Ethiopian Law of Security Rights in Movable Property

In 2019, Ethiopia enacted its first comprehensive law of security rights — the Movable Property Security Rights Proclamation (MPSRP) — drafted under the aegis of the International Finance Corporation (IFC). Although the official narrative is that the it is based on the UNCITRAL Legislative Guide on Secured Transactions Law, the MPSRP is dominantly influenced by Article 9 of the Uniform Commercial Code (UCC Article 9) — the model law governing security rights (secured transactions) in the United States (US). The enactment of the MPSRP represents a radical departure from the French Civil Code-based Ethiopian law of security rights that has been in place since 1960. This book provides an early interpretive and policy analysis by explaining the key principles, policies, and rules of the MPSRP and highlighting some of the potential challenges around its implementation and interpretation. The book has three key objectives. First, it explains the novel approach to security rights taken by the MPSRP. All stakeholders (judges, litigators, counsels, policymakers, advocacy groups, researchers, students, and other interested groups) need guidance in how the law should be interpreted and applied while also gaining insights into aspects of the law that require reform. Second, it demonstrates that future legal reform in this area should be informed by US experience as the MPSRP resembles US law more than the law of any other nation or the UNCITRAL Legislative Guide on Secured Transactions Law. Ethiopian legal professionals and policymakers need to be familiar with the approaches and policies of UCC Article 9, at least on a basic level. Third, the book aims to serve as the basis for future research and intellectual inquiry into this increasingly important area of law.The book is organized into twelve chapters. Chapter one discusses the reasons for the reform of the Ethiopian law of security rights by analyzing the shortcomings of the Pre-2019 law. Chapter two examines the conceptual foundations of the MPSRP where the notions of unitary theory and functional approach to security interests and their implications are explained. Chapter three provides an overview of security rights to which the MPSRP does not apply followed by chapter four which critically analyses possessory security right and security rights in commercial instruments and documents. Chapter five discusses floating security rights along with acquisition security rights. Chapter six is dedicated to security rights in intangible assets (business, intellectual property, and account receivable) while chapter seven covers security rights in proceeds. In chapter eight, the book comprehensively analyses perfection— the method for rendering security rights effectiveness against third parties followed by chapter nine covering the rules for determining priority of conflicting security rights as well as the rights of a third-party acquirer of collateral. Chapter ten offers an in-depth account of private enforcement of security rights including self-help repossession, private disposition of collateral, and strict foreclosure along with the remedies for breach of the secured creditor’s duties. In chapter eleven, the book covers the status of security rights in bankruptcy. Finally, chapter twelve makes a proposal for the implementation of tailored laws protecting consumers from abusive debt collection practices and aggressive enforcement of security rights. The book utilizes comparative analysis to explain policy and interpretive issues, gaps, and uncertainties that require perspectives from UCC Article 9 with occasional reference to laws of Hungary, Germany, Louisiana, Romania, and the UK to highlight unique solutions to specific legal problems.