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Some unusual facts about repeal in Ethiopia


I was writing an article under a general title ‘Some unusual facts about repeal in Ethiopia’ After writing the first topic I found it good to break it down in to a series of posts. Here is the first part

Repeal of a court decision by law (Legislative review of Court Decisions?)

According to the 1995 Ethiopian Constitution, the House of Federation has a power to interpret the constitution. Although the meaning and scope of the ‘constitutional adjudication’ in general is subject to controversy among some legal scholars, practically we all agree that ordinary courts do not have any power over questions of constitutionality of a proclamation  issued by the House of People’s Representatives. The courts are even reluctant to exercise their power of review over the legality of subordinate legislations (regulations and directives) and administrative decisions.

So, as I have said there is no such thing as judicial review of legislation in Ethiopia. What about legislative review of judicial decisions? I mean what about giving power to the House of People’s Representatives to repeal or invalidate those court decisions which are manifestly erroneous or contrary to public interest. I guess most of you will strongly object to this odd ‘concept.’ Yes it is odd, but there is proof that parliament has repealed or invalidated existing court decisions after they were pronounced.

If you have doubt over the validity of this fact, just read Article 3 sub 2 of Civil Code As Amended Proclamation No. 639/2009. This law was issued in response to the position of courts (including the cassation bench) in giving meaning to article 1723 of the 1960 Ethiopian Civil Code. Sub article 1 of article 1723 provides that a contract creating or assigning rights of ownership or bare ownership on an immovable or an usufruct, servitude or mortgage on an immovable shall be  writing and registered  with a court or notary. To be honest this article is clear and does not need any interpretation. The problem is that it is applicable to mortgage contracts concluded with banks. In practice almost all bank mortgage contracts were not registered with a court or notary. Hence, the fate of such contracts were invalidation by court. This posed a great danger to banks, especially to the commercial Bank of Ethiopia as it results in the loss of huge amount of money not collected from borrowers.

Actually, it was a problem created by the banks, (as they have failed to comply with the requirement of registration) not by the courts. Any ways parliament thought it necessary to act immediately, to reverse the situation. Then it issued Civil Code As Amended Proclamation No. 639/2009. The title of the proclamation seems to suggest that it is amendment to article 1723 of the Civil Code. However, its content clearly goes beyond amendment.

The proclamation contains three important provisions.

1.      Article 2 Amendment

The title of Article 2 talks about amendment, but practically it partially repeals article 1723 sub article 1 of the civil code. Article 2 of the proclamation makes the registration requirement of contract of mortgage concluded to provide security to a loan extended by a bank or a micro-financing institution unnecessary. In effect it makes mortgage contracts concluded with banks and micro-financing institutions valid even though not registered with a court or a public notary. This applies to mortgage contracts concluded after the proclamation became effective.

2.      Article 3(1)  Transitory Provisions (Retroactive measure to previous contracts)

Clearly Article 2 of the proclamation was not sufficient to avert the then existing danger posed to banks. What about mortgage contracts concluded before the issuance of the proclamation? This was dealt in Article 3 sub 1 which reads:

“The validity  of  any  contract  of  mortgage concluded,  prior  to  the  effective  date  of  this Proclamation,  to  provide  security  to  a  loan extended  by  a  bank  or  a  micro-financing institution,  may  not  be  challenged  for  not being  registered  by  a  court  or  notary  in accordance  with  Article  1723  of  the  Civil Code.”

This will force courts to give effect to unregistered mortgage contracts concluded not only after the effective date of the proclamation, but also to those mortgage contracts concluded before the proclamation. You may say this is against the principle of non-retroactivity of laws, but thanks to the F.D.R.E. Constitution, it only provides for non-retroactivity of criminal laws not civil laws.

3.      Article 3(2)  Transitory Provisions (Retroactive measure to court decisions)

Even after amending article 1723 (1) and providing a solution to previous contracts, Parliament did not stop there. Before the issuance of the proclamation, courts have already started invalidating mortgage contracts for lack of registration. No one denies the decision of courts severely affected the interest of banks. So, what should be done? (if anything is possible to be done) What about invalidating (I mean repealing) the existing court decisions? That is too extreme and violation of the constitutional principle of separation of powers. However, principle gave way to saving the banks and the House of People’s Representatives invalidated the existing court decisions, rendered prior to the effective date of this Proclamation.

Here is the full text of the article

Article 3(2) of Civil Code As Amended Proclamation No. 639/200

Any court decision, rendered prior to the effective date of this Proclamation, to invalidate a contract of mortgage concluded to provide security to a loan extended by a bank or a micro-financing institution, for not being registered by a court or notary in accordance with Article 1723 of the Civil Code shall have no effect.

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About Abrham Yohannes

Abrham Yohannes Hailu Licensed Lawyer & Consultant

Discussion

9 thoughts on “Some unusual facts about repeal in Ethiopia

  1. you wrote a good article and keep it up!.How ever I expect you will write the legislative limits of judicial power have a very serous effect on judicial activism.How do you see such matters?

    Like

    Posted by Ayele Tekola | January 25, 2013, 6:15 am
  2. The repeal is for the emperor and dergue regime period too, if it is applicable retrospectively. This shows that the HPR is enacting law for the period it was not in power. that means the HPR is working in behalf of the previous law makers.

    Like

    Posted by shagiz | September 24, 2012, 6:56 am
  3. Laws should govern the past, the present and the future social conduct. But, now in Ethiopia laws are issued only to solve the forefront problem. Because of this, laws are amended and repealed with in months. Even the professionals have know chance to know about.

    Like

    Posted by Wondwosen | September 21, 2012, 9:36 pm
  4. what you doing is great!!

    Like

    Posted by cvcxvcx | September 21, 2012, 7:12 am
  5. The proclamation did not repeal the registration requirement entirely. Previously, there was two registration requirement (for mortgage contracts) by law, i.e. 1. by court or notary (Art. 1723) & 2. by municipal /land administration authorities(Art 3052). Proclamation 639/2009 deals with only Art 1723 and the requirement of registration under Article 3052 is still intact.

    As the registration with land authorities is still required (Banks & other financial institutions are complying with this requirement since the advent of the civil code), financial institutions will not encounter any problem. In fact, the main purpose of registration with land authorities is to providing vital information like mortgage rights, attachments and encumbrances to any interested party. Hence, Banks & other interested parties can have full information about the property from the municipal /land administration authorities.

    Like

    Posted by eferemh | September 19, 2012, 12:24 pm
  6. nice writing I will wait for the next

    Like

    Posted by Weineshet | September 17, 2012, 11:26 am
  7. Dear Abreham, Once again very smart article. keep on writing, i am curious about the next one

    Like

    Posted by Mengistu | September 17, 2012, 10:45 am

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