Introduction
On 22 May 2026, the Supreme Court of Appeal of South Africa (“SCA”) delivered a judgment of considerable significance to the Kingdom of Lesotho, to public procurement law in the region, and to the law governing the enforcement of arbitral awards against sovereign States. The SCA set aside the decision of the Gauteng Division of the High Court, Johannesburg, which had refused Lesotho’s application for rescission of an arbitration award of €50 million (approximately R950 million) obtained by Frazer Solar GmbH, a German renewable-energy company. The matter has been remitted for reconsideration on the merits.
The judgment is a welcome restatement of long-established principles: that the courts will not lightly enforce agreements concluded in breach of constitutional and statutory requirements; that arbitral awards obtained without proper notice may be vulnerable to rescission; and that public-policy considerations remain central whenever the assets of a sovereign State are at stake.
This note examines the dispute, the SCA’s reasoning, and the practical implications for government entities, contracting parties, and practitioners advising on cross-border commercial transactions involving the Kingdom of Lesotho.
Background to the Dispute
In September 2018, an agreement was concluded between Frazer Solar and a representative of the Government of Lesotho for the implementation of a large-scale renewable-energy project. The project, as advertised, was to include the installation of 40,000 solar water heating systems, the deployment of 20MW of solar photovoltaic capacity, the distribution of one million LED lights, and the supply of 350,000 solar lanterns to rural communities. Financing was reportedly to be sourced through the German development bank KfW-IPEX Bank GmbH.
The agreement was signed on behalf of the Government by Mr Temeki Tšolo, then Minister in the Prime Minister’s Office. It is the authority or, more accurately, the alleged absence of authority of Mr Tšolo to bind the State that lies at the heart of the dispute.
The agreement contained an arbitration clause providing for the resolution of disputes by arbitration seated in South Africa. In December 2019, Frazer Solar invoked the clause and commenced arbitral proceedings, asserting repudiation by the Government. The arbitration proceeded in the absence of the Kingdom of Lesotho, which contends it received no proper notice. An award in the sum of €50 million was issued in favour of Frazer Solar and, in 2020, made an order of the Gauteng High Court again, without representation of the Kingdom.
The Enforcement Campaign
Armed with a South African court order, Frazer Solar embarked on an aggressive multi-jurisdictional enforcement campaign. The company:
- Served notice on the Trans-Caledon Tunnel Authority SOC Ltd seeking to attach royalty payments due to Lesotho under the Lesotho Highlands Water Project Treaty;
- Sought attachment of monies allegedly payable by Eskom to Lesotho in connection with the same Project;
- Obtained recognition of the award before the Supreme Court of Mauritius, resulting in the provisional seizure of Lesotho’s shareholding in the West Indian Ocean Cable Company held through the Lesotho Communications Authority; and
- Obtained an order in Belgium in October 2022 purporting to authorise the seizure of Lesotho assets valued at €50 million, said to include the bank account of the Lesotho Embassy in Brussels.
The breadth of this enforcement strategy underscores why the South African proceedings have been of such strategic importance to the Kingdom: the South African order has functioned as the doctrinal and evidentiary foundation upon which downstream enforcement in other jurisdictions has rested.
Lesotho’s Constitutional Challenge
In parallel proceedings before the High Court of Lesotho, the Government challenged the validity of the underlying agreement. In a judgment delivered in November 2022, the High Court of Lesotho declared the agreement unconstitutional and unlawful. The Court found that:
- Mr Tšolo lacked the requisite authority to bind the Government of Lesotho;
- The agreement had not been approved by Cabinet, as constitutionally required;
- The mandatory procurement processes prescribed by the Public Financial Management and Accountability Act, 2011 and the Public Procurement Regulations, 2007 had been disregarded; and
- The agreement was, accordingly, void ab initio.
That declaratory finding, which remains undisturbed, forms the constitutional and statutory backdrop against which the South African rescission application was advanced.
The Rescission Application and the High Court’s Refusal
Lesotho applied to the Gauteng High Court for rescission of both the arbitration award and the order making it enforceable. The grounds advanced included that the award had been procured improperly, that the underlying agreement was unlawful and void, and that the Kingdom had not been afforded proper notice of the arbitration.
The High Court dismissed the application, holding that Lesotho had failed adequately to explain delays in approaching the Court and had not demonstrated reasonable prospects of success. The judgment did not, in any meaningful way, engage with the Lesotho High Court’s declaration of invalidity or with the substantive allegations of procurement irregularity.
The Supreme Court of Appeal’s Findings
On appeal, the SCA reversed. The judgment is notable for several reasons.
First, the SCA held that the High Court had failed to give appropriate weight to the Lesotho High Court’s declaration that the underlying agreement was unconstitutional and unlawful. A South African court cannot, the SCA emphasised, enforce an agreement that is contrary to public policy. Where a competent court of the contracting State has already pronounced the agreement invalid, that finding cannot simply be set to one side.
Second, the Court held that the allegations that Lesotho was not properly served with notice of the arbitration proceedings had not been adequately considered. The audi alteram partem principle is foundational, and an arbitral award procured against an absent party who was not lawfully notified raises serious public-policy concerns.
Third, the SCA accepted that the allegations of “fraud and concealment” required careful consideration. The matter could not be dismissed on procedural grounds without engaging with the substantive allegations regarding the legality of the contract itself.
Fourth, the Court recognised that “serious disputes of fact” existed concerning both the conclusion of the agreement and the conduct of the arbitration, and that these disputes could not be resolved without a proper hearing.
The SCA therefore upheld the appeal, set aside the order dismissing the rescission application, and remitted the matter for reconsideration on the merits.
Parallel Criminal Proceedings
The corruption dimensions of the matter remain live. The Directorate on Corruption and Economic Offences (“DCEO”) laid charges against Mr Tšolo in 2022 in connection with the agreement. In November 2025, the High Court of Lesotho granted Mr Tšolo a permanent stay of prosecution a ruling Frazer Solar has cited publicly as vindicating the legitimacy of the underlying contract.
That position, however, has since been overtaken by events. On 15 May 2026, the Court of Appeal of Lesotho overturned the permanent stay and reinstated the prosecution. The criminal proceedings are now expected to resume before the High Court of Lesotho.
Legal Commentary and Practical Implications
The SCA judgment is significant on several levels.
On the authority of officials to bind the State. The decision reinforces the principle that no minister or official can lawfully commit the State to a contractual obligation outside the bounds of the Constitution and the applicable statutory framework. Counterparties dealing with government entities, domestic or foreign, bear a duty of inquiry as to the authority of the signatory and as to compliance with procurement law. Reliance on ostensible authority is no substitute for confirmed compliance with the mandatory provisions of the Public Financial Management and Accountability Act, 2011 and the Public Procurement Regulations, 2007.
On the public-policy bar to enforcement. The judgment is a salutary reminder that an arbitral award, however formally regular, does not exist in a normative vacuum. Where the underlying agreement offends the constitutional and statutory order of the State against whom it is sought to be enforced, public policy may operate as a substantive bar to recognition. This principle is reflected in both Article V(2)(b) of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and section 18 of the International Arbitration Act, 2017.
On procedural fairness in arbitration. The audi principle is no less applicable to arbitration than to litigation. Awards rendered against absent respondents who have not been duly served are vulnerable to rescission and to refusal of recognition. Practitioners advising claimants in cross-border arbitrations should ensure that service is effected in strict accordance with the agreed mechanism and, where appropriate, supplemented by service through diplomatic channels.
On the rescission of arbitral awards made orders of court. The decision affirms that, where an award has been made an order of court without representation of the respondent, the Court retains jurisdiction to revisit that order on proper grounds. Allegations of fraud, of non-service, and of substantive illegality of the underlying contract are all matters which the Court is bound to consider before lending its imprimatur to enforcement.
On the strategic value of parallel jurisdictional proceedings. The Frazer Solar matter illustrates the importance, for sovereign respondents, of coordinated litigation strategies across multiple jurisdictions. The declaration of invalidity by the Lesotho High Court has now been deployed to material effect in the South African appeal, and is likely to feature in any continued enforcement efforts in Mauritius, Belgium, and elsewhere.
Conclusion
The SCA’s judgment does not represent a final adjudication on the merits. The rescission application returns to the High Court for reconsideration in light of the appellate court’s guidance. However, the legal terrain has been materially altered. The presumption of regularity that once attached to the arbitral award and to the 2020 order making it enforceable has been displaced, and the substantive defences advanced by the Kingdom of Lesotho, invalidity of the underlying agreement, want of authority of the signatory, non-compliance with mandatory procurement law, and improper service of the arbitral proceedings, must now be addressed on their merits.
For Lesotho, the judgment is a meaningful step toward the vindication of its constitutional and statutory framework governing public contracting. For commercial counterparties, it is a reminder that contracts concluded in disregard of those frameworks carry latent fragility that no arbitration clause, however broadly drafted, can wholly cure.