Legal friction amongst businesses is a naturally occurring phenomenon. However, if there is no equally-dynamic venue and avenue to solve those frictions, business activity will get stuck. The normal court system which handles criminal cases and takes months and years to conclude, is too slow for business.
Though arbitration is globally preferred as the best business dispute settlement mechanism, Ethiopia has not had the necessary legal frameworks in place. Usually, business arbitration awards rendered in any country across the world are acceptable by the highest courts. However, this was missing in Ethiopia until the nation signed the 1958 New York Convention in 2021.
Until now, most business conflicts arising from contracts between Ethiopian businesses and foreign partners, have been arbitrated outside of Ethiopia. This has its costs in terms of undue foreign currency consumption, inability to receive fair arbitration, and misconception of Ethiopia as business unfriendly. Ashenafi Endale explores the new changes after the ratification of the convention, as well as the new local arbitration proclamation.