Ethiopia
Answer ... Creditors must enforce their security rights by applying to court. The exception is the foreclosure right provided to Ethiopian banks. The laws include special features regarding the enforcement of security rights, depending on the type of property.
Movable property: A secured creditor requires a court order to take possession of collateral, unless:
- the security agreement provides that the secured creditor is entitled to obtain possession of the collateral without applying to the court; or
- at the time the secured creditor attempts to obtain possession of the collateral, the grantor or any other person in possession of the collateral does not object.
A secured creditor whose rights are affected by the non-compliance of a third party is entitled to apply for relief to a court, including relief in the form of expedited proceedings.
Immovable property: Banks are permitted to sell by auction, after notice, the mortgaged collateral. However, other creditors must pursue enforcement action through the courts.
Ethiopia
Answer ... The timeframe for enforcement will depend on the method of enforcement – that is, self-enforcement or court proceedings. In case of the latter, it will also depend on other factors such as the workload of the court at the time of the application for enforcement. Therefore, there is no set enforcement period. However, in practice, enforcement can take from six months to two years.
Security on movable property: Upon default, the secured creditor is entitled to sell or otherwise dispose of, lease or license the collateral. The creditor may choose to dispose of the collateral through a public auction or other forms of sale, lease or license. The creditor must follow the following steps:
- The creditor must give 10 working days’ notice of its intention to dispose of the collateral. However, the law provides for exceptions to which this notice period will not apply due to the nature of the collateral.
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If the creditor opts for a public auction, a notice should be published that sets out:
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- the time and place of the auction;
- a detailed description of the collateral;
- the estimated value of the collateral;
- the terms and conditions of the sale; and
- the encumbrance to which the collateral is liable.
- The sale will not happen until at least 15 days after the date on which the notice is affixed to the court compound or notification of the auction is publicised
If the highest bid at the auction is lower than the value specified in the notice, a second auction will be held. If no buyers attend the second auction, the secured creditor can acquire the collateral at the floor price of the first auction.
Security over immovable security:
- After obtaining a court decree for the delivery of immovable property, the property will be attached by a court order which prohibits the judgment debtor from transferring or charging the property.
- The general principle is for the sale to be effected through public auction. However, the court can authorise a private sale at the request of the judgment debtor and after hearing the decree holder.
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A notice of the auction must be published that sets out:
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- the time and place of the auction;
- a detailed description of the collateral;
- the estimated value of the collateral;
- the terms and conditions of the sale; and
- the encumbrance to which the collateral is liable.
- The sale will not happen until at least 30 days after the date on which the notice is affixed to the court compound or notification of the auction is publicised.
- If the highest bid at the auction is lower than the value specified in the notice, a second auction will be held. If no bidder attends the second auction, the court may authorise the decree holder to take possession of the collateral at its estimated value.
As an exception to the requirement to obtain a court order for an auction, banks that are registered in Ethiopia may enter into an agreement that authorises the creditor bank with which a property has been mortgaged and whose claim is not paid within the time stated in the contract to:
- sell the mortgaged property by auction upon giving prior notice of at least 30 days to the debtor; and
- transfer the ownership of the property to the buyer.
The steps for the auction are the same as outlined above.
Ethiopia
Answer ... No other considerations should be borne in mind, apart from what is stated in questions 10.1 and 10.2.
Ethiopia
Answer ... Direct agreements with contractual counterparties are not yet common in Ethiopia. However, in recent years we have seen a few direct agreements used in project finance transactions and in public-private partnership projects.
Ethiopia
Answer ... There are none.