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A dreamless dreamer: should pauper proceeding be allowed in Arbitration proceeding?

Abraham Hailemeskele and Yehualashet Tamiru Tegegn

The legislator who, on the plea of checking litigation, or on any other plea, exacts
of a working man as a preliminary to his obtaining justice, what that working man
is unable to pay, does refuse to him a hearing, does, in a word, refuse him justice,
and that as effectually and completely as it is possible to refuse it. - Jeremy
Bentham (A Protest Against Law Taxes)

1. Meaning and grounds for filing a pauper proceeding

It is a generally agreed principle that access to justice should not be denied to an individual
merely because he does not have the means to pay the prescribed court fee. As a matter of rule,
at the time of institution of a civil case before the court, the plaintiff is required to pay the
requisite court fees as per the court fee legal notice issued in 1943.1 However, the poor people do
not possess sufficient means to pay the court fees, should not be denied access to justice.
Therefore, the lawmaker comes to their rescue by exempting them from the payment of the court
fees at the first instance and allows them to proceed the suit in forma pauperis subject to the
fulfillment of certain conditions as stipulated in the Civil Procedure Code.2

Under Ethiopian law, whosoever is not possessed of sufficient means to enable him to pay all or
part of the prescribed court fee shall be deemed to be a pauper.3 The determination of whether
the plaintiff is in possession of sufficient asset is far from clear. However, as indicated under the
Civil Procedure Code while the court examines this issue it will not consider two issues. First
and foremost, the property which is exempted from the attachment in execution of a decree4 and
the second, which is subject matter of the suit.5 Thus, these two assets at least are not considered

1
Legal Notice No. 177/1943
2
Please see Article 467-480 of the Civil Procedure Code
3
Article 467(2) of the Civil Procedure Code
4
As per Article 404 of the Civil Procedure Code, the following property shall not be liable to attachment or sale at
any stage of the proceeding: the necessary waring- apparel, bedding of the judgement- debtor, tools instruments or
implements of any kind used by the judgement-debtor, where the judgement-debtor is an agriculture, such cattle and
seed-grain as may, in the opinion of the court, be necessary to enable him to earn his livelihood, such amount of
food and money as may, in the opinion of the court, be necessary for the judgement-debtor and his family for a
period of three months, pension and alimonies are exempted from attachment.
5
Since the outcome is yet to decided by the court
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as within the possession of the plaintiff for the purpose of determination of his financial capacity
to pay the required court fees on his claim.

Moreover, as point outed by someone somewhere “the factors such as person's employment
status and total income including retirement benefits in the form of pension, ownership of
realizable unencumbered assets, and person's total indebtedness and financial assistance received
from the family members or close friends can be taken into account in order to determine
whether a person is possessed of sufficient means or indigent to pay requisite court fee.6
Therefore, the expression “sufficient means” under the Civil Procedure Code contemplates the
ability or capacity of a person in the ordinary course to raise money by available lawful means to
pay court fee.

In case of pauper proceeding, forma pauperis is granted to those individuals whose indigency
prohibits access to the courts in order to allow them to maintain their cause of action without the
burden of paying court costs in advance.

The court will reject pauper application, if:7

(1) The applicant is not a pauper;

(2) There is no cause of action;
(3) The applicant has, within two months before the filing of the application disposed of any
property fraudulently in order to be able to apply for pauper proceeding; or
(4) The applicant has entered into any agreement with respect to the subject-matter of the
proposed suit under which any other person has obtained an interest in such subject-
matter.

In principle, an order denying the plaintiff pauper proceeding shall have an effect of res judicata.
However, this does not prohibit the plaintiff from suing ordinarily by paying an appropriate court
fee.

2. The need to recognize pauper proceeding in Arbitration

By and large, the law governing arbitration in Ethiopia is found under Civil Code8 and the Civil
Procedure Code.9 The former carries provisions dealing with the substantive aspects of

6
Indian Supreme Court decision, in a matter between Mathai M. Painkeday v. C.K Antony (2011) at 179
7
Article 470 of the Civil Procedure Code
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arbitration10 while the latter mainly regulates the procedural aspect of arbitration.11 There is no
clear provision under Ethiopia arbitration legal regime that recognizes the pauper proceeding.
Looking at the very nature of arbitration, one may tempt to think that pauper proceeding is not
within the ambit of arbitration. This is because of the fees and expenses of the arbitrators, which
unlike the salary of judges, must be paid by the parties. Moreover, in the case of institutional
arbitration, it is necessary to pay administrative fees and expenses of an arbitral institution. 12

Above all, allowing pauper proceeding might influence the neutrality of arbitrators, which is the
integral and the most valuable element in arbitration proceeding.13 Arbitrators will get their fee if
and only if the pauper party comes out as a winner and hence, allowing pauper proceeding will
affect the neutrality of arbitrators. Despite all this, we will argue that pauper proceeding in
arbitration should be allowed.

First and foremost, as per Article 317 of the Civil Procedure Code, the procedure before an
arbitration tribunal, including family arbitrators shall, as near as may be, be the same as in a civil
court. This procedure requirement should be read to include the right to file a pauper proceeding
by the plaintiff and hence, the tribunal has a legal obligation to accept and entertain the case for
free provided that the plaintiff has no sufficient property.

Second, there is no clear prohibition either in the substantive law or procedural law concerning
pauper proceeding in arbitration. It is one of the generally accepted principles of interpretation
that, as a matter of rule what is not prohibited is deemed to be permitted. Thus, either
institutional arbitration or ad hoc arbitration should accept and entertain pauper application
because there is no clear prohibition to this effect.

Third, an arbitration is an agreement between parties to submit a future or existing dispute for
neutral third party so resolve and give final decision. Thus, arbitration is a private proceeding
that excludes the jurisdiction of courts and refers a matter of to a private adjudication. In
arbitration, the parties are free to determine the terms and condition, usually known as term of

8
Article 3325 to 3346 of the Civil Code
9
Article 315 to 319 of the Civil Procedure Code
10
As it’s the substantive part of the law
11
As it’s procedural part of the law
12
Blackaby et al., Redfern and Hunter on International Arbitration
13
Diego M. Papayannis, Independence, impartiality and neutrality in legal adjudication, Revns Journal Vo. 28
(2016)
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reference, the parties can select the arbitrators, applicable law, and the seat. Thus, in arbitration
freedom of parties and finality of the tribunal decision are the two basic essences of arbitration.

As mentioned above the main reason not to allow pauper proceeding is the perspective that it
might influence the neutrality of arbitrators since the arbitrators will get their fee contingent upon
the pauper party comes out as a winner. As a result, we can say that the fairness, independence,
ethics, and moral value of the arbitrators are the issues which are in question. Yet, depending on
the strength and development of the country legal system, it is possible to argue that formal court
proceedings might even be more biased and corrupt to this regard. By colluding with one party
the judge might flip the judgment and justify it with the law, for personal gain. Therefore, the
argument about the neutrality of arbitrators might not be reasonable as it seems from its face
value.

Furthermore, since the parties in arbitration proceeding have the autonomy to choose arbitrators
freely, they can be cautious about the character/personality of the arbitrators while choosing and
avoid the concern being discussed. In effect, it might even be preferable than formal litigation for
the specific concern because of in formal litigation the parties do not have the right to choose the
judge.

The final and the more compelling reason is that an arbitration agreement by its very nature
produces mandatory consequences for the parties by excluding the intervention of state courts in
the settlement of disputes, at least before the issuance of an arbitration award. 14 Thus, by
resorting to arbitration, parties are in effect excluded any available remedies in state court. This
implies that denying pauper party to commence an arbitration proceeding simply means denial of
access to justice since because of arbitration clause or arbitration submission, he cannot resort to
court.

Access to justice is one of the most important and constitutionally guaranteed rights of citizens.
Under Article 37 of the Constitution, it is indicated that “everyone has the right to bring a
justiciable matter to, and to obtain a decision or judgment by, a court of law or any other
competent body with judicial power.” (underline supplied). Moreover, the constitution imposes
an obligation on all citizens, including arbitrators, the duty to ensure observance of the

14
Benjamin G. Davis, Pathological clauses: Frederic Eisemann’ still vital criteria (1991) Arbitration International at
366
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Constitution and to obey it. As part of this Constitutional obligation, they must allow or permit
the pauper to file forma pauperis.

3. Conclusion

Although there is no clear provision that entitles pauper proceeding in arbitration proceedings,
for reasons provided above forma pauperis proceeding should be permitted.