The government of Lesotho is contemplating appealling against a court judgement to pay a staggering M1.2 billion arbitration award and legal costs to Frazer Solar GmbH (FSG).
This after the South African High Court recently threw out Lesotho government’s (GOL) case to overturn FSG’s arbitration award for an alleged breach of agreement over a solar and energy efficiency project.
In its belated court challenge, the government of Lesotho had sought to set aside FSG’s arbitration award of €50 million plus costs and interest, and also to rescind the court order to allow for seizure of the government’s assets, which FSG had attempted in 2021.
In its defense, the GOL argued that the then Minister in the Prime Minister’s Office, Temeki Tsolo was never authorised to enter into the supply agreement with FSG on its behalf.
It further argued that it never agreed to submit to arbitration, suggesting that the South African arbitrators and the High Court did not have jurisdiction to preside over the matter.
Lesotho also argued that the primary reason it initially defaulted in the early legal processes was because its relevant officials had not been notified of the cases beforehand.
But South African High Court judge, Justice JJ Strijdom in the judgement that was issued last Friday, held that given the overwhelming evidence presented before the court, Tsolo had the authority to conclude the arbitration agreement.
The judge pointed to the evidence that indicated that then Prime Minister Thomas Thabane had deposed an affidavit to a confirmatory letter dated August 1, 2018 from Tsolo to PSG.
The other evidence raised before the court showed that FSG representative, Mr Frazer met with then Prime Minister Thabane, Tsolo and the Government Secretary, where Thabane assured Mr Frazer that everything was in order and that Finance Minister Dr Moeketsi Majoro would be compelled to cooperate.
The evidence before the court further showed that on a separate occasion, FSG representatives met with Majoro, during which Majoro undertook to complete the finance agreement.
“I concluded (sic) that the evidence shows that on a balance of probabilities Minister Tsolo had actual authority or at least ostensible authority to conclude the arbitration agreement,” Justice Strijdom said in his judgment.
On the jurisdiction of South African arbitration and courts, Justice Strijdom ruled that when the enforcement ruling was made following the arbitration award, the Tsolo’s actions of signing the supply agreement in his official capacity were not yet reviewed and set aside (by the Lesotho High Court).
In the end, the judge dismissed Lesotho’s application with costs, and ordered it to pay PSG legal costs
Following Justice Strijdom’s judgement, Lesotho’s Deputy Prime Minister Justice Nthomeng Majara, said they would soon meet with the government’s legal team to familiarise themselves with the contents of the judgement with a view to a possible appeal application.
She said they have until February 3 this year to lodge an appeal.
“It is not all over. We still have a glimmer of hope, as we wish to appeal the judgement,” Justice Majara said on Monday this week.
But FSG believes there is no hope for the GOL to successfully appeal the judgement.
“Now that GOL has lost, it has few if any options left to avoid complete defeat. We understand there is no automatic right to appeal the decision, and we firmly believe there are no reasonable grounds to assume GOL would prevail should an appeal be granted.
FSG has vowed to continue seizing Lesotho’s assets in different countries including Lesotho, South Africa, Lesotho, UK, USA, Belgium and Mauritius in order to get what is due to it.
“We urge Prime Minister Sam Matekane to acknowledge the reality that Lesotho has lost and to reach out to us to settle the matter.
“As for Frazer Solar’s future intentions, failing settlement, Frazer Solar will contInue to enforce our legal rights with renewed vigour on the back of this overwhelming legal victory through any appeal process, and then to restart asset seizure actions in any and every country in the world where Lesotho has assets until we receive every single cent of what is rightfully owed to us.”
The solar project in question, approved in 2018, among others involved the installation of solar water heaters, solar PVs, and LED lights with the provision to incorporate large-scale batteries in off-grid and grid-tied applications.
The project never saw the light of day as the financing agreement was never finalised.
This prompted the now high profile legal dispute between FSG and the GOL, which eventually went to arbitration in South Africa in 2019.
The GOL was unable to make its opposing submissions before South African arbitrators, and FSG subsequently prevailed and was awarded €50 million plus costs and interest in 2020.
FSG then approached South African courts to seek an order making the arbitration award an order of the court, which was duly granted unopposed again, by the government of Lesotho in 2021.
The government of Lesotho then filed an application in the Lesotho High Court to review and set aside the decision to enter into a supply agreement and its arbitration agreement, which declared the agreement void.