Form of Contracts Relating to Immovables in Ethiopia: Analysis of the Position of the Federal Supreme Court Cassation Division

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Addis Ababa University


The justifi cations for the importance of the doctrine of precedent rest on the need for certainty, reliance, equality and efficiency in the law. Hence, cases involving similar legal issues are expected to have similar outcome in all COUl1s. When the Ethiopian Federal Supreme Court Cassation Division (FSCCD) tries to hold on its deci sions of prior cases, its credibility will increase. This paper, however, finds that the Cassation Division rendered many contradictory interpretations on Article 1723 of the Civil Code of Ethiopia which deals with form ofa contract relating to an immovable. The FSCCD neither clearly follows nor overrules its own interpretation rendered in Cassation File No. 21448 (the Gorfie Case) and this creates a conflict within its jurisdiction. It, in this case, held that the requirement of regi stration before a court or a notary as embodied in Article 1723 is binding thereby rendering unregistered contract of sale of an immovable a mere draft that is non-enforceable. The debate that arises after this interpretation partly lies in the fact that the Cassation division has departed from settled practices to enter into a contract relating to an immovable. The judges in the FSCCD state that this interpretation is the governing principle as to form of contracts relating to immovables so far. However, in the opinion of the writer, registration is not a formal requirement for the validity (ad validitalem) of a contract relating to an immovable. The sole purpose of regi stration is publicity as envisaged under Articles 2877 and 2878 of the Ethiopian Civil Code. The prevailing practices proved that contracts relating to an immovable were not registered with a court or a notary. The writer has not observed a consistent approach in the other interpretations of the Cassation Division which he has examined as to form of a contract relating to an immovable. The Cassation Di vision rendered clashing interpretations with the Gorfie Case in Cassation File Numbers- 36887 (Alganesh v.Gebru), 39336 (Nyala Insurance S.C v. Adugna and Tenaye), 38666 (Development Bank of Ethiopia v. Ato Tesfay) and others. Almost all of the inconsistent interpretations of the Cassation Division are rendered within two years time span, i.e. from 1999 to 200 I E.e. Hence, the decisions of the FSCCD on form of a contract relating to an immovable have not stayed for reasonable long period of time without being overruled. As a result, trial courts, lawyers and other planners of transactions find themselves in untenable position where they are bound by conflicting decisions of the Cassation Division. In the present Ethiopian situation, it is hard for lawyers to advise their clients with a confidence that the law as to form of a contract relating to an immovable is settled. Such inconsistent interpretations of laws, if allowed to persist, forfeit the benefits of certainty, stability and predictability of the law which the doctrine of precedent is intended to foster. Consequently, there is a need for further reform of the position of the FSCCD on form of a contract relating to an immovable. The Cassation Division should clearly overrule its blameful interpretation rendered in the Cassation File No. 2 1448 (the Gorfie Case) since the interpretation has departed from settled practices. Every ruling of the FSCCD has far reaching implications on the legal system of the country. Therefore, the cassation judges should criti cally consider the impacts of their interpretation on social , economic, political, cultural and moral contexts of the people. They have to make sure that their decision would exist and applicable relatively for a reasonable long period of time. The FSCCD should follow one fairly reasoned position and clearly overrule other contradictory decisions. Every interpretation has to be made in accordance with the concept of hori zontal stare decisis that the Cassation Division should refrain from creating conflicting interpretation of laws.