Sophia Bekele, an Ethiopian native with foreign nationality, won a milestone legal battle against the central bank, whose decision led her to lose shares at United Bank and United Insurance Company (UNIC) inherited from her late father.
The two financial institutions were to auction her shares at an undervalued rate following the instruction of the defendant which restricted Ethiopian born non-nationals like Sophia from owning shares in the country’s financial industry. The directive has been effective since last year.
Sophia took the co-defendants to the First Instance Court Lideta Divison for denying her successive rights over insurance and bank shares worth over 288,000 Br. She inherited the shares from her late father Bekele Eshete, who was the founding shareholder of UNIC and United Bank.
A businesswoman with American citizenship, and one of over 4,000 foreign nationals of Ethiopian origin who lost their shares at par value after the NBE issued the directive, Sophia filed a lawsuit as the Bank allegedly violated her constitutional rights, blocking her from transferring her property.
She also claimed that the directive was issued after her father’s death, thus invoking the non-retroactivity principle of law- law’s effect does not extend to include past affairs and cannot pass judgment on events that occurred before its implementation.
In its statement of defence, the central bank has replied that it had issued the directive to enact the proclamation which previously prevented non-nationals’ ownership in the financial industry. While the co-defendant, UNIC, claims it only implemented the directive circulated by the regulatory body, the central bank, and requested for exoneration from the case.
After analysing the arguments from both sides, on November 21, 2017, the Court ruled in favour of Sophia. Leaving the claim of successive rights, the Court instead framed the issue on how Sophia owned the shares and whether the financial proclamation of the country was violated. It also granted her the right to transfer the inherited shares.
Bank and Insurance companies were obliged to notify their customers to return the certificate and pay the par value of the shares. All financial institutions have called for their customers to surrender their holdings.
Although thousands of individuals lost their shares due to central bank’s order, Sophia, founder and CEO of Dot Connect Africa (DCA), is the first to challenge central bank’s decision with her lawyer Yoseph Kiros, taking the case to the Federal First Instance Court.
Displeased with the lower court’s ruling, lawyers of the National Bank of Ethiopia (NBE) appealed to the Federal High Court claiming the lower court has passed the judgment against the banking proclamation and directive of the of the NBE.
The appellate court admitted NBE’s appeal and adjourned the case to January 27, 2017, injuncting the lower court’s ruling.
Sophia’s shares at the two financial institutions have not been transferred to a third party yet as a result of the ongoing court proceedings, according to the officials from the Bank and the Insurance firm.