corporeal properties, is stated in the provision under Article 70, The exception with regard to
goods in transit is this.8 It is thought that it would not be acceptable to subject commodities in
transit to the laws of a place where they are only momentarily located, given that they are
7
Araya Kebede and Sultan Kassim Conflict of Laws Teaching Material 2009
8
Araya Kebede and Sultan Kassim Conflict of Laws Teaching Material 2009

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discovered there. The parties in dispute would experience unjustified inconvenience as a result of
this. The paragraph correctly states that it would be more suitable to follow the laws of the place
of destination.9

Article 71 addresses the promise of securities, claims, and other rights. According to this clause,
the parties' choice of law will apply to the pledge of claims, securities, and other rights. Thus, the
law recognizes the choice made by the parties to the pledge of contact regarding the applicable
law to resolve their dispute. Nonetheless, the problem will be handled by the pledgee's personal
law by default if the parties are unable to reach a decision.10

A separate provision of the draft proclamation addresses matters pertaining to intellectual

property. According to Article 72, intellectual property rights will be governed by the laws of the
nation in which they were established; however, in the event that the defendant is of Ethiopian
descent, Ethiopian law may be applied by the court on Ethiopian interest.

Regarding their scope and content, the draft conflict of laws' property-related provisions are
generally lacking and incomplete. They lack specificity and are very broad. Furthermore, it
doesn't seem logical to classify property under the general headings of corporeal and
incorporeal.11

Rules Governing Succession on Death

On the draft proclamation's clauses on the deceased person's property succession, there are
roughly three of them. This section uses the movables and immovable method to categorize
properties.

On the content side, however, as specified by Article 66, it subjects the succession of immovable
property to the local laws of the location of the property. This highlights how crucial the site of
sitis is for all issues pertaining to immovable property, including succession transfer.

On the other hand, the subject of Art 67 is succession to moveable property. It stipulates that the
deceased person's personal law in effect at the time of his death will control the succession of
movable property, whether it is acquired testate or intestate. Insufficient precision in both

9
Ibid
10
Ibid
11
Ibid

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sections prevents Ethiopian judges from determining and applying the relevant law in a given
situation.

It attempts to independently adjudicate under particular Art. 68 provisions concern the

substantive validity of testamentary and other provisions, mortis cause, and the interpretation of
the testator's or person creating the provision's intention. Additionally, it subjects them to the law
of the deceased's abode, or his personal law as it existed at the time of his death.

The Draft Proclamation against the rules in other jurisdictions

Indeed, the classification of properties as movable or immovable can vary significantly from one
country to another, and this classification can have a significant impact on legal outcomes. In
many legal systems, the determination of whether a property is considered movable or
immovable is based on the concept of lex situs, which refers to the law of the place where the
property is located.12 The draft code of Ethiopia takes into account various factors that may
influence the choice of law in property transactions, including the location of the property, the
nationality or domicile of the parties, and any contractual agreements between the parties.
When we evaluate the draft code proclamation of Ethiopian private international law rule
regarding acceptable jurisprudence of common law and civil law, it is insufficient and deficient
provisions, Absence of clarity, Broad scope, Categorization of property as tangible and
intangible. Particular classification of movable and immovable assets is missed but diverse legal
frameworks needed for movable and immovable properties. Therefore it is Necessary to revise
and incorporate precise regulations for property transactions. It seems that the provisions of
the draft conflict of laws proclamation dealing with succession are generally in line with
principles found in other countries' laws and practices. However, they lack specific details
necessary for Ethiopian courts to effectively address issues related to cases containing foreign
elements. To be capable of guiding Ethiopian courts in deciding such cases, the provisions need
to include more detailed guidance and clarity.13

12
Araya Kebede and Sultan Kassim Conflict of Laws Teaching Material 2009
13
Ibid

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 Related case
The "Makonnen v. Ethio Lease" case presents a significant conflict of laws scenario, involving
immovable property and contractual obligations, within the legal systems of Ethiopia, which is a
civil law jurisdiction, and a foreign leasing company, which may be subject to a common law
legal system. This case raises complex issues of jurisdiction, recognition and enforcement of
foreign judgments, and conflict of laws, providing an illustration of the practical application of
private international law principles in the context of property rights and contractual obligations.

The dispute between Makonnen, an Ethiopian national, and Ethio Lease, a foreign leasing
company, centered on a commercial property located in Ethiopia. The conflict arose from a
lease agreement between Makonnen and Ethio Lease, leading to disagreements regarding the
terms of the lease and the rights of the parties. The case required the court to determine which
legal framework should govern the lease agreement, considering the international elements
involved.

The conflict of laws aspects of this case are particularly noteworthy. Ethiopia's legal system is
based on civil law principles, which are rooted in statutory law and codes. In contrast, the
foreign leasing company may be subject to a common law jurisdiction, which relies on case law
and judicial precedent. The clash between these two legal systems raises questions about the
application of Ethiopian law to the lease agreement and the recognition and enforcement of
foreign judgments related to immovable property.

The court had to navigate the conflict of laws rules to determine the appropriate legal regime
to govern the lease agreement and address the jurisdictional aspects of the dispute. This
involved analyzing the relevant provisions of Ethiopian law, as well as considering any
applicable international treaties or conventions. Furthermore, the case also touched upon the
issue of recognition and enforcement of foreign judgments, particularly in the context of
property rights. The court had to assess the legal framework for recognizing and enforcing
foreign judgments in Ethiopia, taking into account the principles of comity and reciprocity.

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The "Makonnen v. Ethio Lease" case serves as a significant illustration of the complexities that
arise when dealing with cross-border contractual disputes and the importance of carefully
navigating the principles of private international law to ensure fair and just outcomes. It
underscores the practical application of private international law principles in the realm of
property rights and contractual obligations within the Ethiopian legal system.

In conclusion, the "Makonnen v. Ethio Lease" case provides a compelling example of the
practical application of conflict of laws principles in the context of immovable property and
contractual disputes. The case highlights the complexities that arise when dealing with cross-
border legal issues and the importance of carefully navigating the principles of private
international law to ensure fair and just outcomes. This case serves as a significant illustration
of the practical application of private international law principles in the realm of property rights
and contractual obligations within the Ethiopian legal system, especially when dealing with the
clash between civil law and common law legal system.

References
1) Araya Kebede And Sultan Kassim Conflict Of Laws Teaching Material 2009.
2) Cammell v Sewell (1860) 5 H & N 728; Winkworth v Christie [1980] Ch 496
3) Cheshire and North, Private International Law, 13th ed 1999, 957-58.

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4) D’Avout, L., «Property and proprietary rights», in Basedow, J., Rühl, G., Ferrari, F. and
de Miguel Asensio, P. (eds.), Encyclopedia of Private International Law, Edward Elgar
Publishing, 2017, p. 1429
5) France ratified the Convention on 10 November 1983.
6) D’Avout, L., «Property and proprietary rights», in Basedow, J., Rühl, G., Ferrari, F. and
de Miguel Asensio, P. (eds.), Encyclopedia of Private International Law, Edward Elgar
Publishing, 2017, p. 1429
7) Paul Matthews, The Jersey Law Review – June 2005 Choice Of Law In Property Transactions In
Jersey Law

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