Strengthening Corporate Governance in the Arbitration Institute!
(By Yohannes Woldegebriel)
On its regular session last September 21, 2010, the Board of Directors of the Addis Ababa Chamber of Commerce and Sectoral Associations took yet another action toward enhancing the Arbitration Institute and in order to promote its credibility and confidence among its customers. The board approved the appointment of 11 professionals to serve as members of the Council, the supreme organ of the Arbitration Institute,. It is recalled that on June 16, 2009, the board adopted the Procedural Rules that established the Institute “attached to the AACCSA” but, to use the phrase of article 8 of the rules, “an independent organ in its functions.”
Following the adoption of the procedural rules, the Arbitration Institute prepared a guide line for the recruitment of candidates to Council membership. This guideline consists of 10 articles providing among others principles of selection, representation of major economic sectors, minimum academic qualifications and experiences, requirements for integrity and good conduct and independent review and evaluation of the selection of candidates.
Last year, although much effort had been exerted to recruit, solicit for the selection of nominees and present to the Board of Directors for further action, the board criticized the process of selection, rejected the nomination and instructed the secretariat to follow more transparent procedures of candidate nomination. In accordance with the instruction issued by the board, the guideline for the selection and nomination of members of the council was thoroughly revised and identification of 9 relevant professional and business associations that are potential customers of the Institute was sought to help nominate members.
Subsequently, a letter was prepared and sent requesting each selected association to nominate members that are capable of representing their constituency in addition to fulfilling the requirements laid under the guideline for the selection and nomination of council members. In order to adequately inform the daunting task awaiting for each candidate, the procedural rules of the institute was also attached. To the dismay of the chamber however, four out of the nine associations properly respond to the request. Mean while the chamber in general and AACCSA AI in particular would like to seize this opportunity to thank those associations that seriously considered our request and respond positively.
The process of soliciting the right nominee from each selected business and professional associations took unduly and frustratingly long time. However, it was gratifying to get the right candidates from the sectors that are most frequent users of the Institute. Following serious examination, a total of 11 nominees were proposed for Council membership of the Arbitration Institute and the board issued its approval. We have listed hereunder names and profession of each of the appointed members of the council.
The Addis Ababa Chamber of Commerce and Sectoral Associations Arbitration Institute (AACCSA AI) is also honoured to congratulate the newly appointed members of the Council for their willingness and commitment to take up and discharge their responsibility as members of the council entrusted by the revised arbitration and procedural rules of our chamber. The appointment by the AACCSA board of directors of the council members is a historic action that has transformed the governance of the Institute. This appointment is yet another unique and unprecedented act for an Arbitration Institute whose establishment and legal mandate as the only private dispute resolution body is the first and the only in the modern legal history of the country.
The AACCSA AI Council is a supreme governing body that oversees the activities of the Institute. Although the day to day activities of the AACCSA AI is carried out by the secretariat, council members are mandated among others, to provide directions, supervise and follow up the secretariats activities, give decisions within their competence, issue instructions, give delegations and receive reports, to ensure expedited resolution of cases, transparency and accountability of the Institute as an arbitration body and alternative to the conventional federal or state courts. Council members have also the duty to maintain the integrity, credibility and acceptance of the Institute as a reliable dispute resolution organ for all public and private customers. In a nutshell, the appointment and commencement of the activities of Council members is a great stride forward in the realization of corporate governance that promote the credibility and institutionalization of the services of AACCSA AI that will contribute for peaceful and amicable settlement of commercial disputes.
On the 1st of January 2011, the Addis Ababa Chamber of Commerce and Sectoral Associations Arbitration Institute (AACCSA AI) organized an event that signaled a new era for the whole Ethiopia in the sphere of arbitration and alternative dispute resolution. In this event, the newly appointed members of the AACCSA AI Arbitration Council assumed their responsibility and executed oath of fidelity to serve the institute and the official launching of their service was announced in a fabulous ceremony held at Kings Hotel Pushkin square, Near Sar Bet.
This event was conducted in the presence of more than 70 representatives from private and public institutions, professional associations, academicians and the media. President of AACCSA, Ato Ayalew Zegeye and Secretary General Teshome Beyene, were in attendance as guests of honours. This event was accompanied by the presentation of two study papers of topical issue that was superbly and professionally moderated by the renowned Ethiopian academician cum lawyer, Professor Fissehatsion Mengistu and heatedly debated by participants.
It is recalled that the Board of Directors of AACCSA appointed 11 members of the Arbitration Council following careful examination of the guideline for their selection, nomination and representation of their respective trade. The Arbitration Institute Council is the supreme governing body that is mandated with a host of powers, duties and responsibilities. In accordance with the procedural rules of the AACCSA AI, Council members are expected among others, to confirm and dismiss the appointment of arbitrators’ conciliators, mediators and adjudicators, decide on the form of awards, issue extension of time on arbitration and other alternative dispute resolution proceedings give ruling on challenges filed against any arbitrator etc….
The appointment of arbitrators, mediators, conciliators and adjudicators is almost daily phenomena throughout the country for the resolution of all commercial and non commercial disputes in accordance with the contractual agreement entered between disputing parties or as required by law. Such appointment may be made by disputing parties, body corporate, government offices or court judges in accordance with contractual agreement or applicable laws. Some private or government bodies or individuals may also seek such appointments from the Chambers of Commerce established at national, regional and city level.
However, one may wonder how such appointments are conducted under our legal system by federal or regional courts and contracting parties. Indeed the basic principles for the appointment of arbitrators are provided under article 3340 of the Civil Code. An arbitrator as an administrator of justice is primarily required to be impartial and independent. Impartiality and independence are critical attributes for an arbitrator in order to render fair, equitable and just orders or awards. Although the Ethiopian Civil Code is not clear enough regarding qualification of the arbitrator, it is another vital and demanding component necessary to reach to proper and correct decision.
Despite the incorporation of some cardinal principles for the appointment of an arbitrator that are widely recognized and practiced throughout the world, how such principles are put in practice is perhaps the hardest exercise. The law does not provide the means for the verification of the impartiality and independence of the arbitrators. Courts may require the arbitrator to execute an oath under the pain of perjury, to ensure the impartiality and independence of the parties. In the majority of cases however the onus of disproving the impartiality and independence of arbitrators is left to parties.
Disproving the impartiality and independence of arbitrators is on the other hand, a very elusive issue that is sometimes hard to get a definitive evidence to buttress the allegation. No matter how difficult it may be, it will be a mockery and travesty of justice to simply ignore these principles and allow arbitrators to exercise judicial malfunctions.
The crux of the matter is how are arbitrators appointed in present day Ethiopia? And what mechanisms or devices are available to ensure their impartiality and independence? It is a common knowledge that there are no systematic and well structured methods for the appointment of arbitrators in present day Ethiopia. This is particularly so in most ad hoc arbitration, conciliation and mediation of commercial and non-commercial disputes. Although some courts maintain the list of arbitrators, succession liquidators etc… by and large, it is the discretion of the judge to make the selection and appointment. Therefore, in the majority of cases the appointment of arbitrators for the resolution of disputes is carried out by personal acquaintances, friendship, ethnic, religious or even political affiliations. It is not uncommon to appoint arbitrators that have affinal or consguinal relations with the disputing parties’ relatives as the Amharic version of the civil code seemed to permit and even their own lawyers that have financial stake or conflict of interest on the dispute. What is more, the appointment of arbitrators is primarily left to party’s legal advisors, advocate or legal departments.
Since its establishment in 2002, one of the services provided by AACCSA AI is to appoint arbitrators, conciliators, mediators and adjudicators when so requested by one or more parties or designated as an arbitrator appointing body in a contract. Utmost efforts have been exerted to appoint qualified, impartial and independent arbitrators from the list of arbitrators maintained in the Institute thus far. Nevertheless since chambers the world over, are often designated as credible and reliable arbitrator appointing bodies in countless commercial contracts, a more transparent, accountable and reliable mechanism for the appointment and parties grievance handling procedures is justified as well as necessary.
As a result the official commencement of the activities of Arbitration Institute council members fully and positively responds to the glaring legal, practical and institutional gaps in the legal system of the country. From now on private or public bodies and individuals have a reliable partner to provide desperately needed dispute resolution services through arbitration and other alternative dispute resolution mechanisms in general and a transparent and accountable arbitrator appointing body worth reckoning. Therefore gone are indeed the days when the appointment of arbitrators is forced to pass through dubious, suspicious and untrustworthy practices or capricious will and decisions.
The motto of our chamber is Promoting corporate governance in all areas of the business community. The launching of the activities of the Arbitration Institute Council members is a step forward toward the realization, in practice, of the core principle of corporate governance.