Conflict of Laws in Labour and civil cases
Conflict of Laws in Labour and civil cases
In a conflict of law case, a court is expected to address three basic issues:
- Determining the presence judicial jurisdiction
- Determining the applicable law to solve the dispute
- Determining whether a foreign judgment should be given recognition by domestic courts
Before these three issues are addressed, the court is primarily tasked with determining whether the case is really a conflict of law case or not?
So, how does a case become a conflict of law case? A short to the question is that it becomes a conflict of law case, it contains a foreign element. What then is a foreign element?
“When a case is said to contain a foreign element, the reference(s) may be of three natures __ personal, local, or material __ in that, respectively illustrated, if one of the parties of the case is a foreigner (including one from another federating unit) or the transaction of any nature took place, totally or partially, abroad (outside the forum state) or, finally, the object of the dispute (property, esp. immovable property) is situated in another state (including a member of federation); the case is said to contain a foreign element.” (Araya Kebede and Sultan Kasim, Conflict of laws teaching material, sponsored by Justice and Legal System Research Institute)
The draft conflict of rules also defines foreign element in the following way.
Art.4. Foreign Element
Foreign element refers to:
- A personal nature and may pertain to nationality, domicile or residence of the interested parties; or
- A local nature and may pertain to the place where facts occur or contracts are made from which the juridical situation arises; or
- A material nature and may pertain to the place where the property to which the juridical situation applies is situated.
According to article 11 sub article 2 (a) of Federal Courts Proclamation No. 25/1996, when a case is related to private international law, the Federal High Court will have first instance jurisdiction to solve the dispute. This article is not a conflict of law rule regarding judicial jurisdiction in conflict of law cases. It simply gives exclusive material jurisdiction to the Federal High Court, to address the above three questions of conflict of law disputes. What follows is a brief summary of the way this article is understood by lower courts and the cassation bench.
1. Conflict of laws in labour cases
1.1. Determining the governing law by the agreement of the parties
Applicant: Foundation Africa
Respondent: Ato Alemu Tadesse
Cassation File Number: 50923
Date: 19-9-2003 (E.C.)
An employment contract between the employee and employer made in Ethiopia, for a work to be performed in Ethiopia, stipulating a foreign law to govern any dispute arising between them is invalid. The presence of such contract does not oust the ordinary material jurisdiction of first instance court in labour disputes.
In a similar case, [C.A.S. Consulting engineers salezgiter GMBH vs. Ato Kassahun Teweledeberhan Cassation File Number 54121 Date 1-3-2003 (E.C.)] where the parties indicated German Law to be the applicable law to solve their disputes, it was held that such contractual provision is not valid. The case by its nature is not a case “regarding private international law” as provided in article 11 sub article 2 (a) of Federal Courts Proclamation No. 25/1996. As a result, it is the Federal First Instance Court not the Federal High Court who has jurisdiction over such matter.
1.2. Employment contract made in a foreign country
Applicant: Ato Bezabeh Eshetu
Respondent: Salini construction
Cassation File Number: 60685
Date: 21-6-2003 (E.C.)
When the employment contract is made in a foreign country, it is a case regarding private international law. Hence, the Federal High Court will have first instance jurisdiction as per article 11 sub article 2 (a) of Federal Courts Proclamation No. 25/1996. But, it should be noted that, this does not imply Ethiopian courts will assume judicial jurisdiction merely because the contract was made in a foreign country. The fact that a certain case is a ‘case regarding private international law’ only confers a power on the Federal High Court to determine whether Ethiopian courts have judicial jurisdiction and if yes to determine the applicable law. In short, article 11 sub article 2 (a) of Federal Courts Proclamation No. 25/1996 simply gives material jurisdiction exclusively to the Federal High Court.
2. Conflict of laws in civil cases
2.1. Extra-contractual liability (foreign company not registered in Ethiopia)
Applicant: Ethiopian Electric Light Corporation
Respondent: Dragados Construction
Cassation File Number: 42928
Date: 12-5-2002 (E.C.)
This case relates an action by applicant for compensation for damage caused by respondent while doing business in Ethiopia. Respondent argued that it a foreign company registered according to the law of Greece and domiciled in Athens. It also stated that it is not registered in Ethiopia. Based on these facts, respondent challenged the jurisdiction of the Federal First Instance Court, because the conflict of law rules apply to determine courts having jurisdiction and the applicable law. The Federal Instance Court accepted this argument and ruled that it does not have jurisdiction over the case. On appeal, the ruling of the lower court was affirmed by Federal High Court on the ground that the mater falls within its first instance jurisdiction.
The cassation bench reversed both decisions of the lower courts. The bench in its reasoning stated that damage was caused in Ethiopia while respondent was doing business in Ethiopia. The case was brought to the court where the damage caused. Therefore, the Federal First Court should exercise jurisdiction according to article 27(1) of the Civil Procedure Law.
2.2. Contract made in Ethiopia with a foreigner
Applicant: Global Hotel Private Limited Co.
Respondent: Mr. Nicola As Papachar Zis
Cassation File Number: 28883
Date: 26-3-2000 (E.C.)
The fact that one of the parties in litigation is a foreigner does not automatically make the case ‘a case regarding private international law.’ The defendant should necessarily challenge the jurisdiction of the court on the ground that Ethiopian law is inconsistent with the law of his nationality or domicile. If the foreign party does not invoke lack of jurisdiction of Ethiopian courts, the case is not a private international law case.
The Duty to serve: Cassation Bench on the legal effects of employer-sponsored Tuition Assistance
The Duty to serve: Cassation Bench on the legal effects of employer-sponsored Tuition Assistance
As an employee, you have a duty to serve your employer diligently. But, you don’t have a duty to continue serving your employer for life. If you ever feel like leaving, you are free to resign even without any valid ground (Article 31 of the labour proclamation No. 377/2003.) The only procedural requirement is giving a one month prior notice. Failure to give notice results in your liability to pay compensation (a maximum of your thirty days wages) to the employer (Article 45 of the labour proclamation No. 377/2003.)
But, is it always true that an employee does not have a duty to continue serving his employer at least for a limited period of time? There is one exception (limitation?) to the freedom of the employee to leave his employment. That is when the employer has covered education expenses of the employee and there is an express of employee to continue his employment for a limited period of time. The nature of this contractual obligation is not absolute rather it is alternative. This is to mean that the employee has still a choice either to serve his employer or reimburse all the expenses of education.
The following is a very brief summary of the position of the Cassation Bench of the Federal Supreme Court on issues related to the duty to serve.
My summary is based on the following six cases decided by the bench Continue reading →
Consequential loss in Insurance Cases: Review of Cassation Decisions (Part I)
Consequential loss in Insurance Cases: Review of Cassation Decisions
One of the basic principles of insurance applicable to property insurance is the principle of indemnity. This underlying principle provides that compensation payable to the insured upon occurrence of loss to his property could not exceed the actual value of the property at the time of loss. This principle is clearly stated in article 678 of the commercial code. However, the clarity of the provision didn’t save courts from giving contradictory decisions in determining the amount of compensation to be paid to the insured. When a dispute as to the amount of compensation arises, some courts took a position that the amount payable should be equal to the maximum amount specified in the insurance policy. In order to justify their position courts usually rely on article 665 of the commercial code which imposes an obligation on the insurer to pay “the agreed sum” within the time specified in the policy or when the risk insured against occurs or at the time specified in the policy. In principle a court does not make a mistake if interprets “the agreed sum” as “the amount stated in the insurance policy.” It becomes a mistake if a court applies it to property insurance or insurance of objects.
Article 665 of the code is found in the general provisions applicable to all forms of insurance contract. Hence, the relevance of the provision is limited to determining the time of making payment. As regards the amount of compensation it could only make sense if it is made applicable to life insurance policies. As the value of a human body or life could not be valued, the amount to be paid at the time of materialization of risk is left to the agreement of the parties. The principle of indemnity does not apply to such type of insurance. In property insurance cases article 678 of the code always prevails over the general insurance provisions.
Consequential loss and principle of indemnity
One of the challenges in applying the principle of indemnity in insurance cases is the issue of consequential loss. The commercial code does not make any reference to consequential loss and whether the insurer has an obligation to make payment for such type loss in the absence of a specific policy to this effect. Consequential loss in short refers to lost of profits and income resulting from harm to or destruction of one’s insured property. It is an indirect loss since it is not a result of a direct act but a loss incurred due to the consequences or results of the act. If a commercial vehicle insured against collision is totally destroyed the owner in addition to the direct loss of his property incurs an indirect loss of income as a consequence of the loss of his vehicle. This will be usually loss of income from the time of destruction of the vehicle until he is paid compensation by the insurer. Now the question is: is it possible to claim for such type of consequential loss under Ethiopian insurance law?
In this regard the position of the Federal Supreme Court Cassation Bench is that the insurer has an obligation to compensate the insured for consequential loss. The absence of any clear provision in the insurance policy providing coverage for consequential loss is not a valid ground to relieve the insurer from his liability. What if there is an exclusion clause in the policy? According to the cassation bench, the insurer’s obligation is still effective even though the policy clearly excludes compensation for consequential loss.
However, this firm position of the cassation bench could not be taken as a full answer to the question raised above. Depending on the nature of the claim by the insured ‘consequential loss’ may refer to loss caused as a result of an act (harm to or destruction of one’s insured property) or it may also be similarly used to refer to loss caused as a result of an act of a party (i.e. an act of the insured.) An act of the insurer causes consequential loss on the insured when there is unjustified delay in making payment upon occurrence of loss.
According to article 665 of the commercial code compensation should be paid within the time specified in the policy or when the risk insured against occurs or at the time specified in the policy. If the policy does not provide such time, then payment should be effected immediately (Article 1756 of the Civil Code.) Unjustified delay constitutes non-performance of contract entitling the other party to claim damage caused to him by non-performance. (Article 1771 sub article 2 of the Civil Code)
It is only in this sense that the decisions of the cassation bench could be understood and analyzed. This is important because in most of the decisions no clear distinction is made between consequential los as a result of the act and as a result of the insurer. The absence of clear distinction is not totally the fault of the bench. The parties are also partially responsible for the confusion. When one looks in to the argument of the insured and the insurer, they tend to be at variance in understanding the underlying issue and even in the usage of terminology. Usually the insured claims “compensation for the loss of income” and the insurer challenges such claim on the ground of the absence and/or exclusion of consequential loss in the insurance policy. Yes it is true that a party is not entitled to compensation for loss of income as a result of loss of his insured property. However, what the insured is really demanding by “consequential loss” or “compensation for the loss of income” is payment of compensation for delay of non-performance of the insurance contract. This usually happens when the insurance company delays payment or refuses to compensate the insured upon occurrence of loss.
Consequential Loss in Liability Insurance Cases
Case One
Applicant Ethiopian Insurance Company
Respondents 1.Ato Demesie Werekeneh
2. Genesis Farms Ethiopia Pvt.
Cassation File Number 27565
Date: Hidar 24-2000 E.C.
Court: Federal Supreme Court Cassation Bench
In this case, a vehicle belonging to 2nd respondent caused a total damage on 1st respondent’s vehicle. Applicant became a party to the case as it has insured 2nd respondent’s vehicle. The value of the 1st respondent’s vehicle was estimated to be 80,000 br. (Eighty thousand birr). In addition to this amount 1st respondent also claimed 18, 300 br. (Eighteen thousand three hundred birr) lost income for 211 days.
Applicant challenged the claim for lost income on the following two grounds:
- 1st respondent should not be compensated twice for a single loss, as compensation for the loss of income will have the effect of double compensation.
- 1st respondent could not claim compensation for the loss of income caused as a result of damage to his property, without having consequential loss insurance policy.
The cassation bench, responding to applicant’s 1st argument stated that once 2nd respondent is found liable for causing total damage to 1st respondent’s vehicle there is no reason it could not be liable for the loss of income to 1st respondent as the result of the damage. As regards the second argument the bench said:
“Applicant has not argued (or submitted similar argument) that the insurance policy it issued to respondents excludes consequential loss”
In other words, it held a position that consequential loss is always payable unless the insurance company shows to the satisfaction of the court that it is excluded by the insurance policy.
The cassation bench may not be criticized for its analysis of consequential loss but, for its failure to relate it to the maximum liability of the insurance company. Applicant was made a party to the case because it insured the liability of 2nd respondent. Since this is a liability insurance case the applicable provisions are articles 685 to 688 and of the Commercial Code and the general provisions of insurance (articles 654 to 674 of the Code.) Irrespective of the type of insurance article 665 sub article 2 of the code states that the insurer’s liability shall not exceed the amount specified in the policy.
If the maximum liability of applicant in the insurance policy is 80,000 br. (Eighty thousand birr), then that is the only amount it is obliged to pay. Even assuming that the policy limit is above 80,000 br. (Eighty thousand birr) the insurance company is still not liable to consequential loss. In liability insurance case, the nature and extent of liability of the insurer is determined based on the terms and conditions of the policy. If the policy only provides coverage against the liability of insured as a result of direct damage to the property of third parties, then there is no contractual or legal ground to make the insurer liable for consequential loss. The bench found 2nd respondent liable for the loss of income caused to 1st respondent. However, how this liability is transferred to the applicant insurance company is not clear.
Period of time to dismiss a worker for misconduct (Summary of cassation decisions)
Introduction
According to Ethiopian labour law, an employer loses his right to dismiss a worker irrespective of a valid ground of dismissal, if he fails to make a decision to terminate the employment contract within 30 working days. The time starts to run from the date the employer knows the ground for the termination. (Article 27(3) of the labour proclamation 377/2003)
The following is a brief summary of Cassation decisions regarding the application an interpretation Article 27(3.
The meaning of working days
Applicant Ethio-Djibouti Railway
Respondent Teshome Kuma
Cassation File Number 36377
Date: Hidar 2, 2001 E.C.
In the Federal First Instance Court, where the case was first heard, the respondent claimed reinstatement and 6 months back pay alleging that his contract of employment was terminated unlawfully by the Applicant. However, the applicant employer challenged the claim stating that termination was lawful as it was due to an unlawful act committed by the applicant worker.
The Federal First Instance Court found the termination unlawful on procedural ground without investigating the merit of the case. The Court ruled that the employer (Applicant) has failed to take an action of dismissal within one month as required by the labour proclamation. For this reason, judgment was given in favour of the respondent The court awarded him six months back pay salary and reinstatement.
Applicant lodged an appeal against this decision to the Federal High Court, but it was rejected.
Lastly, the applicant submitted his application to the Federal Supreme Court, Cassation division for review of the lower courts on ground of fundamental error of law.
The cassation division examined the legal issue involved in the case by interpreting article 27 sub 3 of the labour proclamation No.377/2003. Both the federal first instance and high court misread the article in determining the period of time to take dismissal action by the employer. Rather than examining whether 30 working days have passed from the date the employer knew the ground for the termination, they simply counted 30 days to reach at a conclusion.
This was indicated by the cassation division as a manifest error. Accordingly, the case was re-examined based on the facts affirmed in the lower courts in order to determine whether 30 working days have passed. As stated in the decision, the worker allegedly committed fault on Meskerem 24 and 25 1999 E.C. and his contract of employment contract was terminate on Tikimet 25 1999 E.C. From Meskerem 25 to Tikimet 25 there are four Sundays and assuming that Sunday is not a working day, there are only 24 working days during this time. Based on this calculation, the court reasoned, 30 working days have not passed, which makes the action of the employer valid for the purpose of time requirement.
Consequently, the decisions of the lower courts was reversed by the cassation division and the case was remanded to the federal first instance court to give its own decision on the merit i.e. the legality of termination of employment.
New Federal Supreme Court Cassation Decisions (Volume 11 & 12)
Cassation Decisions volume 11
DOWNLOAD Cassation Decisions Volume 11
Cassation Decisons Volume 12
DOWNLOAD Cassation Decisions Volume 12
It took almost a year for the Supreme Court to officially release its Cassation decisions which are suppose to be binding on all lower courts in Ethiopia on similar cases requiring interpretation of the law. All these decisions, compiled in two volumes (volume 11 and 12) include decisions rendered in the previous year i.e. 2003 Ethiopian calender. Delay of Publication has been and is still continuing to be one of the major setbacks for the proper application of the rule of precedent in Ethiopia. It also raises some serious legal issues as the binding effect of a cassation decision not officially published is not clear.The Federal Courts Proclamation Re-amendment Proclamation No.454/2005, which makes Interpretation of a law by the Federal Supreme Court rendered by the cassation division with not less than five judges binding on federal as well as regional courts, simply imposes on the Federal Supreme Court a duty to publish decisions of the cassation division that contain binding interpretation of laws to all levels of courts and other relevant bodies, without indicating whether decisions are still binding before the time of publication.
Related articles
Can a civil case be a ground of res judicata in a labour case?
Case Brief
Applicant- Ermias Mulugeta
Respondent- Bekelecha Transport Share Company
Cassation File Number- 39471
Date of judgement- Hamle 29 2001
Read the decision of the court (Amaharic)
Issue: Wether failure to prove fault of employee by the employer in a labour case is a ground of resjudicata if a civil action is brought by the same employeer against the same employee alleging fault of the employee?
Ruling and reasonig of the court
The Cassation bench affirmed the decision of lower courts. The court relied on its own previous decision (Cassation File Number 36710) regarding the issue raised in this case. Accordingly it concluded that the issue to be framed in unlawful dismissal case is totally different from a civil action brought by the employer claiming restitution or payment for loss of or damage to property. The labour court may have decided that the employee has not committed fault, when the fault at issue is ‘being responsible for loss of property’ of the employer. Such decision is not a ground of res judicata if an action against the employee is brought by the employer claiming payment of the price of the property.
HIGHER EDUCATION COST-SHARING COUNCIL OF MINISTERS REGULATION Number 91 of 2003
Brief note
Starting from 2003/04 academic year students enrolled in public universities were required to cover their costs of education. Such cost includes full costs related with boarding and lodging and minimum 15% of tuition related costs. This cost sharing regulation imposes a pre-condition on every student to enter a written contract agreement with the respective institution before he is allowed to pursue his education.
Even though, Article 4 of the regulation, states that the amount to be share shall be shall be revealed to the student, this amount is likely to increase at the time of graduation. According to sub article 4 of article 4 the cost of education and training shall be revised at least every three years. Almost all the disciplines in the public universities require four years of study for graduation. A possibility of revision every three years is in effect giving a power to unilateral modify the contract as the regards the total costs require from the student.
The students once gradated will start making payment within six months after graduation if earning income or within a maximum of one year after graduation, in the form of graduate tax of at least 10% of the monthly income. He is expected to pay all of his costs within a maximum of 15 years.
According to article 6 ( 7) a beneficiary [ Article 2 (5) defines beneficiary as a student at a public higher education institution pursuing higher education or training and who has entered into an obligation with the concerned institution for the future payment of the cost of his/her education or training and other services] who decides to go abroad for more than six months before completing the payment of the cost required of him, shall be made to produce a guarantee for the payment of the outstanding amount. However, contrary to this explicit provision most universities refuse to give Degree and Transcript of the student and in some cases other relevant evidences (like proof of language of instruction) until final settlement of debt. However, this is not only contrary to the regulation, but also a manifest violation of the right to education enshrined in F.D.R.E. Constitution.
COUNCIL OF MINISTERS REGULATION NO. 91/2003
HIGHER EDUCATION COST-SHARING COUNCIL OF MINISTERS REGULATION
This regulation is issued by the Council of Ministers pursuant to Article 5 of the Definitions of Powers and Duties of the Executive Organs of the Federal Democratic Republic of Ethiopia Proclamation No. 4/1995 and the Higher Education Proclamation No. 351/2003.
1. Short Title
This Regulation may be cited as the “Higher Education Cost-Sharing Council of Ministers Regulation No. 91/2003″
2. Definitions
For the purposes of this Regulation:
1) “Ministry” and “Minister” means Ministry of Education and the Minister of Education, respectively.
2) “Institution” means a public higher learning institution in any region, in Addis Ababa or Dire Dawa offering a post-secondary education with a budget allocated from the Federal Government.
3) “Employer” means any government, private or non-governmental institution or international or regional organization or person employing graduates of higher education institutions including self-employed graduate of the same,
4) “Person” means a physical person or any other legal person,
5) “Beneficiary” means a student at a public higher education institution pursuing higher education or training and who has entered into an obligation with the concerned institution for the future payment of the cost of his/her education or training and other services.’
6) “Cost-Sharing” means a scheme by which all beneficiaries of public higher education institutions and the government share the cost incurred for the purposes of education and other services.
7) “Graduate Tax” means a scheme by which an amount is deducted from income in the form of a tax to be paid by a beneficiary who has been obliged to share the costs of his higher education. Continue reading →
Transfer of workers: Is it employer’s prerogative?
Applicant- Cheshire Foundation Ethiopia
Respondent- W/o Meseret Workagegnehu
Cassation File No. 38605
Date: Yekatit 19, 2001
Court- Federal Supereme Court Cassation Bench
Issue: Wether an employer can unilaterally change the place of work of the employee?
Ruling &reasoning: The decision of lower courts was reversed. The cassation bench said that “it is the prerogative of the employer to transfer the employee to another place of work and the employee has no valid ground to object to such order.”
Do you agree that an employer has unlimited power to change the place of work of an employee? is that variation of employement contract? If it is variation, can an employement cantarct be varied by a unilateral act of the employer?
Index to Cassation Decisions Volume 13
Index to Cassation Decisions Volume 13
Most of you are asking and waiting for the release of Cassation decisions volume 13 and 14 and I don’t have any good news. I frequently check their website. Still volume 12 is the last volume available. But I think, the next two volumes will be made available to the public soon. The index to Volume 13 is officially released. You can download it here or from the official web page of the Federal Supreme Court.
I have added a bookmark and a link to the table of contents, so that you can easily browse the contents of the document.
DOWNLOAD Index to Cassation Decisions Volume 13
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