The Arbitration and Conciliation, Working Procedure Proclamation No.1237/2021 of the Federal Democratic Republic of Ethiopia, hereinafter referred to as the “Proclamation”, provides a workable framework for arbitration broadly aligned with international standards. Parties should carefully consider the broad non-arbitrability provisions, mandatory requirements and local specificities when deciding to arbitrate in Ethiopia. The success of arbitration will depend significantly on supportive implementation by courts and institutions.

1.1 Advantages

The positive aspects of arbitrating in Ethiopia could be broadly summarized as follows:

• the law incorporates international best practices, recognizes party autonomy in many aspects, and there are clear provisions on interim measures and enforcement;
• the law limits the court intervention principle. Courts support arbitration through interim measures and clear enforcement mechanisms for awards; and
• the law recognizes and regulates arbitration centers; allows both ad hoc and institutional arbitration.

1.2 Disadvantages and common pitfalls

There are also potential concerns that are worth noting:

• there is an extensive list of non-arbitrable matters, including administrative contracts, land cases, tax matters, etc., limiting the scope of arbitrable disputes;
• there are strict requirements for arbitration agreements to be in writing, specific formalities for appointment of arbitrators, and mandatory provisions that cannot be contracted around;
• there are broad grounds for setting aside awards, and awards that can be challenged for violation of public policy/morality;
• the Federal Ministry of Justice has an oversight mandate over arbitration centers;
• some provisions are different from UNCITRAL Model Law; and
• there is a need to consider Ethiopian law mandatory provisions in the Proclamation.

1.3 Distinctive features

Distinctive features include:

• Government regulation of arbitration institutions (of public and private entities).
• Broad non-arbitrability.
• Third-party intervention.
• Court fee reimbursement.
• Integration of arbitration and conciliation under one legislation.
• Language requirements (such as sign language accommodation).
• Emergency relief.

2.1 Legal framework

The legal framework is as follows:

• Although there is no specific mention of the New York Convention in the Proclamation, it acknowledges international treaties ratified by Ethiopia. Foreign arbitral awards falling under international treaties ratified by Ethiopia shall be recognized according to such treaties.
• The 1960 Civil Code provisions on arbitration and conciliation are repealed by the Proclamation. Relevant provisions of the Civil Procedure Code of 1965 that do not contradict this Proclamation remain applicable. Any laws or customary practices inconsistent with the Proclamation are inapplicable. There are also other sectoral legislative instruments which recognize both domestic and international arbitrations as mechanisms for dispute settlement.
• Courts Handling Arbitration. The Federal First Instance Court is empowered to act as a default appointing authority and has jurisdiction over setting aside domestic awards. The Federal High Court has jurisdiction over foreign arbitral awards.
• No Special Courts/Chambers. The Proclamation does not establish specialized arbitration courts or chambers. Regular courts provide support and supervision of arbitration proceedings through:
  • appointment of arbitrators when parties fail to agree;
  • granting interim measures;
  • enforcement of awards; and
  • hearing challenges to awards.

2.2 What qualifies under domestic law as “international arbitration”? Is there a specific statute?

Article 4 of the Proclamation determines the qualifying conditions for international arbitration:

• When the principal business places of the contracting parties are in two different countries at the time of conclusion of the agreement.
• When one of the following is located in a foreign country:
  • the legal place of arbitration chosen in the arbitration agreement;
  • the place where substantial part of commercial/contractual obligations are to be performed; and
  • the place where the dispute arose and is most closely connected.
• When the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.
• Additionally, the Proclamation specifies that:
  • if a party has multiple business places, the one with closest connection to the arbitration agreement will be considered; and
  • where there is no place of business, the principal residence of the contracting parties will be considered.

2.3 Ratification of the New York Convention

Ethiopia acceded to the New York Convention, which came into force on November 22, 2020. This made Ethiopia the 165th state party to the Convention.

2.4 Ratification of the ICSID Convention

Ethiopia signed the ICSID Convention on September 21, 1965, but never ratified it.

2.5 Other treaties relating to arbitration

Ethiopia’s record in the UNCTAD Policy Hub website shows that 35 bilateral investment treaties (BITs) have been signed, of which 22 are in force, two were terminated (Ethiopia–India (1964), and Ethiopia–Germany (1964)), while 11 were signed but are not in force. Almost all of them have reference to arbitration as a mechanism for dispute settlement.

2.6 Choice of forum for intra-EU dispute settlement

Not applicable.

2.7 Is the municipal law governing arbitration based on UNCITRAL Model Law?

Although there are some divergences and introduction of new elements, by and large, the Ethiopian arbitration law is based on the UNCITRAL Model Law.

2.8 Recent amendments or reforms in arbitration laws

No amendments have been made since the Ethiopian arbitration law was promulgated in 2021.

The current Proclamation permits for the establishment of arbitration centers (institutions) by governmental and private entities (Article 18). There are no centers established so far due to the non-enactment of a regulation by the Federal Council of Ministers for the establishment and operation of such centers. However, The Ministry of Justice of Ethiopia, which serves as the Federal regulatory body, recently developed a draft registration and licensing regulation for arbitration centers and released it for stakeholders’ discussions. The Proclamation does not prohibit existing arbitration centers from continuing their operations.

3.1 Presence of local arbitration institutions

At the Federal level, there are two notable Arbitration institutions:

• the Addis Ababa Chamber of Commerce & Sectoral Associations Arbitration Institute (AACCSA Al), which was founded in 2002; and
• the Ethiopian Mediation and Arbitration Center (EMAC).

There are also alternative dispute resolution (ADR) centers established mainly for educational practice services under universities, such as the Bahir Dar University Arbitration Center.

3.2 Does the London Court of International Arbitration (LCIA) have a local office?

No.

3.3 Does the Permanent Court of Arbitration (PCA) have a local office?

Although the PCA does not yet have a local office, negotiations are underway to let PCA open a branch office in Ethiopia.

3.4 Does the ICC International Court of Arbitration have a local office?

No.

3.5 Does the International Centre for Dispute Resolution (ICDR) have a local office?

No.

3.6 Agreement entered into with local offices of international arbitration institutions

No.

An arbitration agreement is defined as “an agreement to be implemented in order to partly or wholly settle future or existing dispute that may arise from contractual or non-contractual legal relationship” (Article 2.1 of the Proclamation).

4.1 Requirements as to content and form

The agreement must be in writing. Even if made orally or by conduct, content must be recorded and signed by all contracting parties and two witnesses. Arbitration agreements concluded electronically are valid if accessible for future reference. They are deemed concluded at the place where the offeree gives consent. As to content requirements, the agreement must specify:

• the subject matter and disputes covered;
• the names of contracting parties;
• a clear intention to submit disputes to arbitration; and
• whether the agreement covers both existing and future disputes arising from contractual/non-contractual relationships.

4.2 Validity of arbitration agreements

An agreement must:

• demonstrate valid consent between parties;
• comply with formal and capacity requirements of parties;
• not cover arbitrable matters listed in Article 7; and
• not violate mandatory provisions of the law or public policy.

4.3 Special formalities

The Proclamation does not specify any special additional formalities for states/state entities entering into arbitration agreements. However, it does exclude certain matters from arbitration entirely, including administrative contracts unless specifically permitted by law.

4.4 Governing law

While party autonomy is primary, the legal seat of arbitration becomes determinative for applicable law when parties have not made a choice, and Ethiopian law provides mandatory minimums that cannot be contracted around regardless of the chosen law.

The Proclamation takes a clear restrictive approach by explicitly listing matters that cannot be submitted to arbitration.

5.1 Applicable restrictions

Based on Article 7 of the Proclamation, the following matters are explicitly non-arbitrable:

• personal/family law matters;
• criminal cases;
• tax matters;
• bankruptcy judgments;
• business organization matters (decisions on dissolution of business organizations);
• all land cases, including lease matters;
• administrative contracts (unless specifically permitted by law) and administrative disputes falling under powers given to administrative organs by law; and
• any other cases prohibited from arbitration by law.

In summary, the Proclamation allows for stays in specific circumstances while generally favoring the continuation of arbitration proceedings. The stays are time-limited and courts have discretion in granting them depending on the circumstances.

6.1 Stay of proceedings

When a suit is brought to court on a matter covered by an arbitration agreement, and the defendant raises a preliminary objection about the existence of the arbitration agreement, the court must dismiss the suit and direct the parties to resolve their dispute through arbitration as per their agreement. However, the court may hear the case if it finds the arbitration agreement is void or ineffective.

6.2 Anti-suit injunctions

Under Ethiopian arbitration law, parallel proceedings are allowed, meaning court proceedings do not stop arbitration. Seeking interim measures from a court is not considered a violation of the arbitration agreement. The court may suspend enforcement of an award for up to 60 days while examining the application to set aside the award and may refer the matter back to the tribunal with a stay order.

The Proclamation uses the terms “Tribunal” and “Arbitral Tribunal” interchangeably throughout the text when referring to the arbitration panel or sole arbitrators appointed to hear and decide disputes.

7.1 Restrictions on the parties’ freedom to choose arbitrators

The Ethiopian law preserves party autonomy in arbitrator selection with minimal restrictions, mainly focused on ensuring arbitrator independence and impartiality. The only real limitation is that arbitrators cannot have previously been involved in the same case in other capacities. Nationality cannot be a barrier unless parties specifically agree to such restrictions.

7.2 Requirement of arbitrator independence and impartiality

The law imposes strict requirements for arbitrator independence and impartiality through disclosure obligations, grounds for challenge, prohibitions on certain conduct, and making bias a basis for refusing enforcement of awards. The provisions aim to ensure the integrity and fairness of the arbitration process.

7.3 Mandatory rules applicable to the appointment process

There are several mandatory rules applicable to the appointment process of arbitrators: the number of arbitrators must be an odd number (the default is three arbitrators if this is not specified by the parties). No person shall be precluded from being an arbitrator based on nationality/citizenship, unless the parties agree otherwise. A person who previously served as an attorney, advisor, conciliator or judge in the same case cannot serve as arbitrator.

7.4 Appointment mechanism in the absence of party agreement or applicable institutional rules

Article 12 (3) of the Proclamation provides the following default mechanism: the Federal First Instance Court will make the appointment upon request of a party if:

• a party fails to appoint an arbitrator within 30 days of notice;
• two appointed arbitrators fail to agree on the third arbitrator within 30 days; and
• parties fail to agree on the sole arbitrator.

When appointing an arbitrator, the Court considers:

• criteria stated in the arbitration agreement;
• the arbitrator’s impartiality and independence; and
• professional competence related to the dispute.

7.5 Mandatory rules applicable to the replacement process

Article 17 of the Proclamation governs the replacement process. An arbitrator is replaced when they are removed from their position by any reason and when they resign from the position. Replacement must follow the original appointment procedure unless the parties agree otherwise. Parties must decide how to handle ongoing proceedings after replacement. If the parties cannot agree, parties may apply to the Federal First Instance Court to decide.

7.6 Mandatory disclosure obligations

Arbitrators must promptly disclose any conflicts of interest: anything that could interfere with or cast reasonable doubt on their impartiality and independence; any family, loan, business or property ownership relationship with the parties.

7.7 Grounds for challenge

Challenge of an arbitrator can only be made if there are circumstances which create justifiable doubts about the arbitrator’s impartiality and independence, and fulfilment of criteria stated in the arbitration agreement. A party may only challenge an arbitrator they appointed or participated in appointing for reasons discovered after the appointment was made (Article 14).

7.8 Mandatory rules governing the challenge of arbitrators

A party must submit an objection in writing within 15 days of the arbitrator’s appointment or of becoming aware of grounds for challenge. An arbitrator may resign voluntarily if challenged. The other party may agree to the challenge. If neither occurs, the tribunal decides on the challenge. The party whose challenge is rejected may appeal to the Federal First Instance Court within 30 days. The court’s decision on challenges is final. The court must decide within 60 days of suspending proceedings.

7.9 Removal

Grounds for removal

There are grounds for removal when:

• an arbitrator is unable to properly discharge functions on legal grounds; and
• an arbitrator causes delay in performance without good cause.

Procedure

Removal requires agreement of contracting parties. Parties must notify the tribunal in writing of their agreement to remove. If the tribunal fails to take action, if the arbitrator does not resign voluntarily, or if parties cannot agree, parties can apply to the Federal First Instance Court. The court’s decision on removal is final.

Effects of removal

Resignation or removal by agreement of parties shall not be deemed as the arbitrator’s acceptance of the grounds for removal. Removal does not automatically validate the grounds for removal.

7.10 Liability and immunity of arbitrators

The law is silent on arbitrators’ liability or immunity. This is an important aspect that may need to be addressed through future amendments or regulations.

For arbitrations seated in Ethiopia, courts can assist with

• the appointment of arbitrators when parties fail to agree;
• hearing challenges against arbitrators;
• granting interim measures;
• receiving evidence and executing a tribunal’s orders that the tribunal cannot execute itself;
• setting aside arbitral awards; and
• the enforcement of awards.

Courts can also assist in receiving evidence where a tribunal lacks power to enforce, can hear evidence directly or order it to be heard, and may allow the tribunal and parties to participate in the process of hearing evidence.

For foreign-seated arbitrations, Ethiopian court assistance is limited to specific matters like interim measures and enforcement, while locally seated arbitrations can access broader court support including with the arbitral process itself (appointments, challenges, evidence taking, etc.).

8.1 Interim measures

8.1.1 Overview of interim measures

The tribunal may issue interim measures upon request by a party if deemed necessary. The measure must relate to the subject matter of the dispute under arbitration. The court can also grant interim measures before or during arbitration proceedings.

8.1.2 Relevance of availability of emergency arbitrator mechanism

While the law does not create a standalone emergency arbitration mechanism as some modern arbitration laws/rules do, it addresses emergency relief needs through court assistance. The emphasis is on court support for emergency measures rather than creating a separate emergency arbitration track within the arbitration framework itself.

8.2 Taking of evidence

The tribunal has the power to determine admissibility, relevance and evaluation of evidence. It can order the submission of evidence it deems appropriate. It can also conduct proceedings as it sees fit regarding evidence.

The tribunal can request court assistance in receiving evidence it cannot obtain itself. The court shall hear evidence or give orders for hearing evidence when requested by tribunal. The court must notify the tribunal in writing about results of evidence taking. The court may allow the tribunal and parties to participate in the evidence-hearing process.

8.3 Appointment or challenge of arbitrators

The court will appoint arbitrators if:

• a party fails to appoint an arbitrator within 30 days of notice;
• two appointed arbitrators fail to agree on the third arbitrator within 30 days; and
• the parties fail to agree on the sole arbitrator.

8.4 Other available assistance

No other types of assistance to arbitrations are commonly available.

9.1 Domestic scope of sovereign immunity from jurisdiction

Under Ethiopian law, the concept of sovereign immunity is recognized, meaning that the state and its organs generally cannot be sued without their consent. However, Ethiopia has taken a restrictive approach to sovereign immunity, allowing lawsuits against the government in certain cases, particularly in contractual and civil liability matters.

There are also a few notable international cases where Ethiopia has invoked the state of diplomatic immunity to defend its interests before foreign courts. For example, Eritrea v. Ethiopia (Eritrea–Ethiopia Claims Commission) is a good case in point. This case involved multiple claims and counterclaims between Eritrea and Ethiopia following the Eritrean–Ethiopian war. Ethiopia raised issues of state responsibility and diplomatic immunity in various claims, including economic loss, property loss, and pensions.

9.2 Immunity from execution

When a state consents to arbitration, it typically waives its immunity from jurisdiction. This waiver is often implicit in the agreement to arbitrate. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which Ethiopia ratified in 2020, supports this principle by ensuring that arbitration awards are recognized and enforceable across borders.

Contracting parties can agree on the place (seat) of arbitration. If parties fail to agree, the tribunal shall determine an appropriate place. The seat is legally designated as the place of arbitration. Unless parties agree otherwise, the tribunal may conduct proceedings in another location for consultation, hearing witnesses, receiving expert testimony, inspecting property and documents, and other related activities.

The Proclamation does not specifically address virtual hearings or make explicit provisions about in-person versus virtual hearings. It appears to take a flexible approach by allowing the tribunal to conduct proceedings “as may be necessary” in appropriate locations but does not prescribe mandatory requirements about the format of hearings.

The Proclamation provides mechanisms to continue arbitration despite non-participation while protecting parties’ rights when absence is justified. If a party proves they had sufficient reason for non-appearance or non-submission, the tribunal may terminate previous proceedings, restart proceedings, or allow submission of evidence. The tribunal shall award costs to the party who appeared according to the Civil Procedure Code.

While the tribunal has discretion on whether to hold hearings or decide on papers, it must hold hearings if requested by parties (unless parties agree otherwise) and ensure all evidence is shared between parties.

The tribunal’s proceedings and award must be kept confidential unless otherwise provided by law or agreement. There are exceptions to confidentiality such as when disclosure is required by law, when parties agree otherwise through contract, and when disclosure is necessary for enforcement of the arbitral award. The Proclamation does not explicitly address specific duties of transparency, detailed scope of confidentiality, consequences of breaching confidentiality, and whether confidentiality extends to the existence of arbitration itself.

12.1 Requirements as to content and form

The award must include the arbitration claim/request, material facts of the dispute, names of the parties, names, addresses and if necessary, citizenship of arbitrators, reason/grounds for the decision, allocation of arbitration costs, date of the award, place/seat of arbitration as per Article 30 of the Proclamation. Awards must be in writing. They must be signed by arbitrator(s). For tribunals with more than two arbitrators, a majority of signatures is sufficient. If there is a dissenting opinion, it must be recorded. The law does not provide further details about the form, content or procedural aspects of recording dissenting opinions.

12.2 Time limit

The only general guidance is that tribunals should conduct proceedings efficiently and avoid unnecessary delays, but no strict timeline is imposed for rendering awards.

12.3 Remedies

The Proclamation appears to be silent on the specific types of remedies available to arbitrators. The Proclamation appears to leave the question of available remedies to be determined by other applicable laws and rules rather than prescribing them directly.

13.1 Interpretation and correction of awards

Parties can request corrections/interpretations within 30 days of receiving the award. Corrections are requested for fixing clerical and numerical errors, or unintended omissions, while interpretations are needed for clarifying specific issues or parts of the award.

The tribunal can correct errors on its own initiative within 30 days from the date of the award. Such corrections apply to clerical, numerical, or inadvertent omissions.

For omitted claims, parties can request an additional award within 30 days. The tribunal must render any additional award within 60 days of request, which will become part of the original award. The tribunal may extend the period for corrections, interpretations or additional awards by up to 20 additional days if necessary.

13.2 Challenge of an award

A party can challenge an award only on the following grounds:

• Lack of capacity to conclude arbitration agreement.
• Invalid, void or expired arbitration agreement.
• Unable to present case during proceedings.
• Arbitrators failed to maintain impartiality/independence or took bribes.
• Award exceeds scope of arbitration agreement or tribunal’s jurisdiction.
• Tribunal’s composition or procedure contradicted parties’ agreement or the law.

Any challenge must be filed within 30 days of receiving the award. No challenge is possible after an award has been enforced by an Ethiopian court.

13.3 Recognition and enforcement proceedings

General recognition and enforcement

Arbitral awards are binding and enforceable like court judgments. Enforcement applications follow the Civil Procedure Code.

Recognition and enforcement of foreign arbitral awards

Foreign awards under international treaties ratified by Ethiopia may be recognized and enforced according to those treaties. The Federal High Court has jurisdiction over foreign arbitral awards.

Procedural requirements

Enforcement applications must be submitted with:

• the original arbitration agreement;
• the original award or authenticated copy by the relevant authorities for foreign awards; and
• translations if the award is in a foreign language.

The court can suspend enforcement for up to 60 days while examining challenges. It can also refer the matter back to tribunal with a stay order based on grounds for setting aside.

13.4 Cost of enforcement

There are no explicit provisions in the Proclamation that specifically address the costs of enforcement or arbitral awards. The Proclamation appears to leave the specific costs related to enforcement of awards to be governed by other applicable laws and court rules.

The Proclamation only addresses costs related to arbitration and conciliation proceedings and fees. The tribunal can decide on costs and fees if parties have not otherwise agreed upon these. Parties can appeal cost decisions to the Federal First Instance Court.

13.5 Enforcement of orders of emergency arbitrators

The Proclamation does not specifically address the concept of “emergency arbitrators” or enforcement of their orders as a distinct category. This appears to be a gap in the legislation that may need to be addressed through future amendments or regulations. The closest relevant provisions relate to interim measures and their enforcement through court assistance, but these are for regular arbitral tribunals rather than emergency arbitrators specifically.

Ethiopia acceded to the New York Convention on August 24, 2020, and it came into force for Ethiopia on November 22, 2020. This accession marked a significant step in aligning Ethiopia’s arbitration framework with international standards, promoting the country as a favorable destination for international arbitration.

14.1 Process for enforcing New York Convention awards

The Proclamation does not explicitly mention the New York Convention or have specific provisions about its application. Procedural requirements for enforcing (New York Convention) awards include submission of:

• the original arbitration agreement;
• the original award or authenticated copy by relevant authorities for foreign awards; and
• translations if the award is in a foreign language.

Applications for enforcement of foreign awards go to the Federal High Court.

The explicit inclusion of “reciprocity” as a ground for refusal suggests that Ethiopia does take a reciprocal approach to enforcement of foreign awards.

14.2 Grounds for resisting enforcement of New York Convention awards

The Proclamation takes a fairly standard approach aligned with the New York Convention grounds, though adds reciprocity as an explicit ground for refusal. While it references international treaties Ethiopia has ratified, it does not specifically mention or incorporate the New York Convention grounds.

The public policy exception appears to be framed broadly to include morality and security considerations beyond public policy. However, the Proclamation does not provide detailed guidance on how these grounds should be interpreted and applied in practice.

14.3 Enforcing non-Convention awards

Please see above, Section 13.3 (Recognition and Enforcement Proceedings).

15.1 Applicable to counsel

The Proclamation has limited provisions on counsel rights in arbitration, only stating in Article 31 (4) that parties may be represented by a person of their choice or an attorney, which requires notification of the representative’s details.

Professional and ethical rules for counsel are detailed in Proclamation No. 1249-2021 (Federal Advocacy Service, Licensing and Administration Proclamation), including maintaining an office, not using intermediaries, having professional indemnity insurance, keeping proper accounting records, and mandatory continuing education. Ethical standards include being prepared, not submitting false evidence, rejecting baseless cases, and maintaining professional dignity. Breaches can result in disciplinary measures, including suspension or revocation of license.

15.2 Applicable to arbitrators

The Proclamation sets professional and ethical standards for arbitrators, emphasizing independence, impartiality, efficiency and transparency. Arbitrators must be impartial, disclose conflicts of interest, and reveal any relationships with parties. They cannot have previously served in the same case, cannot meet parties separately, and cannot accept gifts from the contracting parties. They must maintain confidentiality.

16.1 Applicable regulatory requirements

There are no explicit laws or regulations governing third-party funding in arbitration in Ethiopia. This means that parties involved in arbitration must rely on general principles of contract and arbitration law.

16.2 Overview of the third-party funding market

There is no such market in Ethiopia.

To the best of the author’s knowledge, there are no specialist arbitration practices or institutions in Ethiopia.

17.1 Types of specialist arbitration

Not applicable.

17.2 Key legal principles

Not applicable.

17.3 Types of claim and defenses typically brought in that area

Not applicable.

17.4 Issues and strategic considerations to take note of

Not applicable.

Ethiopia has modernized its arbitration framework with the Arbitration and Conciliation Proclamation, aligning with international best practices and the UNCITRAL Model Law. This has enhanced the legal environment for both domestic and international arbitration, promoting the use of arbitration for commercial disputes. Ethiopia is re-evaluating its BITs to align with modern standards, focusing on a balanced investor–state dispute settlement (ISDS) system for resolving disputes between foreign investors and the state.

Ethiopian courts now play a more supportive role in arbitration, upholding agreements and enforcing awards while reducing judicial intervention. The new law emphasizes the finality of arbitral awards, enhancing efficiency and predictability.