Kingdom of Lesotho v Frazer Solar GmbH and Others

The Kingdom of Lesotho (KOL) entered into a supply agreement with Frazer Solar GmbH (FSG) in September 2018 for a renewable energy project. The agreement was signed by Minister Tšolo without cabinet approval and in breach of Lesotho’s public procurement regulations and financial management legislation. FSG terminated the agreement in July 2019 and commenced arbitration in Johannesburg, obtaining an award in its favour on 28 January 2020. FSG subsequently applied ex parte in the Gauteng High Court, Johannesburg for an order making the award an order of court. The KOL did not attend the enforcement hearing held on 29 April 2021, and the enforcement order was granted. The KOL alleged that the court documents had been intercepted and concealed by government officials, which triggered a criminal investigation by the Directorate on Corruption and Economic Offences. The KOL then launched applications to rescind the enforcement order and to set aside the arbitral award. The high court dismissed both applications, finding wilful default and that Article 34(3) of the UNCITRAL Model Law imposed an absolute three-month time bar. The KOL appealed with leave. In the interim, the Lesotho High Court set aside the supply agreement as invalid, unconstitutional and void ab initio.

• Whether the enforcement order could be rescinded under Uniform Rule 42(1)(a), the common law, or for lack of jurisdiction
• Whether the appellant provided a reasonable explanation for its default in the enforcement proceedings
• Whether the appellant demonstrated a bona fide defence with prima facie prospects of success
• Whether the application to set aside the arbitration award was time-barred by Article 34(3) of the UNCITRAL Model Law
• Whether the court possessed an inherent power to condone non-compliance with Article 34(3)
• Whether Article 34(3) constituted an unconstitutional limitation of the right of access to courts under section 34 of the Constitution
• Whether the appellant waived its foreign state immunity under the Foreign States Immunities Act 87 of 1981
• The effect of the Lesotho High Court judgment invalidating the underlying supply agreement on the South African enforcement and setting-aside proceedings

1. The first respondent’s application for leave to adduce further evidence was dismissed with costs, including the costs of two counsel. 2. The appeal against the order of the high court dismissing the rescission application was upheld with costs, including the costs of two counsel. 3. The high court order dismissing the rescission application was set aside and replaced with an order rescinding the enforcement order granted on 29 April 2021, with each party directed to pay its own costs. 4. The appeal against the order of the high court dismissing the application to set aside the arbitral award was dismissed with costs, including the costs of two counsel.

An order making an arbitral award an order of court may be rescinded under the common law where the applicant furnishes a reasonable explanation for default and demonstrates a bona fide defence with prima facie prospects of success; lack of ministerial authority and non-compliance with public procurement and financial management laws constitute such a defence. Article 34(3) of the UNCITRAL Model Law on International Commercial Arbitration, as adapted by the International Arbitration Act 15 of 2017, imposes a strict, peremptory three-month time limit for applications to set aside an arbitral award, which does not permit judicial condonation or extension on good cause shown outside the statutory fraud/corruption exception. The three-month time limit is a reasonable and justifiable limitation of the right of access to courts under section 34 of the Constitution, satisfying the requirements of section 36. A foreign state that has ostensibly agreed in writing to submit disputes to arbitration is not immune from the jurisdiction of South African courts in arbitration-related proceedings under section 10(1) of the Foreign States Immunities Act 87 of 1981. South African courts may not entertain a foreign domestic court’s setting aside of the underlying contract as a basis to challenge an international arbitral award under the Model Law, given the principle of limited judicial intervention and party autonomy encapsulated in Article 5.

The Court made non-binding observations regarding the stringent criteria for admitting further evidence on appeal, emphasising finality, the need to avoid prejudice, and the requirement that such evidence be practically conclusive and admitted only in exceptional circumstances. It noted the international consensus favouring strict time limits and minimal court interference in arbitration, and observed that a losing party who fails to set aside an award timeously may still resist recognition and enforcement under Article 36 of the Model Law or the New York Convention in other jurisdictions. The Court also commented that the argument that the KOL waived immunity by bringing urgent interim stay proceedings was untenable, as those proceedings were brought pending the assertion of immunity.

This judgment is a leading authority on the interpretation of Article 34(3) of the UNCITRAL Model Law in South Africa. It definitively establishes that the three-month period for applying to set aside an international commercial arbitral award is a peremptory, non-extendable time bar that does not permit judicial condonation, and that this limitation is constitutionally valid under section 36 of the Constitution. The judgment reinforces the principles of finality, expedition, party autonomy, and limited judicial intervention in international arbitration. It also clarifies the interaction between foreign state immunity and arbitration agreements under the Foreign States Immunities Act, and confirms that a foreign domestic court’s invalidation of an underlying contract does not override the procedural strictures of the Model Law in South African enforcement or setting-aside proceedings.