Arbitration

……………………..

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 Outline
1. Introduction
2. The Arbitration Agreement
3. Parties to Arbitration
4. Arbitrators
5. The arbitral procedure
6. The Award
7. Enforcement of Awards
8. Means of Recourse
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 1. Introduction
1.1. What is arbitration?

1.2. Special Types of Arbitration

– Quality arbitration- see, Art.3325 (2) CV.C
– Compulsory arbitration/statutory arbitration,
see Cooperative Societies (Amendment)
Proclamation No. 402/2004.”
– Court –Annexed arbitration.

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 1.Introduction, cont’d
1.3. Procedures Akin to Arbitration
• Art. 2271,Cv. C. -Valuation/appraisal
• Art. 1765,Cv.C.-gap filling in the
contract.
• What are the reasons or benefits for
not considering them as arbitration?

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 1.Introduction, cont’d
1.4. settlement in arbitration
– can arbitrators suggest conciliation or act as conciliators?
– Award on Agreed Terms- what is the status?

1.5. Sources:
– National Arbitration laws [ Ethiopian arbitration law: Arts 3325-
3346,Cv.C; & Arts315-319,350-357,244(2)(g),Civ.P.C]
– International Conventions on arbitration (NY Convention)
– Arbitration rule:
ICC Rules
UNCITRAL rules

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 1.Introduction, cont’d
1.6. Advantages and Disadvantages

– Advantages: Disadvantages
• Speed Delay
• Cost effectiveness Expensiveness
• Confidentiality Limited authority of AT
• Experts
• Neutrality

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 1.Introduction, cont’d
1.7. Ad hoc vs. institutional arbitration
• Ad hoc arbitration is where parties agree
upon a form of arbitration that is specific to
a particular contract or dispute, without
referring to any arbitral institution.
• An institutional arbitration is one that is
administered by an arbitral institution
under its own rules of arbitration.
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 …………
• Ad hoc: Advantages and Disadvantages
– Advantages
• Flexible/Can be tailored to specific needs
• Absolute control
• cheap
– Disadvantages
– it depends on the cooperation of parties
when the AA is incomplete

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 ……..
• Advantage of Institutional Arbitration
– Adequacy of arbitral rules
– Experts assistance
• Disadvantage:
– Delay
– More expensive
– Rigidity

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 2.The Arbitration Agreement (AA)
2.1. What is AA?
2.2.Type of AA
2.3 Formality Requirement
2.4.Enforcebility of AA
2.5.Separability of the arbitral clause
2.6.The Domain of arbitration (arbitrability)

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 2.1. What is AA?
• AA is an agreement to arbitrate.
• AA is the corner stone of arbitration.
• In the AA agreement, parties determine
such things as number of arbitrators,
arbitral procedures etc- almost everything
which is not the subject of mandatory
provisions.

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 …………..
• Model AA:
– “All disputes arising out of or in connection
with the present contract shall be finally
settled under the Rules of Arbitration of the
International Chamber of Commerce by one
or more arbitrators appointed in accordance
with the said Rules.”

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 2.2. Type of AA
• AA agreement is a generic name.
• AA submitting future dispute is called
Arbitral clause.
• AA submitting an existing dispute is called
submission agreement.
• Ethiopian law does not make any
distinction b/n AC and SA. Both types of
AA are recognized.
• See Art.3325 and 3328,Cv.C.
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 2.3 Formality Requirement
• Should it be in writing?
• See Art.3326(2), CV.C.
• See,UNCITRAL Model Law, Art.7(2):
– The arbitration agreement shall be in writing. An agreement is in
writing if it is contained in a document signed by the parties or in
an exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement, or
in an exchange of statements of claim and defense in which the
existence of an agreement is alleged by one party and not
denied by another. The reference in a contract to a document
containing an arbitration clause constitutes an arbitration
agreement provided that the contract is in writing and the
reference is such as to make that clause part of the contract.

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 2.4.Separability of the arbitral
clause(AC)
&
Kompetenz and Kompetenz
• The separapility doctrine states that AC is
independent from the contract in which it is
embedded.
• It has a practical significance.
– Arbitrators can decide on the nullity of a
contract or its termination and consequences
of invalidation or termination.
– It correspondsBirhanu
to parties
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A.Y 15
 ………..
• If arbitrators decide that the main contract
does not exist , can we still say that it does
not mean that the AC does not exist,
either? Is the separability doctrine
applicable in the question related to the
existence of the main contract?

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 ……….
• The Kompetenz and Kompetenz principle
states that arbitrators can rule on their
jurisdiction. Arbitrators have authority to
decide their jurisdiction.
• The jurisdiction of arbitrators can be
challenged on the following grounds:
– the Scope of the AC
– the Invalidity of AC
– the non-existence of the AC
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 --------
• Is the kompetenz –kompetenz principle
adopted in the Ethiopian arbitration law?
• How about the separability doctrine?
• See Art.3330,Civ.C.

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 2.5.Enforcebility of AA

• AA ousts the jurisdiction of courts

• Courts are required to enforce it. Courts
do not have to entertain a dispute on
which there is AA.
• See, Art.244(2)(g) ,Cv. P.C
• See, Zemzem PLC v Illubabor Zonal
Dep’t of Education, Cassation Bench
Decisions Reporter, vol. 2,p.75.
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 ….
• Is the ruling against arbitration
immediately appealable?
(BirhanuBeyene, Immediate Appealability of A Court Order
against Arbitration: It Should Be Allowed and Even Made
Compulsory, Jimma University Journal of Law Vol.4 P.1)

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 2.6.The Domain of arbitration
(arbitrability)
• Matters excluded from the domain of
arbitration:
– Criminal matters
– civil status matters
– Disputes arising from Administrative
Contracts( art.315(2),Civ.C)
• What is the formula of arbitrability?

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 3. Parties to Arbitration
3.1. Who can be a party?
– Natural persons with contractual capacity
– Legal persons such as business organizations
can be a party to an AA as long as it is signed
by an individual who is properly authorized.
– Can a state or state owned enterprise or
government agency be a party to AA?
• can a state be a party to a domestic arbitration?
• Can it be a party to international arbitration?

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 …………..
• Can a state which entered in to an
international arbitration agreement invoke
its sovereignty and say that it is immune
from the jurisdiction of the AT? [Immunity
from jurisdiction]
• Can a state invoke its sovereignty and say
that its property in another country must
not be used for the execution of an award?
[immunity from execution]

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 ……
• Is there any prohibition in Ethiopia for the
state to be a party to arbitration?
• Look at the Civ. C, art. 3326(1), does it
give away any answer?
• See also the proclamation defining the
responsibilities of ministry of justice - proc
471/ 2005 ; and the recent one
proc.691/2010

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 ………….
2.2 Multi-Party Arbitration
– in the appointment of arbitrators.
– Can consolidation by a court order be a
solution?
– Joinder of parties?
• Any solution in the Ethiopian arbitration
law for multi-party arbitration problems?

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 4.Arbitrators
3.1. The importance of arbitrators in arbitration
3.2.Number of arbitrators
– even or uneven number?
3.3. Methods of Appointment
– parties, a 3rd person, an institutions or a court may
participate depending on the circumstances. (See Arts
3331,3334 Cv.C)
– in ad hoc arbitration-
– in institutional arbitration - appointing by sending the
name list.
– Party – arbitration: what is it?
– Equality in the appointment of arbitrators is required.
Absence of this equality may lead in to the invalidation of
the AA – see Art 3335,Cv.C
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 4.Arbitrators,cont’d
3.4.Persons eligible as arbitrators
– See, Art. 3339,Cv.C.
– Exclusion by law – can a judge be an arbitrator?
– Exclusion by agreement
3.5 Challenge of Arbitrators
– Is there a way to avoid the challenge?
Disclosure! See, UNCITRAL Art.12(1)
– What are grounds of challenge?
• doubts as to impartiality
• Lack of the agreed qualities

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 4.Arbitrators,cont’d
– Who is to decide on the challenge? And
procedure of challenge
– Any appeal from the court ruling? See Art.3342(3)
– Is such agreement acceptable in Ethiopia?
• As the one found in ICC Arbitration Rule,Art.2 para.8,9
• See, art.3342(2)
• How is an arbitrator replaced?
3.6.Liability of Arbitrators
– Do they have the same immunity as judges?
– Can they be held liable for undue delay for
example?
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 4.Arbitrators,cont’d
• UNCITRAL is silent on the subject
• Bermuda Act
– “An arbitrator is not liable for any act or
omission in the capacity of an arbitrator in
connection with any arbitration conducted under
this Act except that he may be liable for the
consequences of conscious and deliberate wrong
doing.
– Volume 15 cassation Decision—p.
• Liability of Arbitral Institutes
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 5.The Arbitral Procedure
4.1. parties autonomy
• UNCITRAL Model Law, Art.19 – parties
are free to set the procedure. But
mandatory procedural principles such as
fairness and mandatory rules of the
arbitration law must be respected.
• As a rule parties determine the place of
arbitration….
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4.The Arbitral Procedure, cont’d
4.1 Organizing the arbitral proceedings
– TOR – it includes a summary of parties’
respective claims and issues to be determined.
TOR must be signed by the parties and
arbitrators.ICC rules require the drawing up of
TOR
– Preparatory meetings- to determine the time
schedule for exchange of documents, the
possibility of settlement could be discussed etc.

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4.The Arbitral Procedure, cont’d
4.2. production of documents
– What if the party refuses to produce a document
which is in its possession? What is the
solution?
4.3. Hearing of the parties
4.4. Hearing of witnesses
– unwilling witness
– examination of witnesses
– Oath
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 ……………
4.5. Interim Measures of protection
– Does the AT have this power? Do parties need to
confer the power to take interim measures
expressis verbis?
– Does the existence of AA preclude a party from
requesting an interim measure from the court?
– See art.3344(2)
– If AT renders an interim order, do courts enforce
it?
– See UNCITRAL art.17 and also Art . 9
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 5.The Award
5.1.Form
– It must be in writing and signed
• What if the minority members of the tribunal refuse
or absent to sign? See UNCITRAL , art.31
– It must state the place and the date
– Should it be reasoned?
• can parties agree otherwise?
• What is the fate of an award with no reason at all
• in Quality arbitration and in awards on agreed
terms , reason is not to be given.

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 5.The Award, cont’d
5.2. The Making of the Award
– Any time- limit? What if the parties do not
regulate this? What is the consequence of
failing to comply with the time limit?
– Decision by majority
• can it be changed by parties agreement? See
UNCITRAL, art.29
– Dissenting and concurring opinions
– Decision on costs
5.3 Types of Awards
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 5. The Award, Cont’d
• Types of awards:
– Partial awards
– Awards on agreed terms
– Additional award
• Correction and Interpretation of an award
• Notification and deposit of an award.
• Publication of awards
• Can arbitrators decide as amiables
compositeurs or ex aequo et bono?
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 6.Enforcement of Awards
• We need to distinguish enforcement of foreign and
domestic awards.
• Regarding the enforcement of foreign awards, the most
important convention is the New York Convention,1958.
• Convention on the Recognition and Enforcement of
Foreign Arbitral Awards- official name
• See Art. V of the convention - grounds of refusal
• Ethiopia is not a party to the convention, so foreign
awards are enforced in Ethiopia according to
Art.461,Civ.P.C
– See, Tecle Hagos Bahta, Recognition and Enforcement of
Foreign Arbitral Awards in Civil and Commercial Matters in
Ethiopia,1 Mizan Law Review 5(20110

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 6.Enforcement of Awards, cont’d
• Enforcement of domestic awards
• Under the common law concept, an award
enforcement of which is sought may be
transformed into judgment of the court and
as such may be executed
• Under the civil law concept, the award is
executed after leave for enforcement
( exequatur) has been obtained.
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 ……….
• How is a domestic award enforced in
Ethiopia?
• See, Art.319(2),Cv.P.C
– An award may be executed in the same form
as an ordinary judgment upon the application
of the successful party for the homologation of
the award and its execution.”
– See, Birhanu Beyene Birhanu,Homologation
of Arbitral Awards in Ethiopia: Refining the
Law,5 Ethiopian Bar Review 1(2012)
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 7.Means of Recourse
• A party not happy with an award may be
able to attack the award via
– Appeal( to second arbitral instance and
appeal to court)
– Setting Aside
– Refusal
– Cassation( a peculiarity of Ethiopian
arbitration law)

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 7.1. Appeal (to the court)
• In Ethiopian arbitration law, it is dealt under Arts350-
354,Cv.P.C.
• Appeal is reviewing the award on the merit.
• Appeal right is waivable( see,Art.350(2),Cv.P.C).Is there
such right if the award is decided based on equity?
• In France, parties are presumed to have waived their
right to appeal if arbitrators are authorized to decide as
amiables compositeurs
• Appeal is allowed on those grounds provided under
Art.351,Cv,P.C.
• Appeal leads to remission and/or decision( see
art.353,Cv.P.C)
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 ……..
• One problem with remission is that what if
the arbitral tribunal is no longer in a
position to resume the arbitral proceeding?
• Remission with an opinion of the court is
the rule in England,for example

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 7.2.Setting Aside
• Setting aside it is also known as an action for
annulment of the award (France) vacating the award
(USA).
• Grounds of Setting aside in the UNCITRAL Model Law:
– invalidity of the arbitration agreement
– Violation of due process
– excess of authority –what if separation of matters is possible?
– Irregularity in composition of the arbitral tribunal and in the
arbitral procedure
– Arbitrability and public policy

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 ………….
• See Art 356 of the Cv.P.C for grounds of setting aside
and compare it with the grounds mentioned above.
• Can an error on the merit of an award a ground of
setting aside?
– Violations of rules of public policy
– Manifest disregard of law- USA
• Can the non-observance of the time limit be a ground
of setting aside? Revocation of the arbitrator is a
solution for some.

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 ……
• Are the grounds for revision of judgments
grounds of setting aside? (see art.6,
Cv.P.C).
• Procedure of Setting aside
– Application with in – days
– Does it suspend the enforcement of the award?
– can it be waived?
– Consequences of setting aside – the model law is silent. See the
Dutch law :
• Unless the parties have agreed otherwise, as soon as a decision setting
aside the award has become final , the jurisdiction of the court shall revive

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 ……..
• Does the arbitration agreement expire or is
it still binding on the parties after the
setting aside?

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 7.3. Refusal
• A court in which enforcement of an award
is sought may refuse its enforcement.

• What are the grounds of refusal of

enforcement?

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• Assignment III:
– How should we understand the link between setting
aside and refusal in Ethiopia? How does the two work
together?[ For example, if the court gives a leave for
enforcement( or homologate the award), can the
party(the award-debtor) then request for the setting
aside of the award? Does the setting aside proceeding
suspend the enforcement proceeding? Which court has
the power to order for the stay of the enforcement
proceeding, etc] To come up with an answer which fully
portrays how the two actions can be linked in Ethiopia,
see the experience of other countries

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 7.5.Cassation
• In Ethiopia, an award can be reviewed on
the merit for a basic error of law via a
procedure called cassation – see
Beherawe Maeden Corporation vs Dany
Drilling, vol.10.p.350.
• In my opinion, the Ethiopian arbitration law
does not provide for such a review. It is a
review created by the cassation bench
itself.
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 ……..
• This review of awards can not even be excluded by
agreement according to the holding of the cassation
bench in the case mentioned above.
• In England according to the 1979 arbitration act, appeal
on question of law is allowed but even there it can be
contracted out.
• For more, read:
– Birhanu Beyene, Cassation Review of Arbitral Awards:
Does the Law Authorize It? Oromia Law Journal
2(2013)

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 ……
• The assignment must be submitted next
week, Thursday at my office in the
president’s building. It is possible to work
on the assignment in a group

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 ……

THANK YOU!

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