Concerns in Arbitration Proceedings in Ethiopia

I came across a research document that was prepared by JLSRI sometime back. This research sheds light on some interesting aspects of arbitration in Ethiopia. While it is widely believed that arbitration is generally faster more reliable and less expensive than litigation in regular courts, the research indicates that this may not be the case in Ethiopia.

According to the research, the average duration of arbitration proceedings in Ethiopia is reported to be more than one year (15 months for insurance contracts, 13 months for sales contracts, 13 months for construction contracts and 8 months for lease contracts. This timeframe is not significantly different from the average duration of first instance civil cases reported by the federal courts. This revelation prompts us to reconsider our understanding of the time efficiency benefits associated with arbitration.

The research also reveals another significant issue that affects the efficiency and finality of arbitration proceedings: the high rate of appeals. According to the research, approximately 56.8% of arbitral tribunal decisions are appealed or reviewed through cassation proceedings in the federal courts. This alarming rate of appeals not only adds to the delays and cost in the resolution of disputes but also raises questions about the effectiveness and reliability of arbitration as a means of achieving final and binding decisions

Another aspect highlighted in the research is that a significant percentage of these decisions have been either varied or reversed by the courts. According to the research, out of the arbitral decisions presented to the courts on appeal or cassation, approximately 50% have experienced changes in their outcomes. Specifically, 19.2% of the decisions have been varied, meaning that the court has made modifications to the original decision, while 30.8% of the decisions have been completely reversed by the court.

The research has also observed a potential bias exhibited in dissenting opinions rendered by arbitrators. The research shows that there was a dissenting opinion in 44.7% of the arbitral decisions. It is reported that when arbitrators submit a dissenting opinion, in majority of the cases, their stance tends to align with the party that appointed them. This pattern raises concerns about the integrity and impartiality of the arbitration process as a whole. Ideally, dissenting opinions should reflect an independent and objective analysis of the issues at hand, rather than being influenced by the party that nominated the arbitrator.

The research has also uncovered concerns regarding the arbitration fees, which can substantially raise the overall cost of the proceedings compared to court fees. The research findings reveal that the arbitration fee typically ranges from 1.5% to 10% of the disputed amount. Notably, the average arbitration fee is reported to be 4.5%, considered high when compared to the fees paid to courts for resolving legal disputes. It should be noted that court fee in Ethiopia is quite low (for example the court fee for a dispute involving 1,000,000 Birr is 12,850 Birr which is 1.128% of the disputed amount).

The disparity in fees between arbitration and court processes raises questions about accessibility and affordability for parties seeking alternative avenues for dispute resolution. While arbitration is often perceived as a faster and more efficient method, the higher cost associated with it may deter certain individuals or businesses from utilizing this avenue when seeking justice.

It is essential to recognize and address these challenges to ensure a fair and efficient dispute resolution system. By doing so, we can create an environment that truly promotes accessible and affordable justice. It is crucial for stakeholders, including legal practitioners, policymakers, and businesses, to come together and explore ways to improve the dynamics of ADR in Ethiopia.

Efficient and expeditious dispute resolution is crucial for businesses and individuals seeking timely justice. Addressing these challenge will not only enhance access to justice but also foster confidence in the ADR system as a viable alternative to traditional litigation.