In recent years, commercial actors in Lesotho have shown a marked shift toward resolving disputes through arbitration rather than relying solely on the High Court or subordinate courts. This trend mirrors global developments and reflects practical realities within Lesotho’s legal and economic landscape. Arbitration has become an attractive alternative forum not only for multinational investors, but also for local companies seeking predictability, efficiency, and commercial sensibility in how disputes are managed.
1. Speed and Efficiency
One of the most significant advantages of arbitration is the timeframe within which matters are resolved. Lesotho’s courts, particularly the High Court, are burdened by heavy caseloads, limited judicial capacity, and procedural delays. Even straightforward matters can take years to reach finality.
Arbitration, in contrast:
- Allows parties to set their own timelines;
- Avoids lengthy court rolls;
- Produces awards far quicker than judicial decisions.
For businesses operating in fast-moving sectors such as construction, mining, procurement, and cross-border trading, avoiding prolonged disputes is essential. Time lost to litigation directly affects operations, cash flow, and investor confidence.
2. Expertise of Arbitrators
Court judges handle a broad range of matters, and not all have specialist experience in complex commercial arrangements, engineering contracts, shareholder disputes, or financial instruments.
Arbitration permits parties to appoint arbitrators with specific industry knowledge, such as:
- construction law experts for FIDIC disputes;
- accountants or valuation specialists for shareholder disagreements;
- commercial law practitioners for contract interpretation.
This specialised expertise often results in awards that are commercially sound, technically accurate, and aligned with industry realities.
3. Flexibility of the Process
Litigation is governed by strict procedural rules, including the High Court Rules and Evidence Act. Arbitration, on the other hand, offers far greater procedural flexibility. Parties can determine:
- the format of hearings;
- whether evidence will be oral or on affidavit;
- discovery procedures;
- timelines for submissions;
- whether the arbitration is conducted in person or virtually.
The ability to tailor the dispute-resolution process to the complexity of the matter allows for a more streamlined and cost-effective experience.
4. Confidentiality and Commercial Sensitivity
Court proceedings in Lesotho are public, which can expose sensitive commercial information, internal governance issues, or financial data. Arbitration is private, and awards are generally confidential unless enforcement proceedings are later required.
This privacy is especially valuable for sectors such as:
- mining;
- telecommunications;
- banking and insurance;
- shareholder and joint-venture arrangements.
Confidentiality protects brand reputation, internal strategies, and ongoing negotiations.
5. Neutrality for Foreign Investors
Many commercial contracts in Lesotho involve foreign companies, especially in:
- renewable energy;
- infrastructure (LHDA, Polihali, roads);
- pharmaceuticals and manufacturing;
- telecommunications and digital services.
Foreign parties often perceive arbitration as a neutral and predictable forum, especially when the alternative is appearing in a local court system they are unfamiliar with. Arbitration provides comfort that:
- the adjudicators are appointed by agreement;
- international standards and rules may apply (UNCITRAL, ICC, AFSA, etc.);
- awards are enforceable under the New York Convention, to which Lesotho is a signatory.
This enhances investor protection and encourages foreign direct investment.
6. Enforceability of Awards
Arbitral awards can be enforced through the courts under the Arbitration Act 1980, which gives effect to the New York Convention. This makes the enforcement of foreign arbitral awards more predictable than foreign court judgments, which require separate recognition procedures.
The enforceability of arbitration awards is a critical advantage for multinational and regional companies operating across SADC.
7. Reduced Form of Hostility and Preservation of Business Relationships
Litigation often escalates conflict and can permanently damage commercial relationships. Arbitration is generally less adversarial and can be conducted in a manner that preserves business dealings, especially where the parties have long-term contracts or interdependent supply chains.
Some arbitrations even incorporate conciliation or mediation elements, allowing for settlement without burning commercial bridges.
8. Control Over the Selection of the Tribunal
Parties avoid the uncertainty of judicial assignment and instead select arbitrators:
- for their reputation;
- for impartiality;
- for expertise;
- for availability.
This level of control offers a degree of confidence that the dispute will be adjudicated fairly and efficiently.
9. Costs and Predictability
While arbitration can be expensive in highly technical disputes, businesses increasingly view arbitration as more cost-predictable than litigation. Costs associated with extended court delays, procedural setbacks, and appeals can be substantial.
Arbitration usually:
- concludes faster;
- avoids repeated postponements;
- limits appeal rights (finality of award).
For many companies, the certainty of a fixed timeline outweighs the upfront arbitrator fees.
Conclusion
The growing preference for arbitration in Lesotho is driven by a combination of efficiency, confidentiality, specialist expertise, neutrality, and enforceability. As the commercial sector becomes more sophisticated and more closely integrated with regional and international markets, arbitration offers a modern dispute-resolution mechanism aligned with global business expectations.
For companies in Lesotho, both local and multinational, the choice of arbitration over litigation is no longer merely a contractual clause. It has become a strategic decision aimed at safeguarding commercial interests, ensuring timely outcomes, and maintaining strong business relationships in a competitive economic environment.