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

The Basic Premises The Legal framework affects pace of Development 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

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

The Scenario in Ethiopia A. Constitutional scheme 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

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

B.Other laws…… 2. Procedural Laws (civil) 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

C. 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 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 Are significant to understand and implement property and other important rights

Why is it not working so well? Absence of sufficiently trained manpower when the laws were enacted (The first law school started in 1963 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 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 Institutional basis for the operation of the laws is missing Absence of sufficiently developed administration of justice Absence of sufficiently developed administration of justice Some laws have not been functional Some laws have not been functional  Registration, bankruptcy, mortgages

Educational level of Judges Level of Education (for Federal Court Only Phd 0.1%0% LLM0.4%6.48% LLB7.3%74.07% Diploma7.9%19.44% Certificate5.7%0% 1-6th grade14.4%0% 7-12th grade17.2%0.9% No formal education 47%0.%

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

Reasons for Judicial Reform Problems 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

Judicial Reform Four Main components Four Main components  Efficiency  Accessibility  Independence and accountability  Effectiveness

efficiency Judicial 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

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

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

Independence Independence Independence  Personal  Institutional  Legal framework ConstitutionConstitution Other lawsOther laws

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

Effectiveness Speed Speed integrity integrity Competence Competence External factors 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

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

YearFederalAmaraOromiaSNNPR Total Opened file Disposed Opened file Disposed Opened file Disposed Opened file Disposed No of Cases Disposed , , ,718496, , , ,320512, , , ,163596, , , ,035, , , ,

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

Thank you Thank you