Priority Right Between Creditors Over Collateralized Properties in Ethiopia with Special Emphasis on Properties Given as Collaterals to Secure Bank Loans
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Date
2025-03-01
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Addis Ababa University
Abstract
This research investigates the legal framework governing priority rights between creditors over collateralized properties in Ethiopia, with emphasis on properties securing bank loans. The study is motivated by the existing uncertainty in Ethiopia's secured lending system, where various types of creditors, both secured and unsecured, assert competing claims against a single property, leading to disputes whenever debts mature and payment is sought. Through a combined doctrinal and non-doctrinal approach, analyzing legal provisions, examining court cases, and conducting face to face and written interviews with bank officials, the research identifies significant gaps and inconsistencies in Ethiopia's fragmented legal framework. The findings reveal that while the Civil Code establishes that secured creditors should have priority rights, subsequent laws have eroded this principle, granting preferential status to certain non-consensual creditors without appropriate limitations. The study argues that Ethiopia's current approach undermines the effectiveness of secured transactions as a mechanism for facilitating access to credit, with negative implications for financial inclusion and economic development
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Properties Given as Collaterals to Secure Bank Loans