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Based on its recently launched Web-based service,
the Federal Supreme Court is to begin rendering
online authentication and registration services on
contractual agreements of immovable properties.
Ethiopia’s commercial code states that, when an
agreement to transfer, through gift, sale or
mortgage of immovable properties like buildings is
made, it has to be authenticated and registered
either by the courts or any other body that is given
the authority.
However, a paper prepared and presented by Justice
Menberetsehay Tadesse, vice president of the Supreme
Court, two months ago revealed that the code has not
been effectively implemented in the last 40 years
due to the failure of courts and properly organised
offices to carry out the authentication.
Menbertsehay also claimed that court orders freezing
immovable properties from third-party transfer based
on any litigant’s request, as well as banks’
grabbing of property title deeds for loan
collateral, prevented them from being sold or
transferred to a third party and has thus driven
many houses out of the market.
“This has its own role to play in the shortage of
houses that has been witnessed in the country,”
concludes the paper.
Banks have no authority to take title deeds and
created problems on owners of the collateralised
immovable properties from any kind of transfer or
sale. They have the right only to have the property
authenticated within the legal framework by the
authorised body.
However, Menbertsehay’s paper precisely states that
the lending banks can trace the property to whoever
owns it and forecloses it if the borrower defaults.
The Website developed for this purpose will feature
a list of properties that are held as bank
collateral, court orders and anyone who lends to the
owner of the property, including the amount of money
involved.
“I wonder how many are going to have the ability to
make use of this technology,” requested Araya
Gebreegziabher, acting president of Wegagen Bank SC.
“This also has to be considered.”
Abie Sanu, president of the largest bank in country,
the Commercial Bank of Ethiopia (CBE), who strongly
argued with Menberetsehay when he presented his
paper to judges and the business community at the
Sheraton Addis, considered the move commendable. But
he shares the concerns of Araya that most people
will not be able to have access and know-how to use
the services.
He, however, has reservations on the policy
prescription of Menbertsehay’s paper claiming that
it complicates previously advanced loans as it will
force banks to forgo the title deeds and engage in a
hide-and-seek business.
The major concerns raised by banks during the
presentation of the paper were that there are no
well organised offices at the city municipality
which enable courts to authenticate contractual
agreements. They had therefore expressed their fears
that the implementation of his recommendations would
hamper their businesses.
“It was a legitimate fear,” Menberetsehay told
Fortune. “Though private banks have taken the
initiative to order their legal departments to take
seriously the law procedures when they prepared loan
agreements, state-owned banks have yet to be seen
implementing it.”
To deny banks room for excuses, the Supreme Court
has decided to launch an online authentication
service, Menberetsehay told Fortune.
It was on August 3, 2007, that the Supreme Court
commenced rendering Web based services to grant the
general public access to view any services provided
by courts to increase transparency. The services
provided online include accessing pending court
debates, verdicts, charges, defences, judges’
profiles and an e-litigation service which helps to
charge individuals and defend oneself against
charges from anywhere.
The authentication and registration software
currently is under installation and will begin
rendering services in the coming two months.
“The development of the technological infrastructure
is great progress,” said Araya. “But the law by
itself has to be revised if the majority of the
population is to benefit.”
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