Applicant- Cheshire Foundation Ethiopia
Respondent- W/o Meseret Workagegnehu
Cassation File No. 38605
Date: Yekatit 19, 2001
Court- Federal Supereme Court Cassation Bench

Issue: Wether an employer can unilaterally change the place of work of the employee?

Ruling &reasoning: The decision of lower courts was reversed. The cassation bench said that “it is the prerogative of the employer to transfer the employee to another place of work and the employee has no valid ground to object to such order.”

read the decision (Amharic)

Do you agree that an employer has unlimited power to change the place of work of an employee? is that variation of employement contract? If it is variation, can an employement cantarct be varied by a unilateral act of the employer?

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Brief note

Starting from 2003/04 academic year students enrolled in public universities were required to cover their costs of education. Such cost includes full costs related with boarding and lodging and minimum 15% of tuition related costs. This cost sharing regulation imposes a pre-condition on every student to enter a written contract agreement with the respective institution before he is allowed to pursue his education.

Even though, Article 4 of the regulation, states that the amount to be share shall be shall be revealed to the student,  this amount is likely to increase at the time of graduation. According to sub article 4 of article 4 the cost of education and training shall be revised at least every three years. Almost all the disciplines in the public universities require four years of study for graduation. A possibility of revision every three years is in effect giving a power to unilateral modify the contract as the regards the total costs require from the student.

The students once gradated will start making payment within six months after graduation if earning income or within a maximum of one year after graduation, in the form of graduate tax of at least 10% of the monthly income. He is expected to pay all of his costs within a maximum of 15 years.

According to article 6 ( 7) a  beneficiary [ Article 2 (5) defines beneficiary as a student at a public higher education institution pursuing higher education or training and who has entered into an obligation with the concerned institution for the future payment of the cost of his/her education or training and other services]  who decides to go abroad for more than six months before completing the payment of the cost required of him, shall be made to produce a guarantee for the payment of the outstanding amount. However, contrary to this explicit provision most universities refuse to give Degree and Transcript of the student and in some cases other relevant evidences (like proof of language of instruction) until final settlement of debt. However, this is not only contrary to the regulation, but also a manifest violation of the right to education enshrined in F.D.R.E. Constitution.

COUNCIL OF MINISTERS REGULATION NO. 91/2003

HIGHER EDUCATION COST-SHARING COUNCIL OF MINISTERS REGULATION

This regulation is issued by the Council of Ministers pursuant to Article 5 of the Definitions of Powers and Duties of the Executive Organs of the Federal Democratic Republic of Ethiopia Proclamation No. 4/1995 and the Higher Education Proclamation No. 351/2003.

1. Short Title

This Regulation may be cited as the “Higher Education Cost-Sharing Council of Ministers Regulation No. 91/2003″

2. Definitions
For the purposes of this Regulation:

1) “Ministry” and “Minister” means Ministry of Education and the Minister of Education, respectively.

2) “Institution” means a public higher learning institution in any region, in Addis Ababa or Dire Dawa offering a post-secondary education with a budget allocated from the Federal Government.

3) “Employer” means any government, private or non-governmental institution or international or regional organization  or person employing graduates of higher education institutions including self-employed graduate of the same,

4) “Person” means a physical person or any other legal person,

5) “Beneficiary” means a student at a public higher education institution pursuing higher education or training and who has entered into an obligation with the concerned institution for the future payment of the cost of his/her education or training and other services.’

6) “Cost-Sharing” means a scheme by which all beneficiaries of public higher education institutions and the government share the cost incurred for the purposes of education and other services.

7) “Graduate Tax” means a scheme by which an amount is deducted from income in the form of a tax to be paid by a beneficiary who has been obliged to share the costs of his higher education.

3. Scope of Application

This Regulation shall apply to students that are newly admitted to an institution beginning from 2003/04 academic year, as well as to students in their second year or above training during the 2003/4 academic year.

4. Beneficiary’s Share and Mode of Application

1) All beneficiaries of public institutions of higher learning shall share full costs related with boarding and lodging and a minimum 15% of tuition related costs. The amount to be shared shall be calculated based on the cost to be incurred at each institution and programme of study and shall be revealed to the beneficiaries at the beginning of each academic year.

2) The beneficiary shall pursue his education after entering a written contract agreement with the respective institution for the future discharge of the amount of cost to be borne by him referred to under Sub-article (1) of this Article. This contract document is a legal document.

3)Any beneficiary who discontinues or completes his education shall be given a document stating the amount owed. The document shall have full name of the beneficiary, address, photo and other relevant information.

4)The cost of education and training shall be revised at least every three years. The Ministry shall enact directives to this effect.

5) Only an Ethiopian national is eligible for pursuing his higher education or training upon the contractual commitment for future payment, in cash or in service, of his share of the cost in the form of graduate tax.

5. Incentives

1) Up to 5% deduction of the payable cost shall be made for beneficiaries who pay every year the total cost determined either by themselves or by the support of organizations.

2) Up to 3% deduction of the payable cost shall be made for beneficiaries who pay the total cost determined within the first year of their graduation.

3)Pursuant to directives to be issued by the Ministry from time to time, a beneficiary who volunteered to be trained in certain fields as designated by the government provided that he enter into a contract with the government to work in all places of assignment after graduation for at least three times the time spent in the training.

4.)Beneficiaries who, in breach of their agreement, refuse to discharge their obligation of service, shall be obliged to pay all outstanding cost of their training and education with interests, as per the rate applicable during the time of payment, within five years from the date of breach of their agreement.

6. Mode of Repayment of Shared Costs

1)The beneficiary shall start paying the amount within six months after graduation if earning income, or within a maximum of one year after graduation, in the form of graduate tax of at least 10% of the monthly income of an employee; or amount owed deducted from the yearly income if self-employed,

2)The total amount that a beneficiary is required to pay shall be subject to payment of service fee or interest, and the interest payable shall be determined pursuant to the deposit rate in use at the time of conclusion of the contract

3)Completion of repayment of amount owed by beneficiaries shall, depending on the type and duration of program, not exceed 15 years.

4)A beneficiary who discontinues his education due to any reason shall be required to pay the amount required of him. However, in case the beneficiary discontinues education owing to national call of duty or service, the obligation to pay shall be waived.

5)In case of an employed beneficiary the amount owed shall be deducted from the monthly income of the beneficiary and transferred to the treasury by the employer. However, such deduction shall not exceed 1/3 of a monthly income without a prior consent of the beneficiary as per Article 8( 1) (c) of this Regulation.

6)In case a beneficiary is living abroad as a result of private business or foreign employment, payments due shall be collected as per provision of an additional directives to be issued by the Federal Inland Revenue Authority.

7)A beneficiary who decides to go abroad for more than six months before completing the payment of the cost required of him, shall be made to produce a guarantee for the payment of the outstanding amount.

7.. Obligations of Employers

1.Any employer employing a beneficiary after the effective date of this Regulation shall have the following obligations:-

(a)to request a copy of the contractual agreement entered between the beneficiary and the Institution and a written document specifying the amount to be deducted from a monthly salary.

(b)to forward to the Federal Inland Revenue

Authority list of beneficiaries employed within a period of 3 months;

(c)to deduct, and transfer every month, the amount owed by the beneficiaries as per Article 8(1) (c) of this Regulation and the Income Tax Proclamation No. 286/2002,

(d) If the employee has not produced the required documents as per Sub-Article (1) (a) of this Article or a document issued by the Federal Inland Revenue Authority, to hold one third of the monthly salary of the employee, inform the same to and give solution in a maximum period of three months based on the information of Federal Inland Revenue Authority

2. Any employer who fails to discharge all obligations set forth under Sub-Article (1) of this Article shall be liable for the amount not collected and shall be guilty of an offence for the month payment is not paid in accordance with the Income Tax Proclamation of the country.

8. Obligations of the Beneficiary

1)Without prejudice to provisions of Article 6(1) of this Regulation, a beneficiary employed by any employer has the following obligation:

(a)to inform the full address of his place of work and information pertaining to prior employment

through the employer to the Federal Inland Revenue Authority;

(b) to start paying the amount required of him/her on monthly basis in the form of graduate tax;

(c) to submit the contract document entered as per Article 4(2) of this Regulation to the employer and assist the employer to withhold part of his/ her monthly salary and pay to the Government every month. The monthly payment shall not be less than the sum stipulated in Article 6(1) of this Regulation.

2)A Beneficiary who violates any of the obligations under Sub-Article (1) of this Article and those under Article 6 of this Regulation shall be liable in accordance with the Income Tax Proclamation.

9. Cancellation of Payment Obligation
The unpaid part of the cost of a beneficiary who has been discharging his payment obligation shall be cancelled in the event of death or retirement of the beneficiary.

10. Powers and Duties of the Ministry

Without prejudice to other provisions in this Regulation, the Ministry shall have the following powers and duties:-

(a) to oversee and ensure the implementation of this Regulation

(b) to approve the amount apportioned by higher education institutions from the beneficiaries.

(c) to issue, directives for the proper implementation of this Regulation.

(d) to determine on the substance of contractual document.

(e)to issue detailed directives on the areas and modalities of the cost shared in ways other than monetary .

11. Powers and Duties of the Federal Inland Revenue Authority

Without prejudice to other provisions of this Regulation, the Authority shall have the following powers and duties:

(a)to notify each beneficiary and employer the total

amount of payment to be made by the beneficiary together with the monthly payment;

(b) to follow up, supervise and collect the total amount of payment to be made by the beneficiary;

(c)to create the necessary procedures and organizational set ups/structure for the implementation of the foregoing;

(d)to issue certificate of completion of payment for the beneficiary who fully discharges his/her obligations;

(e) to issue a Taxpayer Identification Number for each beneficiary;

(f) to facilitate for the collection of the graduate tax from beneficiaries employed in regions.

12. Powers & Duties of Institutions

Without prejudice to other provisions in this Regulation, institutions shall have the following powers and duties:

(a) to follow up the implementation of the cost sharing system;

(b)to notify the beneficiary, at the beginning of the academic year, the appropriate amount of cost the beneficiary has to share, and to keep record of all necessary data.

(c) to provide the beneficiary with documents stating the amounts that is to be paid by beneficiaries

13. Effective Dates

This Regulation shall enter in to force starting from the 12thday of September 2003.

Done at Addis Ababa, this 5thdayof September 2003.

MELESZENAWI

Prime Minister Of The Federal Democratic Republic of Ethiopia

Case Brief

Applicant- Ermias Mulugeta
Respondent- Bekelecha Transport Share Company
Cassation File Number- 39471
Date of judgement- Hamle 29 2001

Read the decision of the court (Amaharic)

Issue: Wether failure to prove fault of employee by the employer in a labour case is a ground of resjudicata if a civil action is brought by the same employeer against the same employee alleging fault of the employee?

Ruling and reasonig of the court

The Cassation bench affirmed the decision of lower courts. The court relied on its own previous decision (Cassation File Number 36710) regarding the issue raised in this case. Accordingly it concluded that the issue to be framed in unlawful dismissal case is totally different from a civil action brought by the employer claiming restitution or payment for loss of or damage to property. The labour court may have decided that the employee has not committed fault, when the fault at issue is ‘being responsible for loss of property’ of the employer. Such decision is not a ground of res judicata if an action against the employee is brought by the employer claiming payment of the price of the property.

Cassation Decisions volume 11

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Cassation Decisons Volume 12

DOWNLOAD Cassation Decisions Volume 12

It took almost a year for the Supreme Court to officially release its Cassation decisions  which are suppose to be binding on all lower courts in Ethiopia on similar cases requiring interpretation of the law. All these decisions, compiled in two volumes (volume 11 and 12) include decisions rendered in the previous year i.e. 2003 Ethiopian calender. Delay of Publication has been and is still continuing to be one of the major setbacks for the proper application of the rule of precedent in Ethiopia. It also raises some serious legal issues as the binding effect of a cassation decision not officially published is not clear.The Federal Courts Proclamation Re-amendment Proclamation No.454/2005, which makes Interpretation of a law by the Federal Supreme Court rendered by the cassation division with not less than five judges binding on federal as well as regional courts, simply imposes on the Federal Supreme Court a duty to publish decisions of the cassation division that contain binding interpretation of laws to all levels of courts and other relevant bodies, without indicating whether decisions are still binding before the time of publication.

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Introduction

According to Ethiopian labour law, an employer loses his right to dismiss a worker irrespective of a valid ground of dismissal, if he fails to make a decision to terminate the employment contract within 30 working days. The time starts to run from the  date the employer knows the ground for the termination. (Article 27(3) of the labour proclamation 377/2003)

The following is a brief summary of Cassation decisions regarding the application an interpretation Article 27(3.

The meaning of working days

Applicant Ethio-Djibouti Railway

Respondent Teshome Kuma

Cassation File Number 36377

Date: Hidar 2, 2001 E.C.

In the Federal First Instance Court, where the case was first heard, the respondent claimed reinstatement and 6 months back pay alleging that his contract of employment was terminated unlawfully by the Applicant. However, the applicant employer challenged the claim stating that termination was lawful as it was due to an unlawful act committed by the applicant worker.

The Federal First Instance Court found the termination unlawful on procedural ground without investigating the merit of the case. The Court ruled that the employer (Applicant) has failed to take an action of dismissal within one month as required by the labour proclamation. For this reason, judgment was given in favour of the respondent The court awarded him six months back pay salary and reinstatement.

Applicant lodged an appeal against this decision to the Federal High Court, but it was rejected.

Lastly, the applicant submitted his application to the Federal Supreme Court, Cassation division for review of the lower courts on ground of fundamental error of law.

The cassation division examined the legal issue involved in the case by interpreting article 27 sub 3 of the labour proclamation No.377/2003. Both the federal first instance and high court misread the article in determining the period of time to take dismissal action by the employer. Rather than examining whether 30 working days have passed from the date the employer knew the ground for the termination, they simply counted 30 days to reach at a conclusion.

This was indicated by the cassation division as a manifest error. Accordingly, the case was re-examined based on the facts affirmed in the lower courts in order to determine whether 30 working days have passed. As stated in the decision, the worker allegedly committed fault on Meskerem 24 and 25 1999 E.C. and his contract of employment contract was terminate on Tikimet  25 1999 E.C.  From Meskerem 25 to Tikimet 25 there are four Sundays and assuming that Sunday is not a working day, there are only 24 working days during this time. Based on this calculation, the court reasoned, 30 working days have not passed, which makes the action of the employer valid for the purpose of time requirement.

Consequently, the decisions of the lower courts was reversed by the cassation division and the case was remanded to the federal first instance court to give its own decision on the merit i.e. the legality of termination of employment.

Applicant  Mohammed bdella

Respondent Ethio-Djibouti Railway

Cassation File Number 31857

Date: Megabit 17 2000 E.C.

The employer (respondent) knew the existence of ground of termination on February 26 2005 (Yekatit 1997 E.C.) and dismissed the worker (Applicant) on April 8 2005

Based on these facts, which are affirmed by both parties, the federal first instance court ruled that dismissal is automatically unlawful as it was not taken within the 30 working days as required by article 27(3) of the labour proclamation. On appeal the federal high court reached at a different conclusion and reversed the lower court’s decision. The conclusion was on the erroneous assumption that Saturday (in addition to Sunday) is a working day. This error was rectified by the Federal Supreme Court Cassation divison. According to the calculation applied by the cassation division, the weekly working hours in the respondent’s organization is 48 hours. A worker will be able to work 8 hours a day and 48 hours a week, if he is working 6 days a week. This makes Saturday, a working day.

From February 26 2005 to April 8 2005 there are totally 42 days out of which 12 are Saturday and Sunday and one day was a public holiday. As a result, the employer had 35 working days to terminate applicant’s contract of employment. Since applicant was dismissed on April 8 2005, the termination is clearly after the lapse of 30 working days. The cassation division reversed the decision of the federal court and affirmed the decision of the first instance court.

Applicant Addis Ababa Water and Sewage Authority

Respondent Ato Admas Demesachew

Cassation File Number 41767

Date: Hidar 8-2002 E.C.

Based on the summary of facts by the Cassation division, the employer knew the existence of ground of termination on Nehasie 16-1999 E.C. The termination letter was given to the worker (respondent) on Meskrem 21-2000 E.C. According to the calculation of the federal first instance and federal high court, 30 working days have passed and the termination is automatically unlawful.

 The federal Supreme Court cassation division differed on the calculation of the lower courts and found that 30 working days have not passed. The cassation division while calculating the time stated that from Nehasie 16-1999 E.C to Pagume 06-1999 E.C. there are 15 working days and there are 13 working days from Meskrem 1-2000 E.C to Meskrem 21-2000 E.C. Therefore, the total working days are 28, making the action of the employer valid as regards the time requirement.

Both decisions of the lower courts were reversed.     However, unlike other similar cases, the cassation division didn’t remand the case back to the federal first court to give its own decision on the merit of the case. On the contrary, it ruled that termination is lawful as the applicant admitted ground of termination stated by the respondent.

Determining time of Knowledge

Applicant Ethiopian Postal Service

Respondent Ato Tilahun Kuma

Cassation File Number 53358

Date: Sene 18-2002 E.C.

The case is related to the meaning of ‘time of knowledge’ in determining the lapse of 30 working days. The respondent was dismissed after his alleged fault was examined by a disciplinary committee. The cassation division reasoned that the employer is considered to have known the commission of fault by the worker after the investigation by its own disciplinary committee is completed. Once, the fault was investigated and proved by the disciplinary committee, the applicant terminated respondent’s employment contract.

Unlike other similar cases, there were no specific dates mentioned in the decision of the cassation division and the reasoning lacks clarity. The time of decision by the disciplinary committee and the time of termination of employment contract are not specified. However, the cassation division reasoned that since ‘it has not been said that 30 working days have passed since fault was proved by the disciplinary committee’ the employment contract is terminated within 30 working days. Based on this reasoning it reversed the decisions of the federal first instance and federal high courts.

Applicant Guder Agro Industry Plc.

Respondent Ato Belete Chala

Cassation File Number 41767

Date: Hidar 7 2002 E.C.

The issue in this case is similar with Cassation File Number 53358 (Applicant Ethiopian Postal Service vs. Respondent Ato Tilahun Kuma.) However, the cassation division deviated from its own earlier decision without making any express statement to this effect.

As the facts of the case indicate, the employment contract of the respondent was terminated on Megabit 4-2000 E.C. The alleged fault of respondent was collision caused by negligent driving. The traffic report about the accident was issued on Yekatit 26-2000 E.C. Respondent argued that the time of knowledge should start from the day it obtained the traffic report i.e. Yekatit 26-2000 E.C. and for this reason 30 working days do not lapse from this day upto the time of termination which is Megabit 4-2000 E.C.

However, the cassation division rejected respondent’s argument, stating that the time starts to run from the date of accident not the date of issuance of traffic report. However, it failed to indicate how the employer will be able to know commission of fault on the day of accident in the absence of a traffic report.

One of the basic principles of insurance applicable to property insurance is the principle of indemnity. This underlying principle provides that compensation payable to the insured upon occurrence of loss to his property could not exceed the actual value of the property at the time of loss. This principle is clearly stated in article 678 of the commercial code. However, the clarity of the provision didn’t save courts from giving contradictory decisions in determining the amount of compensation to be paid to the insured. When a dispute as to the amount of compensation arises, some courts took a position that the amount payable should be equal to the maximum amount specified in the insurance policy. In order to justify their position courts usually rely on article 665 of the commercial code which imposes an obligation on the insurer to pay “the agreed sum” within the time specified in the policy or when the risk insured against occurs or at the time specified in the policy. In principle a court does not make a mistake if interprets “the agreed sum” as “the amount stated in the insurance policy.” It becomes a mistake if a court applies it to property insurance or insurance of objects.

Article 665 of the code is found in the general provisions applicable to all forms of insurance contract. Hence, the relevance of the provision is limited to determining the time of making payment. As regards the amount of compensation it could only make sense if it is made applicable to life insurance policies. As the value of a human body or life could not be valued, the amount to be paid at the time of materialization of risk is left to the agreement of the parties. The principle of indemnity does not apply to such type of insurance. In property insurance cases article 678 of the code always prevails over the general insurance provisions.

Consequential loss and principle of indemnity

One of the challenges in applying the principle of indemnity in insurance cases is the issue of consequential loss. The commercial code does not make any reference to consequential loss and whether the insurer has an obligation to make payment for such type loss in the absence of a specific policy to this effect. Consequential loss in short refers to lost of profits  and  income resulting  from  harm  to  or  destruction  of  one’s  insured property. It is an indirect loss since it is not a result of a direct act but a loss incurred due to the consequences or results of the act. If a commercial vehicle insured against collision is totally destroyed the owner in addition to the direct loss of his property incurs an indirect loss of income as a consequence of the loss of his vehicle. This will be usually loss of income from the time of destruction of the vehicle until he is paid compensation by the insurer. Now the question is: is it possible to claim for such type of consequential loss under Ethiopian insurance law?

In this regard the position of the Federal Supreme Court Cassation Bench is that the insurer has an obligation to compensate the insured for consequential loss. The absence of any clear provision in the insurance policy providing coverage for consequential loss is not a valid ground to relieve the insurer from his liability. What if there is an exclusion clause in the policy? According to the cassation bench, the insurer’s obligation is still effective even though the policy clearly excludes compensation for consequential loss.

However, this firm position of the cassation bench could not be taken as a full answer to the question raised above. Depending on the nature of the claim by the insured ‘consequential loss’ may refer to loss caused as a result of an act (harm to  or  destruction  of  one’s  insured property) or it may also be similarly used to refer to loss caused as a result of an act of a party (i.e. an act of the insured.) An act of the insurer causes consequential loss on the insured when there is unjustified delay in making payment upon occurrence of loss.

According to article 665 of the commercial code compensation should be paid within the time specified in the policy or when the risk insured against occurs or at the time specified in the policy. If the policy does not provide such time, then payment should be effected immediately (Article 1756 of the Civil Code.) Unjustified delay constitutes non-performance of contract entitling the other party to claim damage caused to him by non-performance. (Article 1771 sub article 2 of the Civil Code)

It is only in this sense that the decisions of the cassation bench could be understood and analyzed. This is important because in most of the decisions no clear distinction is made between consequential los as a result of the act and as a result of the insurer. The absence of clear distinction is not totally the fault of the bench. The parties are also partially responsible for the confusion. When one looks in to the argument of the insured and the insurer, they tend to be at variance in understanding the underlying issue and even in the usage of terminology. Usually the insured claims “compensation for the loss of income” and the insurer challenges such claim on the ground of the absence and/or exclusion of consequential loss in the insurance policy. Yes it is true that a party is not entitled to compensation for loss of income as a result of loss of his insured property. However, what the insured is really demanding by “consequential loss” or “compensation for the loss of income” is payment of compensation for delay of non-performance of the insurance contract. This usually happens when the insurance company delays payment or refuses to compensate the insured upon occurrence of loss.

Consequential Loss in Liability Insurance Cases

Case One

Applicant  Ethiopian Insurance Company

Respondents 1.Ato Demesie Werekeneh

2. Genesis Farms Ethiopia Pvt.

Cassation File Number 27565

Date: Hidar 24-2000 E.C.

Court: Federal Supreme Court Cassation Bench

In this case, a vehicle belonging to 2^nd respondent caused a total damage on 1^st respondent’s vehicle. Applicant became a party to the case as it has insured 2^nd respondent’s vehicle. The value of the 1^st respondent’s vehicle was estimated to be 80,000 br. (Eighty thousand birr). In addition to this amount 1^st respondent also claimed 18, 300 br. (Eighteen thousand three hundred birr) lost income for 211 days.

Applicant challenged the claim for lost income on the following two grounds:

1. 1^st respondent should not be compensated twice for a single loss, as compensation for the loss of income will have the effect of double compensation.
2. 1^st respondent could not claim compensation for the loss of income caused as a result of damage to his property, without having consequential loss insurance policy.

The cassation bench, responding to applicant’s 1^st argument stated that once 2^nd respondent is found liable for causing total damage to 1^st respondent’s vehicle there is no reason it could not be liable for the loss of income to 1^st  respondent as the result of the damage. As regards the second argument the bench said:

“Applicant has not argued (or submitted similar argument) that the insurance policy it issued to respondents excludes consequential loss”

In other words, it held a position that consequential loss is always payable unless the insurance company shows to the satisfaction of the court that it is excluded by the insurance policy.

The cassation bench may not be criticized for its analysis of consequential loss but, for its failure to relate it to the maximum liability of the insurance company. Applicant was made a party to the case because it insured the liability of 2^nd respondent. Since this is a liability insurance case the applicable provisions are articles 685 to 688 and of the Commercial Code and the general provisions of insurance (articles 654 to 674 of the Code.) Irrespective of the type of insurance article 665 sub article 2 of the code states that the insurer’s liability shall not exceed the amount specified in the policy.

If the maximum liability of applicant in the insurance policy is 80,000 br. (Eighty thousand birr), then that is the only amount it is obliged to pay. Even assuming that the policy limit is above 80,000 br. (Eighty thousand birr) the insurance company is still not liable to consequential loss. In liability insurance case, the nature and extent of liability of the insurer is determined based on the terms and conditions of the policy. If the policy only provides coverage against the liability of insured as a result of direct damage to the property of third parties, then there is no contractual or legal ground to make the insurer liable for consequential loss. The bench found 2^nd respondent liable for the loss of income caused to 1^st respondent. However, how this liability is transferred to the applicant insurance company is not clear.

As an employee, you have a duty to serve your employer diligently. But, you don’t have a duty to continue serving your employer for life. If you ever feel like leaving, you are free to resign even without any valid ground (Article 31 of the labour proclamation No. 377/2003.) The only procedural requirement is giving a one month prior notice. Failure to give notice results in your liability to pay compensation (a maximum of your thirty days wages) to the employer (Article 45 of the labour proclamation No. 377/2003.)

But, is it always true that an employee does not have a duty to continue serving his employer at least for a limited period of time? There is one exception (limitation?) to the freedom of the employee to leave his employment. That is when the employer has covered education expenses of the employee and there is an express of employee to continue his employment for a limited period of time. The nature of this contractual obligation is not absolute rather it is alternative. This is to mean that the employee has still a choice either to serve his employer or reimburse all the expenses of education.

The following is a very brief summary of the position of the Cassation Bench of the Federal Supreme Court on issues related to the duty to serve.

My summary is based on the following six cases decided by the bench

1.    Applicant: W/o Harsema Solomon

Respondent: Arba Minch University

Cassation File Number: 33473

Date: 16-3-2001 (E.C.)

2.    Applicant: Ethiopian Agricultural Research Institute

Respondent: Ato Teferi Mamo (ex parte)

Cassation File Number: 49453

Date: 19-9-2002 (E.C.)

3.     Applicant: Government Communication Affairs Office

Respondent: Ato Dereje Mekonen

Cassation File Number: 48476

Date: 12-8-2002 (E.C.)

4.        Applicant: Hawasa University

Respondents:   1. Yonas Kassa (ex parte)

2. W/o Beletu Agotalem

Cassation File Number: 46574

Date: 9-7-2003 (E.C.

5.           Applicant: Addis Ababa City Administration General Auditor Office and respondents:

Respondents: 1. Ato Aesaw Meaza

2. Ato Zerhun Mulat

3. W/o Tesefanesh Tesema

Cassation File Number: 49041

Date: 2-3-2003 (E.C

6.      Applicant: Oromia Roads Authority

Respondent: Ato Abo Gobena

Cassation File Number: 59666

Date: 4-9-2002 (E.C.)

The duty of an employee to continue serving his employer or alternatively reimburse costs of education is not an inherent part of the ordinary employment contract. In the absence of a clear contractual agreement, the employer is not legally entitled to demand expenses of education be paid by the employee. The fact that the employer has actually covered all the costs of education is not by itself sufficient to create an obligation against the employee.

As can be deducted from the decisions of the Cassation bench in Cassation File Number (Hereinafter CFN) 33473 and CFN 49453, the duty of the employee emanates from the additional contract between the parties. Such contract should clearly specify, that the employee has agreed to serve his employer for a limited period of time upon completion of his education in return for coverage of the necessary expenses.

In most of the ‘education contracts’ between employer and employee, there is usually a clear statement regarding the alternative obligations of the employee. These obligations are the duty to serve and the duty to reimburse. In most of the cases the employee agrees to serve his employer for a definite period of time upon completion of his education, or alternatively (in case of refusal) to reimburse all the expenses. The exact amount is usually stated at the time of conclusion of contract.

 One question in this regard is whether the employee has still a duty to reimburse, when the contract only provides for the duty to serve? In Ethiopian Agricultural Research Institute vs. Ato Teferi Mamo (ex parte) [CFN 49453] the Federal First Instance Court and Federal High Court rejected applicant’s claim against respondent for the reimbursement of Birr 326,092.57 including interest.

The lower courts relied on the terms and conditions of the contract for their respective decisions. The contract made between applicant and respondent provides that in order to enable the respondent pursue his MSC education, applicant will pay tuition fee, research allowance and salary until completion of education.

In return, respondent, agreed to serve the applicant for a time equivalent to two months for every one month he stayed pursuing his education. In short respondent will serve twice the time he spent on education. However the contract is silent as to the effect of breach of duty to serve by respondent.  This is the ground both the Federal First Instance Court and Federal High Court rejected applicant’s claim.

The lower court’s decisions were reviewed for fundamental error of law by the cassation bench. As a result they were reversed, but the bench remanded the case back to the Federal First Instance Court, instructing the court to determine the exact amount of compensation payable to applicant. The bench in its reasoning stated that once the corresponding obligations of the contracting parties are clear, the effect of failure to perform that obligation in accordance the contract is entitlement to the other contracting party to claim compensation for non-performance. In order to reach at this conclusion, the bench referred to article 1771(2) and 1790(1) of the civil code and its earlier decisions in this regard (CFN 29169, 29170 & ‘other files’)

By of way of summary, in ‘education contracts’ even in the absence of a contractual provision of a duty to reimburse, a clear contractual provision imposing a duty to serve on the employee, is by itself sufficient to entitle the employer to claim compensation in case of non-performance of obligation by the employee.

In ordinary ‘education contracts’ the employer directly assumes responsibility to cover all the necessary expenses of education. Since a contract imposes a corresponding obligation on both contracting parties, there is no valid ground that one of the parties should be entitled to demand performance or claim compensation for non-performance without having any obligation in reality. This usually happens when all the expenses of the education are covered not by the employer but by another third party. Does the employee still have an obligation to serve or alternatively ‘reimburse’ the expense (which actually is covered by third party institution not a party to the contract) to the employer?

In the case of W/o Harsema Solomon vs. Arba Minch University, the applicant argued that respondent does not have vested interest to bring action, because all the tuition fee and related expenses were actually covered by a third party institution by way of a scholarship opportunity. Applicant also alleged that the scholarship opportunity was obtained through her own effort and personal correspondence with the third party institution.

The case was first submitted by respondent to the Southern Peoples, Nations and Nationalities Regional State, Gamo Zone High Court. The court found that respondent University has granted annual leave to applicant and wrote her recommendation letter to the third party institution. Relying on these facts, the Zonal court concluded that the scholarship opportunity was obtained through the university and not by the personal efforts of the applicant. Consequently it rejected applicant’s objection of lack of vested interest. An appeal to the Federal High Court by applicant was rejected and the Federal Supreme Court Cassation bench held the same position as the lower court on this point.

Once the nature of the duty and liability of the employee is determined, the next important issue will be the extent of his/her liability. In this regard, the cassation bench has set an important precedent for lower courts. In CFN 33473 and 49453 the bench stated that the amount to be paid by the employee, for breach of his contractual duty to serve his employer, should be determined based on the actual costs and expenses incurred by the employer. The employer has a burden of proof and his claim should be supported by evidence. The fact that the employee has agreed to pay a specified amount of money in the contract is irrelevant. Employee’s liability is not to pay the amount stated in the contract, but the amount to be calculated based on tangible evidence.

In the case of W/o Harsema Solomon and Arba Minch University the Gamo Zonal court accepted respondent’s claim for an amount of Birr 290, 961.00 simply because it was stated in the contract.

The cassation while reversing and remanding the case back to the Zonal court stated that the respondent relied on what has been stated in the contract to claim Birr 290, 961.00, but didn’t produce any evidence establishing such expense was actually incurred by it or by the third party institution.

When should the employee start serving the employer? Most of the contracts usually indicate the time needed for completion of education. Hence, the employee is expected to resume work upon the expiry of this time. In some cases, the period of time in the contract may be extended for two reasons:

A)    External factors (like natural calamity, war, etc.) and internal factors (associated with the employee, like sickness, grade, research etc…)

B)    The employee after completing the employer sponsored tuition program, may be awarded an additional education opportunity by a third party

There is no precedent as regards the first factor. In relation to the second factor, an additional education opportunity was accepted by lower courts to reject a claim for reimbursement by the employer. In the case between Hawasa University and 1.Yonas Kassa (ex parte) 2.W/o Beletu Agotalem, the Hawasa High Court rejected applicant’s claim on the ground that 1^st respondent is pursuing additional PHD study after completing his master’s education provided to him by applicant. On appeal the decision was affirmed by the Federal High Court.

However, the cassation bench criticized the decisions of the lower courts for failing to take in to consideration the clear terms and conditions of the contract. The contract clearly imposes an obligation on 1^st respondent to serve the applicant for six years, after completing his master’s education in Belgium. However, 1^st respondent went to America for further PHD study without the consent of applicant. Accordingly the bench concluded that the time of performance begins immediately after completion of master’s study not after successful completion of PHD.

In W/o Harsema Solomon vs, Arba Minch University it was said that the duty to serve is an alternative duty. An alternative duty gives an option to choose one of the alternative duties, i.e. to serve or to reimburse. Being an alternative duty, fulfilling one of the duties will be considered as performance of contract. In other words, it will not entail liability for non-performance.

This notion has got acceptance even by the employer. If one looks in to the contents most of the statements of claims, the employer usually seeks relief in the alternative: either defendant continue serving his employer as per his contract, or alternatively (if defendant does want to serve) pay all the costs of his education. As a result judgment will be given taking into account the alternative nature of the duty. This has its own implication in case of execution. Since the judgment is in the alternative, it will be executed alternatively through continuous employment or reimbursement.

But, is it really true that the duty to serve is an alternative duty? Or is it the legal effect of breach of the contractual duty to serve?

In Ethiopian Agricultural Research Institute vs. Ato Teferi Mamo (ex parte) the bench considered resignation or failure to serve as a matter of non-performance of contract. It then determined the liability of respondent based on Article 1771(2) and 1790(1) of the Code and instructed the lower court to determine amount of compensation based on the ordinary rules of compensation provided in 2090(1) and 2091. No option was given to respondent to choose either to serve or reimburse.  Contrary to W/o Harsema’s case the bench concluded that the duty to reimburse is an immediate effect of breach of duty to serve, not an alternative duty to serve

The case between Government Communication Affairs Office and Ato Dereje Mekonen (CFN 48476) deals with the validity of the action of an employer to refuse the issuance of certificate of service to an emplyee who breached his contractual duty to serve. The respondent Ato Dereje Mekonen was a civil servant in applicant’s office. During his service, he left the office for education for three years. All the expenses of education was covered by applicant. The contractual agreement of the two parties provides that respondent will continue providing service in applicant’s office for six years upon successful compeletetion of his education. However he only stayed for twenty months and five days.

Upon resignation by respondent, applicant didn’t bring an action for breach of contract. However, it declined the respondent’s request for the issuance of a certificate of service . As a result respondent lodged an appeal to the Federal Civil Service Tribunal. The tribunal gave decision in favour of respondent. The Federal Supreme Court which reviwed the decision of the tribunal affirmed the dcision. Finally applicant submitted a petition to the Cassation on grounds of fundamental error of law.

The basic point of the argument of applicant before the bench is that certificate of service  should not be issued before applicant successfuly discharges his obligation and delivers property belonging to respondent.

In response to applicant’s argument the bench first made a clear distinction between certificate of service and clearance. The issuance of a clearance is always subject to settelement of debt and delivery of employer’s property.

However, an employer does not have any valid ground to decline a request made by the employee for the issuance of a certificate of service . The bench refered  to article 87 of the civil servants proclamation No. 515/2007 to conclude that the right of a civil servant to be provided with a certificate of service upon his request is not subject any condition. Respondent is entitled to get certificate of service eventhogh he failed to serve his employer or reimburse expenses of education. If applicant has any claim against respondent it should bring an action and seek a legal remedy.

In the case between Government Communication Affairs Office and Ato Dereje Mekonen, the bench ruled that any remedy for reimbursement should be obtained by bringing an action in court. This holds true in determining the validity of an action as regards set-off and deduction. In the case between Oromia Roads Authority and Ato Abo Gobena, the applicant’s action to deduct costs of education from the severance pay of respondent was invalidated as unlawful.

Unlike the primary ‘education contract, (which is solely governed by the terms and conditions of the contract) in contract of guarantee, the relevant provisions of the Civil Code apply in conjunction with the contract of guarantee to determine the respective rights and liabilities of the contracting parties.  The advantage of the existence of legal provisions is that the terms and conditions of the contract are not totally left to the freedom of contracting parties. In ‘education contracts’ the employer, who has a stronger bargaining power determines the contents of the contract ensuring the maximum protection of his interest.

As a matter of fact, being a guarantor in ‘education contract’ could be characterized as inconvenience if not a burden. One the one hand, you give your guarantee for someone, but in return you don’t get any guarantee. You don’t have any guarantee that the principal party will return to his country or serve his employer as per his contract. Sometimes you will lose contact with the principal party. He doesn’t respond to your calls and emails. If you become a judgment debtor, one third of your insignificant salary will be deducted by a court order, and all this happens without any help from the principal debtor.

The second aspect of inconvenience relates to the length of time you will be bound by the contract of guarantee. For instance, if you become a guarantor to a sales or loan contract, everything will be settled one way or another within one or two years. In ‘education contracts’ you may be bound by the contract of guarantee for about ten years.

In the case between Addis Ababa City Administration General Auditor Office and respondents: 1. Ato Aesaw Meaza 2. Ato Zerhun Mulat 3. W/o Tesefanesh Tesema it took seven years for first respondent to complete his education. He also agreed to serve the applicant for six years in return for the financial assistance. Second and third respondents have jointly and severally guaranteed the performance of the contract. This means in effect it will take thirteen years to be totally free from their obligation.

When a person becomes a guarantor for a very long period of time, is there any means he could be relieved from his contractual duty? This issue was examined in the case between Addis Ababa City Administration General Auditor Office and respondents: 1. Ato Aesaw Meaza 2. Ato Zerhun Mulat 3. W/o Tesefanesh Tesema.

The Federal First Instance and Federal High Court relying on article 1925 sub article 2 of the civil code held a view that 1^st respondent and 2^nd respondent have put an end to their undertaking since the time during which they are to be bound is not stipulated in the contract of guarantee.

However, the Cassation bench took a different position and reversed both decisions of the lower courts. The bench giving meaning to article 1925 sub article 2 of the Code stated: “As can be understood from the provision, when the principal obligation is dependent on uncertain events, likely or not likely to occur in the future, there is a possibility that the guarantor may put an end to his undertaking so long as the primary debt is not yet due”

Applying this interpretation to the facts of the case, the bench reasoned that since the principal contract clearly specifies the time of completion of education and the time first respondent is bound to serve his employer, it could not be said it is conditional upon uncertain events.

In a conflict of law case, a court is expected to address three basic issues:

1. Determining the presence  judicial jurisdiction
2. Determining the applicable law to solve the dispute
3. Determining whether a foreign judgment should be given recognition by domestic courts

Before these three issues are addressed, the court is primarily tasked with determining whether the case is really a conflict of law case or not?

So, how does a case become a conflict of law case? A short to the question is that it becomes a conflict of law case, it contains a foreign element. What then is a foreign element?

“When a case is said to contain a foreign element, the reference(s) may be of three natures __ personal, local, or material __ in that, respectively illustrated, if one of the parties of the case is a foreigner (including one from another federating unit) or the transaction of any nature took place, totally or partially, abroad (outside the forum state) or, finally, the object of the dispute (property, esp. immovable property) is situated in another state (including a member of federation); the case is said to contain a foreign element.” (Araya Kebede and Sultan Kasim, Conflict of laws teaching material, sponsored by Justice and Legal System Research Institute)

The draft conflict of rules also defines foreign element in the following way.

Art.4. Foreign Element

Foreign element refers to:

1. A personal nature and may pertain to nationality, domicile or residence of the interested parties; or
2. A local nature and may pertain to the place where facts occur or contracts are made from which the juridical situation arises; or
3. A material nature and may pertain to the place where the property to which the juridical situation applies is situated.

According to article 11 sub article 2 (a) of Federal Courts Proclamation No. 25/1996, when a case is related to private international law, the Federal High Court will have first instance jurisdiction to solve the dispute. This article is not a conflict of law rule regarding judicial jurisdiction in conflict of law cases. It simply gives exclusive material jurisdiction to the Federal High Court, to address the above three questions of conflict of law disputes. What follows is a brief summary of the way this article is understood by lower courts and the cassation bench.

1.   Conflict of laws in labour cases

1.1.        Determining the governing law by the agreement of the parties

Applicant: Foundation Africa

Respondent: Ato Alemu Tadesse

Cassation File Number: 50923

Date: 19-9-2003 (E.C.)

An employment contract between the employee and employer made in Ethiopia, for a work to be performed in Ethiopia, stipulating a foreign law to govern any dispute arising between them is invalid. The presence of such contract does not oust the ordinary material jurisdiction of first instance court in labour disputes.

In a similar case, [C.A.S. Consulting engineers salezgiter GMBH vs. Ato Kassahun Teweledeberhan Cassation File Number 54121 Date 1-3-2003 (E.C.)] where the parties indicated German Law to be the applicable law to solve their disputes, it was held that such contractual provision is not valid. The case by its nature is not a case “regarding private international law” as provided in article 11 sub article 2 (a) of Federal Courts Proclamation No. 25/1996. As a result, it is the Federal First Instance Court not the Federal High Court who has jurisdiction over such matter.

1.2.        Employment contract made in a foreign country

Applicant: Ato Bezabeh Eshetu

Respondent: Salini construction

Cassation File Number: 60685

Date: 21-6-2003 (E.C.)

When the employment contract is made in a foreign country, it is a case regarding private international law. Hence, the Federal High Court will have first instance jurisdiction as per article 11 sub article 2 (a) of Federal Courts Proclamation No. 25/1996. But, it should be noted that, this does not imply Ethiopian courts will assume judicial jurisdiction merely because the contract was made in a foreign country. The fact that a certain case is a ‘case regarding private international law’ only confers a power on the Federal High Court to determine whether Ethiopian courts have judicial jurisdiction and if yes to determine the applicable law.  In short, article 11 sub article 2 (a) of Federal Courts Proclamation No. 25/1996 simply gives material jurisdiction exclusively to the Federal High Court.

2. Conflict of laws in civil cases

2.1. Extra-contractual liability (foreign company not registered in Ethiopia)

Applicant: Ethiopian Electric Light Corporation

Respondent: Dragados Construction

Cassation File Number: 42928

Date: 12-5-2002 (E.C.)

This case relates an action by applicant for compensation for damage caused by respondent while doing business in Ethiopia. Respondent argued that it a foreign company registered according to the law of Greece and domiciled in Athens. It also stated that it is not registered in Ethiopia. Based on these facts, respondent challenged the jurisdiction of the Federal First Instance Court, because the conflict of law rules apply to determine courts having jurisdiction and the applicable law. The Federal Instance Court accepted this argument and ruled that it does not have jurisdiction over the case. On appeal, the ruling of the lower court was affirmed by Federal High Court on the ground that the mater falls within its first instance jurisdiction.

The cassation bench reversed both decisions of the lower courts. The bench in its reasoning stated that damage was caused in Ethiopia while respondent was doing business in Ethiopia. The case was brought to the court where the damage caused. Therefore, the Federal First Court should exercise jurisdiction according to article 27(1) of the Civil Procedure Law.

2.2. Contract made in Ethiopia with a foreigner

Applicant: Global Hotel Private Limited Co.

Respondent: Mr. Nicola As Papachar Zis

Cassation File Number: 28883

Date: 26-3-2000 (E.C.)

The fact that one of the parties in litigation is a foreigner does not automatically make the case ‘a case regarding private international law.’ The defendant should necessarily challenge the jurisdiction of the court on the ground that Ethiopian law is inconsistent with the law of his nationality or domicile. If the foreign party does not invoke lack of jurisdiction of Ethiopian courts, the case is not a private international law case.

Index to Cassation Decisions Volume 13

Most of you are asking and waiting for the release of Cassation decisions volume 13 and 14 and I don’t have any good news. I frequently check their website. Still volume 12 is the last volume available. But I think, the next two volumes will be made available to the public soon. The index to Volume 13 is officially released. You can download it here or from the official web page of the Federal Supreme Court.

I have added a bookmark and a link to the table of contents, so that you can easily browse the contents of the document.

DOWNLOAD  Index to Cassation Decisions Volume 13

Filed under: Cae Comment, Uncategorized

Finally, The Federal Supreme Court has released Volume 14 of Cassation Decisions.

Click the link below to download.

Federal Supreme Court Cassation Decisions Volume 14   DOWNLOAD

Ethiopian migrant killed in Saudi crackdown – Middle East – Al Jazeera English.

The man was trying to resist arrest, authorities say, as they pursue a crackdown on illegal workers, arresting 16,000

An Ethiopian migrant has been killed by Saudi police after he tried to flee arrest during a round-up of thousands of foreigners suspected of working illegally in the kingdom.

A statement on Wednesday by Riyadh police chief Nasser el-Qahtani said security forces killed the African migrant worker in el-Manhoufa a day earlier when he and others tried to resist arrest.

The security sweep comes after seven months of warnings by Saudi Arabia’s government, which has created a task force of 1,200 Labour Ministry officials who are combing shops, construction sites, restaurants and businesses in search of foreign workers employed without proper permits.

More than 16,000 people have already been rounded up, according to authorities.

Strict labour law

Police have also erected checkpoints to enforce the kingdom’s strict labour rules that make it almost impossible to remain in the country without official sponsorship by an employer.

Residents said most shops have been closed since the sweep began on Monday, with many of the country’s migrants avoiding the streets where they face possible arrest.

The state-backed Saudi Gazette reported on Wednesday that residents are already feeling the brunt of the everyday work the migrants provided, from ritual washings of corpses before burial to food delivery and bagging groceries.

Authorities say that since warnings were issued earlier this year, almost seven million foreigners in Saudi Arabia corrected their paperwork to accurately reflect their occupation and workplace.

The kingdom also issued more than one million final exit visas, which ban people from ever returning.

The Saudi-owned Asharq al-Awsat newspaper reported that authorities detained around 16,500 workers in the first 48 hours of the nationwide crackdown.

The newspaper quoted Saudi officials as saying that nearly half of the migrants were arrested near the southern border with Yemen.

Another 5,000 had been detained in Mecca, where some Muslims stay on illegally after pilgrimage.

Less than 1,000 were detained in the main city of Riyadh.

A resident in the poorer neighborhood of el-Manhoufa in Riyadh told the Associated Press news agency he saw police stopping people outside a mosque after prayers and arresting those who did not have the correct papers on them.

PressTV – Ethiopia condemns Saudi crackdown on workers.

Saudi authorities have launched the weeklong visa crackdown on foreign workers, killing three people, including an Ethiopian national.
“This is unacceptable. We call on the Saudi government to investigate this issue seriously. We are also happy to take our citizens, who should be treated with dignity while they are there,” Adhanom said on Sunday.
Ethiopia’s top diplomat said Addis Ababa has formally complained to Riyadh and is now working to bring its citizens back home.
Saudi security forces on Saturday clashed with thousands of migrant workers protesting a new labor law.
Two people were killed and nearly 70 others injured after police opened fire to disperse protesters in the capital Riyadh. More than 500 protesters were also detained.
On Wednesday, the Ethiopian man was killed during another crackdown, prompting the Ethiopian government to announce efforts to bring home its citizens.
Riyadh has announced plans to create jobs for Saudi nationals by reducing the number of foreign workers totaling some nine million people.
Hundreds of thousands of workers have already left the kingdom amid tougher conditions for migrants.
Foreign workers cannot change jobs or leave Saudi Arabia without the permission of their sponsors, who are often Saudi companies or individuals who provide workers to businesses for profit.
Most of the sponsors take away the passports of the workers for the duration of their contract.
Human rights groups have criticized Saudi Arabia over the condition of migrant workers in the kingdom and called on Riyadh to abolish the sponsorship system for migrant workers.

Index to cassation decisions volume 15

The Federal Supreme Court has released the index to volume 15 of cassation decisions.

Click the link below to download the file.

volume 15 Table of contents  DOWNLOAD

Federal Supreme Court Cassation Decisions Volume 15 is now officially released.

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