Improving the Legal framework for Doing Business in Ethiopia

1. Improving the Legal framework for Doing Business in Ethiopia Menberetsehai Tadesse May 22, 2006

2. The Basic Premises • The Legal framework affects pace of Development • Rule of law • The legal regime on property rights • The Legal regime on contracts • The process and outcome for enforcement of rights

3. The legal system in Ethiopia • Current developments demand new legislation • The existing laws may need updating but are not so bad • The practice leaves much to be desired

4. The Scenario in Ethiopia • A. Constitutional scheme • The preamble creates a link between rule of law and economic development • Protection of property rights is of constitutional significance • Access to justice is a fundamental right

5. B. Other laws of the land (Federal and Regional) • 1. Substantive laws • Civil code of 1960 • Property, contracts, sales, security devices, employment relationships etc • Labor Law • Maritime Code • Commercial Code Businesses, Banking, Insurance, negotiable instruments Bankruptcy, etc.

6. Other laws…… • 2. Procedural Laws (civil) • is modern in a number of respects • Allows different trucks for different disputes • Allows summary and accelerated procedures for business disputes • Gives the judge power to implement CFM • Envisages ADR • Combines oral with written litigation • Is based on the principle of continuous trial

7. International Conventions • Are part and parcel of the law of the land when signed and ratified by Ethiopia (Article 9(4) of the Constitution) • Are significant to understand and implement property and other important rights

8. Why is it not working so well? • Absence of sufficiently trained manpower when the laws were enacted (The first law school started in 1963 • The change of government in 1974 upset many of the assumptions of the Codes • Nationalized private property, Private initiative was discouraged, Foreign investment was not allowed • Institutional basis for the operation of the laws is missing • Absence of sufficiently developed administration of justice • Some laws have not been functional • Registration, bankruptcy, mortgages

9. Level of Education 1989 2005-06 (for Federal Court Only Phd 0.1% 0% LLM 0.4% 6.48% LLB 7.3% 74.07% Diploma 7.9% 19.44% Certificate 5.7% 0% 1-6th grade 14.4% 0% 7-12th grade 17.2% 0.9% No formal education 47% 0.% Educational level of Judges

11. The Reform Agenda • Creates a link between all components of the justice system • Avoids a piecemeal approach • The basic components • Law reform, • Judicial Reform • Law enforcement • Legal Education and Information

12. Reasons for Judicial Reform • Problems • Absence of adequate information • Big backlog • Delay • Unpredictable judicial services • Bad state of record keeping • Little use of ADR • Little or no accountability in judicial services • Non-responsiveness • Low level of public trust

13. Judicial Reform • Four Main components • Efficiency • Accessibility • Independence and accountability • Effectiveness

14. efficiency • Judicial • Administering justice in accordance with the law • Firm and credible adjournment • Judge led litigation • Continuous trial • Oral litigation • avoiding unnecessary steps • Using different tracks • Backlog reduction • Separating judicial and admin functions • Recording and transcribing • Training and professionalizing the bench • Case flow management

15. Administrative • BPR • IT (database, WAN, LAN, digitization, • Record Keeping • One window shopping • Templates • Photocopy, • Time line • Information services (touch screen, plasma, video link

16. Access to justice • Cost (direct, indirect, invisible) • Distance • Speed • Legal Aid • ADR • Friendliness • Litigants with special need • Availability of information • Public trial

17. Independence • Independence • Personal • Institutional • Legal framework • Constitution • Other laws

18. Accountability Judicial Accountability • Necessary • Legal framework • Judicial process( public, reasoning, appeal • Criminal • Admin • Public (parliament, media etc) • Administrative setup • Practical implementation • Manifestations • Control mechanisms

19. Effectiveness • Speed • integrity • Competence • External factors • Legal education • Judicial culture • Role of the parties • Content of the law • Admin set up (registration, hospitals, DNA etc) affects speed as well

20. Results • Reduction of backlog • Increase in demand for judicial services • Shorter duration • Higher clearance rate • Less congestion rate • More predictability (procedural as well as substantive) • Fairness of process • Reduced cost (for the public and the parties) • Less appearances • IT equipped system • More transparent and accountable system

21. Year Federal Amara Oromia SNNPR Total Opened file Disposed Opened file Disposed Opened file Disposed Opened file Disposed No of Cases Disposed 1993 134367 73142 219194 15491 298,228 208,843 102929 64115 754,718 496,591 1994 140418 84036 239011 167531 295,427 200,282 107464 60350 782,320 512,199 1995 140365 86435 262670 196923 334,709 230,340 132419 82754 870,163 596,452 1996 131062 69577 305586 248091 437,744 356,988 160919 114492 1,035,311 789,148 1997 332285 299109 452,627 356,988 207218 161972

22. W hat Next? • We cannot do without the judiciary • accepting that reform is a process • Build on achievements • Participation of stakeholders necessary • Proper identification of problems important • The business community must have a say

27. Thank you