Towards a Better Commercial Arbitration: Should Ethiopia Ratify the New York Convention?

Author:Mesfin Beyene
Position:Mesfin Beyene (LLB, LLM) lecturer of law at Woldia University, Ethiopia. The author can be reached via email at mesfango@gmail.com
Pages:123-152
SUMMARY

The 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral awards is currently ratified by 161 states. The Convention gives a visa for arbitral awards made in a Convention state and guarantees enforcement of the award elsewhere except on few grounds. It imposes obligations on states and their courts to recognize and enforce foreign arbitral awards and arbitration... (see full summary)

 
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Towards a Better Commercial
Arbitration: Should Ethiopia Ratify the
New York Convention?
Mesfin Beyene
Abstract
The 1958 New York Convention on the Recognition and Enforcement of Foreign
Arbitral awards is currently ratified by 161 states. The Convention gives a visa for
arbitral awards made in a Convention state and guarantees enforcement of the
award elsewhere except on few grounds. It imposes obligations on states and their
courts to recognize and enforce foreign arbitral awards and arbitration agreements.
It also imposes on courts the obligation to stay proceeding with a matter subject to
the arbitration agreement. Ethiopia has not yet ratified the NYC. This article aims at
demonstrating the challenges and prospects of ratification of the Convention by
Ethiopia. I argue that by ratifying the Convention, Ethiopia would be able to, inter
alia, increase trade and investment, get access to lower interest rates and rates of
return, improve its international image, improve on competition for trade and
investment, improve its arbitration system, decrease caseloads of courts and hasten
its move towards the accession to WTO. These factors show that it is in the
country's interest to ratify the Convention and domesticate it through the
instrumentality of the UNCITRAL Model Law.
Key terms
Commercial arbitration · New York Convention · Ethiopian laws · UNCITRAL·
Model Law · Ethiopia
DOI http://dx.doi.org/10.4314/mlr.v13i1.5
This article is licensed under a Creative Commons Attribution-NonCommercial-
NoDerivs (CC BY-NC-ND)
Mesfin Beyene (LLB, LLM) lecturer of law at Woldia University, Ethiopia. The author
can be reached via email at mesfango@gmail.com
Frequently used acronyms:
AACCSA Al
Addis Ababa Chamber of Commerce and Sectoral Associations
Arbitration Institute
CPC
Civil Procedure Code
ICC
International Chamber of Commerce
NYC
New York Convention
124 MIZAN LAW REVIEW, Vol. 13, No.1 September 2019
Introduction
With the growth of cross border transaction across all nations, international
commercial arbitration is becoming very essential. Since investors and traders
have their interests at stake, they will invest and/or transact depending on their
degree of confidence to the availability of a dependable remedy if dispute arises.
It is highly probable that the parties to the transaction would select arbitration
for the settlement of their dispute for the latter’s advantage over court litigation
owing to the participation of disputants in the appointment of arbitrators or in
the choice of arbitration organs.
The benefits of arbitration cannot materialize in the absence of a mechanism
by which parties can have the award enforced. The New York Convention
(NYC) satisfies this need because it stretches a visa for an award to be enforced
elsewhere where the award debtor has sufficient assets. The Convention
imposes an obligation on member states and their courts to recognize and
enforce arbitration awards and agreements. Article 5 of the Convention ensures
enforcement by exhaustively listing the grounds for refusal of enforcement, and
this makes it attractive to investors and business persons.
The Ethiopian government has been working on legal reform to realize the
objectives of the industrial development policy that encourages export
manufacturing with a view to enhancing trade and investment. However, the
measures so far taken are not adequate to fully achieve the policy objective for
there is a need for further FDI inflow and a great number of the youth is
unemployed. Furthermore, Ethiopian business persons are under increasing
pressure to enter into contracts with suppliers in faraway regions and meet the
vast and increasing local demands for goods and services. This is so because
traders and investors are also concerned about their contract enforcement.
Although Ethiopia was among the first signatories to the NYC, it has not yet
ratified the Convention. The aim of this article is to analyze the pros and cons of
ratification of NYC by Ethiopia. The first section presents an overview on the
significance of primacy of international commercial arbitration. Section 2
highlights the genesis and nature of the New York Convention followed by
Sections 3 and 4 that examine the advantages and disadvantages of the
ratification of the Convention by Ethiopia. The last section deals with the
prospects of ratification, followed by conclusion.

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