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Ethiopia’s secured transactions system was based on the civil law tradition of continental Europe, mainly that of France.

Thus, the Civil Code (1960) and the Commercial Code (1960) have been the principal sources of the law governing security rights. There have also been other secondary sources (proclamations) that complemented the Codes on different aspects of secured transactions. The new law, however, heralds a shift away from this French-based civilian system to the Anglo-American model in many important respects. It is also informed by UNCITRAL instruments and UNCITRAL Model Law on Secured Transactions.

This has significant implications for secured creditors and debtors as well as for transactional lawyers advising clients. The new law is a very detailed instrument incorporating 96 articles and divided into seven major parts. It has covered, among other things, and in greater detail, issues of creation, perfection (third-party effectiveness), priority, and enforcement of security rights.

It has also introduced an electronic collateral registry system for the first time which is put in operation through the National Bank of Ethiopia’s Directives.