Ethiopia’s 1960 Commercial Code is undergoing revision. The Ministry of Justice (MoJ) is leading this effort; one the private sector hopes will alleviate bottlenecks that hamper doing business.
This is not the first time the government has considered amending the Code. The MoJ and the Justice and Legal Systems Research Institute (JLSRI) attempted revisions in the past.
Also, in July 2008, the Addis Ababa Chamber of Commerce and Sectoral Associations (AACCSA) released a document on the private sector’s concerns over the draft proposed by the MoJ. Despite the promise of an updated code that better reflects the current international business environment, some analysts and observers are concerned that a lack of transparency may lead to oversights. As a result, it is difficult to predict if it will meet expectations, or remain just another attempt in a line of similar efforts.
Tilahun Teshome, professor of law at Addis Ababa University (AAU), has been a leading figure in previous revision efforts. He chaired the JLSRI and AACCSA committees. His influential book, Basic Principles of Ethiopian Contract Law (published in Amharic), is a significant contribution to the development of Ethiopia’s private law.
Tilahun has served in a number of prestigious national and international positions. He was the Dean of the Faculty of Law at AAU, Secretary of the University Senate, Presiding Judge of the Supreme Court of Ethiopia, and Editor-in-Chief of the Journal of Ethiopian Law. He has been awarded fellowships by European and American institutions. A Founding Fellow of the Ethiopian Academy of Sciences, Tilahun graduated with an LL.B. in 1979 from AAU.
EBR’s Bantayehu Demlie sat with the Professor to learn about his views on the revision efforts of the Commercial Code, past and present.
What reasons require governments to revise laws?
There are political, social and economic reasons that necessitate legal reform. With regime change, especially due to revolution, usually comes a new constitution and new policies. Since existing laws may be incompatible with the new constitution and policies, such changes may call for a revision of laws.
For example, the transition from the monarchy to the [socialist] Dergue regime was marked by the advent of different political views and public demands. The same holds true for the transition from the Dergue to the current [system].
Furthermore, laws may be revised to accommodate changes in society. Existing laws may be incompatible with social issues that emerge as a result of changes in social make-up and progress.
Similarly, advancement in science and technology, especially in information communication technology, is influencing every aspect of our life. For instance, the paternity of a child born out of wedlock used to be proved through witness testimony, but now there is DNA testing as an option. Though this paradigm shift is not incorporated in the laws yet, courts are using it. Laws are supposed to play a social engineering role by reflecting such advancements.
Besides internal factors, pressure from the international community pushes governments to make amendments to their laws. For example, the human rights enshrined in Ethiopia’s Constitution are copied from international conventions. Take also the case of Ethiopia’s accession to the World Trade Organisation for which the country is required to reform its laws.
Likewise, bilateral relations with other countries may induce changes in laws. For instance, governments may reform their investment laws in line with their relations with specific countries.
Although Ethiopia has gone through major political transitions, it hasn’t revised the 1960 Commercial Code enacted during the Imperial regime. Why?
Yes, laws may endure changes in political ideologies. Even though some – especially those who are inclined to leftist ideologies – think of law as a tool of oppression of the weak by the powerful, it has scientific elements that are similar in any system.
There are fundamental principles of law that remain unchanged in whatever political system we are in. For example, killing people is punishable in any system though you may find differing degrees of penalty. The basic principles of contract are similar in every system. Take also [bank] cheques. They work all over the world in a similar way.
Thus, distinguishing between the fundamentals of law and political views is important. Mixing the two creates problems. For example, the Dergue outlawed trading companies, but soon it realised it made a mistake.
Of course, it is true that laws of the Imperial regime may reflect that government’s interests. There was some content that privileged the royal family. We can find comparable privileges in the Dergue and the current political systems.
In fact, the Imperial Era laws, including the Commercial Code, were not enacted for the Emperor. They embody principles that developed and condensed into laws throughout world civilisations since the Roman Empire. What the Emperor did was hire world-renowned scholars to study and write excellent laws that would modernise the country.
Take the 2004 revised Criminal Code as an example. About 70 to 80Pct of its content is drawn from the 1957 Penal Code. Through the revision, new crimes were added; degrees of punishment for certain crimes were altered. However, the core principles persisted.
Each new regime changed their predecessor’s constitution in Ethiopia. This is also the case in many African nations. Is there anything different about amending a Constitution?
Yes, a constitution is different. A constitution is a legal document that structures the government, and defines its powers and its relation to the public. For example, it defines a government’s relation with religion, the civic rights and duties of the public, how power can be acquired, how long one can stay in power, responsibilities of government bodies, as well as instruments of checking and balancing. Thus, new governments may need new constitutions reflective of their basic political views.
However, I believe that many constitutional changes in Africa are not appropriate, as they are used as a means to stay in power. This is not right.
Other laws, such as commercial laws, mainly govern the relationship between private persons. The need to change them may not arise as frequently as it does for a constitution.
What attempts have been made to revise the Commercial Code?
I know there were more than three efforts concerning the amendment of the Commercial Code.
In a first attempt, during the Dergue regime, the Ministry of Justice (MoJ) set up Law Revision Commissions, including for the Commercial Code. I know that the revision process did not go far. In fact, in the last few years, the Dergue was thinking of revising some of its policies.
During the current political system, there were further efforts by the MoJ, the private sector and the Justice and Legal Systems Research Institute (JLSRI). The Ministry drafted a revised version that was sent to the Ethiopian Chamber of Commerce and Sectional Associations.
Then, the Chamber, through its Addis Ababa division, hired a team of 14 individuals (11 lawyers and three accounting and auditing professionals) who commented on the proposed draft. I served as a team leader for this effort.
In tandem, the JLSRI set up a committee to work on studies to revise the Code. I also led the committee for some time. The JLSRI’s effort did not go as far as intended.
I also know that later the MoJ hired a French legal scholar to conduct a study on the amendment of the Code. I do not know how the effort with the Ministry ended.
I do not have knowledge on the current [efforts to amend the Code]. I do not know, for example, if the current amendment is based on previous works or started from scratch. I do not know if the MoJ has taken the Chamber’s report as input.
However, previous work should not be shelved. There should be institutional memory. This helps us not to reinvent what has been done before. For example, drafters of the 1960 Commercial Code, Professors Escarra and Geoffrey, literally copied the bills of exchange and promissory notes part of the Code from the 1930 League of Nations Convention [providing a for a uniform law for bills for exchange and promissory notes]. The Convention itself was highly influenced by the 1882 British and French laws. It is better to build on what has been done than reinvent. That is why institutional memory is important.
Why is amending the Commercial Code necessary and what cautions need to be made for it to be effective?
There are several reasons that necessitate the revision of the Code. I remember that the President’s speech to the inaugural parliamentary session of the current regime addressed the need to amend certain laws that are incompatible with the FDRE’s Constitution. However, only the Family Code was amended in its entirety. In fact, there were many laws enacted after that. But most of them are taken out from the Civil and Commercial Codes. Therefore, there is a need to collect these into a systematic code of laws.
There is also a need for governing commercial issues that the Commercial Code did not cover at all or in detail. Issues such as e-commerce, arbitration, and foreclosure are barely addressed by the Code as they continue to be shaped by international developments.
In general, the Commercial Code does not require changes on its pillar principles.
Yet, amending a code is not as simple as amending any other proclamation and thus calls for serious precautions. As a code is a book compilation of a series of laws, ensuring its harmonisation with the whole legal system is very important. The amendment should be compatible not only with the Constitution but also with other codes and laws.
An ill-drafted law will bring devastating consequences to the [very] public upon which it will be placed. The result could also backfire on governments. Thus, the problems of existing laws should be identified carefully. The government should investigate laws and experiences of other countries. It should also refer model commercial laws such as one developed by the United Nations International Commission on International Trade Law.
Is the government ordering drafters to amend the Code according to state political ideology an appropriate approach?
There is no problem with that. Laws are reflections of policies. Everywhere in the world, governments first set policies and request legal experts to draft laws. Drafting laws for governments is much like drafting contracts for private persons. In both cases, drafters are told the intention of the parties to base their task on. Remember, drafting is not lawmaking. It is up to the Parliament to adopt the draft law.
While world-renowned experts drafted the 1960 Commercial Code, stakeholders from the current government are drafting the current amendment. How will this impact the result?
There is nothing wrong with the draft being prepared by relevant government agency representatives. This was also the practice during the Imperial and Dergue times. For example, during the Imperial period, there was a Codification Commission composed of government representatives who used to direct drafters. I had a chance to read their minutes. I found them impressive. Many of the Commission members did not even have modern education.
How about the participation of other stakeholders?
I think the participation of non-governmental actors is insufficient. For example, the participation of the Ethiopian Lawyers’ Association, Ethiopian Bar Association, and judges is immensely important. It is them who know the practical gaps in the law. Academia, chambers of commerce, cooperative and labour unions, and employers’ associations should also participate. Public participation played a vital role in revising the Family Law and Criminal Code.
I also believe that the draft should be open for discussion and debate through different media. All this has to happen before the draft is sent to Parliament to become law. Public participation contributed a lot to the revision of the Family Law and Criminal Code. EBR
4th Year • April 16 2016 – May 15 2016 • No. 38