In Ethiopia, if a contract requires mediation first but one party wants arbitration, can we skip mediation and go to arbitration while protecting my rights?

If a contract clearly requires mediation as a mandatory precondition to arbitration, skipping mediation can jeopardize your arbitration case and increase both costs and delays. In Ethiopia, mediation clauses matter. Skipping a mandatory mediation step can expose a party to procedural objections, higher costs, and unnecessary delay. The safer and more efficient approach is to comply with mediation in good faith, structure it with strict timelines, and then proceed to arbitration if needed.

If you have yet to negotiate on drafting your dispute resolution clause, whether to include a provision for arbitration only or mediation and arbitration, this brief is for you to understand what the law says and its ramifications for your case.

The Ethiopian general contract law, along with the Ethiopian Arbitration Conciliation Proclamation No. 1237/2021, serves as the relevant legal framework which applies to this situation. The contractual parties maintain their ability to establish valid agreements through mediation and arbitration procedures, while they can also choose to proceed with arbitration without first undergoing mediation. The contract may contain a dispute resolution clause which determines the methods that parties should follow to solve their disagreements.

The following points are made to help you understand the effects of choosing arbitration without mediation and mediation as a precondition to going to arbitration as a way of resolving disputes that arise in the future.

Having only an arbitration clause

When the contract allows arbitration to serve as the only dispute resolution mechanism, parties can start arbitration by sending their legal conflict to either the arbitration centre or an ad hoc arbitration panel. But if the mediation clause is there, that mediation process requires parties to the dispute to try to resolve the dispute through a mediator as a starting phase. In this case, the dispute resolution process becomes time-consuming when parties fail to reach a settlement through mediation.  The case needs to move forward with arbitration because this procedure will generate a binding and final decision. This option allows parties to use arbitration as their only dispute resolution tool, which eliminates the need for mediation as a mandatory step that would have required time and money to start the process.

Having both mediation and arbitration clauses

This dispute resolution system functions through a mechanism in which parties in a contract select by adding a dispute resolution clause to their contract, which enables them to use both mediation and arbitration methods. The selection of this dispute resolution method depends on whether the contracting parties or dispute parties decide to include it in their agreement. Sometimes the arbitration process becomes unreachable because the interested party must exhaust all mandatory mediation steps before starting arbitration procedures. The party breaches the contract when they refuse to mediate after the contract includes a mediation-first clause. The party who wants to start arbitration without mediation must first show that the opposing party refused to participate in mediation sessions about their disagreement. This option provides an advantage because parties who reach an agreement during mediation will avoid the long process which follows arbitration, and they won't need to pay both arbitrators (sometimes lawyers' fees) and the arbitration institution for their services.