Case Comment: Comment on the Cassation Division's Decision in File No. 80119 (Amharic)

Case Comment on Usury: Summary The Cassation Bench of the Federal Supreme Court decided that a contract of loan with 10 per cent interest rate per month establishes a crime of usury as provided under Article 712 of the Criminal Code. The court reasoned out that 10% interest rate per month violates the official interest rate and therefore the creditor has committed the crime of usury. The court does not expressly mention which official rate it is referring to -in its decisions. Nevertheless, considering that there is no any other official interest rate that is provided by the law in Ethiopia, it can be easily inferred that the court was tacitly referring to the interest rate provided in the Civil Code. The question is therefore whether the interest rate provided under Article 2479 of the Civil Code overrides Proclamation No. 591/2008 (based on which the National Bank of Ethiopia issues directives on interest rates). Article 5(4) of the Proclamation has empowered the National Bank of Ethiopia to determine official interest rates and it is clear from the provisions of the Proclamation that this mandate includes the power to determine interest rates that are applicable in private loan agreements. Directive NBE/INT/11/2010/ has given financial institutions the authority to determine interest rates freely; whereas, it remains silent about the applicable maximum interest rate for private loans. I argue that Proclamation No. 591/ 2008 has repealed Article 2479 of the Civil Code and the silence of the directive with regard to private loans does not imply the revivication of Article 2479 of the Civil Code. Furthermore, the court has overseen the elements of Article 712 of the Criminal Code that establish the crime of usury. For a crime of usury to be established under the provision, the exorbitant interest rate should be the result of debtor's dependence on the creditor, material difficulty, inexperience, or weak.