Case Comment: Comment on the Cassation Division's Decision in File No. 80119 (Amharic)

Author:Gebreyesus Abegaz Yimer
Position:Gebreyesus Abegaz Yimer, LLB (Haramaya University) LLM (Rotterdam University, School of Law), Assistant professor, Mekelle University School of Law. Email: gebreyesusyimer@gmail.com
Pages:248-254
 
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248
Comment on the
Cassation Division’s Decision in File No. 80119
(February 18, 2013)
DOI http://dx.doi.org/10.4314/mlr.v11i1.10
Gebreyesus Abegaz Yimer
Case Comment on Usury: Summary
The Cassation Bench of the Federal Supreme Court decided that a contract of
loan with 10 per cent interest rate per month establishes a crime of usury as
provided under Article 712 of the Criminal Code. The court reasoned out that
10% interest rate per month violates the official interest rate and therefore the
creditor has committed the crime of usury. The court does not expressly mention
which official rate it is referring to –in its decisions. Nevertheless, considering
that there is no any other official interest rate that is provided by the law in
Ethiopia, it can be easily inferred that the court was tacitly referring to the
interest rate provided in the Civil Code. The question is therefore whether the
interest rate provided under Article 2479 of the Civil Code overrides
Proclamation No. 591/2008 (based on which the National Bank of Ethiopia
issues directives on interest rates). Article 5(4) of the Proclamation has
empowered the National Bank of Ethiopia to determine official interest rates
and it is clear from the provisions of the Proclamation that this mandate includes
the power to determine interest rates that are applicable in private loan
agreements. Directive NBE/INT/11/2010/ has given financial institutions the
authority to determine interest rates freely; whereas, it remains silent about the
applicable maximum interest rate for private loans. I argue that Proclamation
No. 591/ 2008 has repealed Article 2479 of the Civil Code and the silence of the
directive with regard to private loans does not imply the revivication of Article
2479 of the Civil Code. Furthermore, the court has overseen the elements of
Article 712 of the Criminal Code that establish the crime of usury. For a crime
of usury to be established under the provision, the exorbitant interest rate should
be the result of debtor’s dependence on the creditor, material difficulty,
inexperience, or weak character that is unfairly manipulated by the creditor.
Gebreyesus Abegaz Yimer, LLB (Haramaya University) LLM (Rotterdam University,
School of Law), Assistant professor, Mekelle University School of Law. Email:
gebreyesusyimer@gmail.com
I acknowledge the support of Professor Wim Decock, Dr. Elias Nour and Mihrteab
Gebremeskel in writing this case comment.
C

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