PROCLAMATION NO. 97/1998
A PROCLAMATION TO PROVIDE FOR PROPERTY MORTGAGED OR
PLEDGED WITH BY BANKS
WHEREAS, it takes rather too long a time to obtain
judgment, from courts of law, for sale of property mortgaged or pledged with
banks and to subsequently have it executed;
WHEREAS, consequently, banking business thriving on
interest payments on loans it provides from public moneys received by way of
saving deposits or acquired from other sources, has been adversely affected.
WHEREAS, in order to create a conducive environment to
economic development by enabling banks to collect their debts from debtors
efficiently and thereby promoting a good business culture, it is necessary to
amend the Civil Code concerning the sale of property mortgaged or pledged with
banks;
NOW, THEREFORE, in accordance with Article 55(1) of the Constitution of the Federal Democratic Republic of Ethiopia, it is hereby proclaimed as follows:
1. Short Title
This Proclamation may be cited
as the "property Mortgaged or Pledged with Banks Proclamation No.
97/1998".
2. Definition
In this Proclamation
"Registrar" means in the case of mortgage, a Regional or City organ
responsible for registering an immovable property or in the case of pledge, an
organ with the power to witness the signing of a contract of pledge and deposit
same.
3. Contract of Mortgage or
Pledge
Notwithstanding the provisions
of Articles 2851 and 3060 of the Civil Code, an agreement authorizing a
creditor bank with which a property has been mortgaged or pledged and whose claim
is not paid within the time stipulated in the contract, to sell the said
property by auction upon giving a prior notice of at least 30 days to the
debtor and to transfer the ownership of the property to the buyer, shall be
valid.
4. Claim on Mortgaged or
Pledged Property
A creditor bank which, prior the
effective date of this Proclamation, has a claim on property mortgaged or
pledged with it, may sell the property by auction upon giving a prior notice of
at least 30 days and transfer the ownership of the property to the buyer.
5. Relationship between the
Bank and the Debtor
The sale made in accordance with
Article 3 and 4 of this Proclamation shall be deemed to have been executed on
behalf of the debtor.
6. Application of the Civil
Procedure code to Auction
The Provisions of Article
394-449 of the Civil Procedure Code shall, mutatis mutandis, be applicable
while the Bank is exercising its power of selling the mortgaged or pledged
property by auction.
7. Liability of the Bank
The Bank shall be liable for any
damage it causes to the debtor in the process of selling by auction in
violation of the relevant provisions of the Civil Procedure Code specified
under Article 6 of this Proclamation.
8. Powers and Duties of the
Registrar
1. The Registrar shall have the powers and duties to take
the necessary measure for carrying out the sale by auction.
2. If the Registrar, while taking action in accordance with
sub- Article (1) of this Article, finds it necessary to use police force, he
may order the police.
9. Cases Pending before
Court
Any suit or decree on execution
pending before a court prior to the coming into force of this Proclamation may
be terminated upon application by the creditor bank with which the property has
been mortgaged or pledged and the bank may sell and transfer the property to
the buyer in accordance with this Proclamation.
10. Repealed Law
The Civil Code (Amendment)
Proclamation No. 65/1997 is hereby repealed.
11. Transitional Provision
Any action taken in accordance
with the Civil Code (Amendment) Proclamation No. 65/1997 prior to the effective
date of this Proclamation shall be governed by this Proclamation.
12. Inapplicable laws
Any law which is inconsistent with this Proclamation shall
not be applicable.
13. Effective Date
This Proclamation shall enter into force as of the 19th day
of February, 1998.
Done at Addis Ababa, this 19th day of February, 1998.
NEGASO GIDADA (DR.)
PRESIDENT OF THE FEDERAL DEMOCRATIC
REPUBLIC OF ETHIOPIA
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