On June 25, 2015, the House of Federation issued a definitive ruling regarding the legality of using rural agricultural land as security or mortgage. This decision, reached during the second regular meeting of the fifth working year of the fourth parliamentary term, addressed the conflict between private contractual agreements and constitutional land tenure protections. Formal notification of this decision was issued to the Amhara National Regional State Supreme Court on July 3, 2015.
Background of the Case
The litigation originated in the Dejen Wereda Court of the Amhara Region. The applicant, W/ro Kelebe Tesfa, entered into a land mortgage agreement with the respondent, Ato Ayalew Derbow, on July 20, 2010. This agreement was intended to modify or replace a previous mortgage arrangement dating back to 1896 (E.C.), which involved a debt of 270 Birr.
W/ro Kelebe later challenged the validity of this contract, arguing that the agreement lacked a constitutional basis. However, the Dejen Wereda Court dismissed her claim, ruling that the contract was enforceable because both parties had entered into it voluntarily. This decision was subsequently upheld by the Amhara Regional State Supreme Court Cassation Division, which found no error of law in the lower court’s judgment.
Constitutional Review and Recommendations
The Constitutional Inquiry Commission reviewed the case and identified a fundamental contradiction between the lower courts’ rulings and the supreme law of the land. The Commission’s analysis focused on three primary legal points:
- Non-Transferability of Land: Any contract that attempts to transfer agricultural land through sale or exchange is prohibited under the Constitution.
- Statutory Conflict: Agreements that utilize land as security and result in the displacement of farmers are in direct violation of both Federal and Regional rural land administration laws.
- Judicial Obligation: The Commission maintained that courts have an inherent duty to reject illegal contracts on their own initiative. By upholding a mortgage agreement that treated land as private property, the courts violated the protections granted under Article 40, Sub-Articles 3 and 4 of the Constitution.
Final Decision of the House of Federation
The House of Federation adopted the Commission’s recommendations and issued a final ruling to rectify the judicial error. The Council emphasized that according to Article 40(3) of the Constitution, land is the common property of the People and the State and cannot be subject to sale or exchange. Furthermore, Article 40(4) guarantees the right of farmers to access land and protects them from eviction.
The Council determined that the lower courts erred by prioritizing the principle of “freedom of contract” over constitutional mandates. Treating agricultural land as private property for the purposes of a mortgage undermines the constitutional protection afforded to rural landholders.
In accordance with Article 9(1) of the Constitution, which stipulates that any law or decision inconsistent with the Constitution shall be void, the House of Federation unanimously overturned the decisions of the Dejen Wereda Court and the Amhara Regional State Supreme Court Cassation Division. The ruling restores the applicant’s constitutional landholding rights and reaffirms that rural land cannot legally serve as collateral in a manner that leads to the displacement of the holder.