Enforceability of arbitral awards in Lesotho21. April 2020
Nthabeleng Mafisa studied law at the National University of Lesotho. She is an admitted advocate of the courts of Lesotho and has three years of experience working as a commercial litigator in various commercial disputes as well as domestic labour arbitration disputes.
The rise of commercial disputes in Lesotho led to the establishment of the Commercial Court in 2010. This court currently has two judges and with the increasing number of both domestic commercial disputes as well as disputes arising from foreign investments, this court is a bit overwhelmed. This has led to a backlog of cases and it is not easy for parties to get hearing dates respectively judgments in a timely manner. Arbitration could therefore be a solution to these parties and the Commercial Court likewise which is currently overburdened.
While arbitration is not very common in Lesotho, it is regulated by the Arbitration Act 1980 (hereinafter “Arbitration Act”). Lesotho has also acceded to the New York Convention of 1958 (hereinafter “New York Convention”). Both of these factors create room for arbitration of disputes in Lesotho. Members of the Lesotho Law Society have recently called for an amendment of the Arbitration Act to comply with modern arbitration standards. This may result in an increased use of arbitration as a dispute resolution method which is much needed for both foreign and national businesses operating in Lesotho.
What is the applicable law for recognition and enforcement of an arbitral award in your jurisdiction and which is the relevant section?
Domestic awards: These awards are regulated by the Arbitration Act. In terms of its Section 28, an award shall be binding and not be subject to appeal. Section 28 further provides that each party shall abide by and comply with the award. The Arbitration Act also affords parties an opportunity to request the court to make the award an order of court in terms of Section 32 of the Arbitration Act. This is mandatory for enforcement purposes as it enables the award to be enforced in the same manner as an any judgment or order of court.
Foreign awards: The Arbitration Act makes no provision for foreign awards and its Section 38 refers to notice of service to parties residing within Lesotho. It can therefore be concluded that it only applies to arbitration awards made in Lesotho. However, Lesotho has acceded to the New York Convention without any reservations, therefore the provisions of the New York Convention, in particular Article II, are applicable.
Is your jurisdiction party to the 1958 New York Convention? If yes, what is the date of entry into force of the Convention? Was there any reservation made under Article 1 (3) (reciprocity reservation) of the Convention?
Lesotho is a party to the New York Convention which entered into force on 11th September 1989. Lesotho has acceded to the New York Convention without any reservations under its Article I (3).
JURISDICTION & PROCEDURE BEFORE COURT
Which is the competent court for an application for recognition and enforcement of arbitral awards?
Domestic awards: In terms of Section 2 of the Arbitration Act, the court designated to deal with arbitration matters under the Arbitration Act is the High Court of Lesotho (hereinafter “High Court”).
Foreign awards: The High Court is similarly the court with competent jurisdiction in respect of foreign awards given that all matters relating to arbitration in Lesotho are handled by it. Further, an application for recognition and enforcement would require a court order to declare such an award enforceable. The High Court is the only court with inherent exclusive jurisdiction to grant declarators. A declarator is a legal action by which a judicial declaration of a certain fact is obtained.
How does one initiate court proceedings for the enforcement of an award in your home jurisdiction?
Domestic awards: The award creditor must file an application to the High Court in terms of Rule 8 of the High Court Rules 1980 (hereinafter “High Court Rules”). A party seeking to make an award an order of court must first comply with form requirements under Rule 8 by filing a Notice of Motion together with a Founding Affidavit. The existence of the award and the arbitration agreement must be alleged in the Founding Affidavit and subsequently be attached to the pleadings.
The application will then be served upon the respondent who may defend against the action or opt not to under Rule 8. The rules provide for time periods for the filing of all pleadings such as the respondent’s answer and the applicant’s reply. A hearing date will then be allocated under the High Court Rules. After the order for recognition and enforcement has been issued, the applicant may execute the same against the award debtor’s property under Rule 46 and 47 of the High Court Rules through the assistance of the Sheriff, depending on whether the property is movable or immovable.
Foreign awards: The procedure for initiating recognition and enforcement proceedings before the High Court in respect of a foreign award is similar save for the fact that the party seeking recognition and enforcement must indicate that the application is made in terms of the New York Convention. The provisions of the High Court Rules regarding the form and substance of applications apply in an identical manner.
Are there any requirements for the court to have jurisdiction over an application for recognition and enforcement of arbitral awards? If yes, what are they? Must the applicant identify assets within the jurisdiction of the court?
For the court to have jurisdiction to enforce the award, the subject matter of the dispute must fall within the Arbitration Act or the New York Convention (in the case of foreign awards). The courts may refuse to grant recognition and enforcement of awards where such an award relates to a matrimonial case or related matters or any matter relating to status. This is provided under the Section 3 of the Arbitration Act. Also, the award debtor must be domiciled in Lesotho or have assets in Lesotho for the court to have jurisdiction. The award creditor must identify the assets of the award debtor within the jurisdiction of the court in order to confirm the jurisdiction of the court.
How are costs of the enforcement proceedings allocated?
Any party making an application for recognition and enforcement may request the court to award it the costs of such proceedings. The court has the discretion to either award costs to one party or that each party should bear its own costs depending on the conduct of the parties and the circumstances of each case.
What documentation is required to obtain recognition of an arbitral award? For instance, must the award be submitted in original or a certified copy? Must the original arbitration agreement be submitted?
Domestic Awards: For an application for recognition and enforcement of a domestic award, the original award and a certified copy of the arbitration agreement must be filed with the application.
Foreign Awards: These awards are regulated by the New York Convention which requires an authenticated original award or a certified copy of that award. It further requires that the original arbitration agreement be attached. Where the award is written in any language other than English, a translation by a sworn translator must be filed.
If the required documentation is drafted in another language other than the official language of your jurisdiction, is it necessary to submit a translation together with an application to obtain recognition of an arbitral award? If yes, in what form is the translation required to be?
Domestic awards: English is one of the two official languages in Lesotho. It is mandatory that all documents filed to support applications before the High Court, including applications for recognition and enforcement, must be in English. If the domestic award is in Sesotho, a simple translation of the award prepared by the counsel of the applicant will suffice.
Foreign awards: Foreign awards, being regulated by the New York Convention, must be translated to English if written in any language other than English. They must be translated by a sworn translator.
Do you need to be represented by a lawyer from the particular jurisdiction?
Applications before the High Court must be prepared and filed by an attorney or advocate admitted to practice under the Lesotho Legal Practitioner’s Act 1983 (hereinafter “Legal Practitioner’s Act”). Section 22 of the Legal Practitioner’s Act provides for admission of lawyers already admitted in other jurisdictions. Any lawyer admitted in terms of the laws of Lesotho, even if they come from a different jurisdiction, can represent a party in Lesotho.
When is service of judicial and extrajudicial documents deemed to be affected in your home jurisdiction and what does the procedure and legal framework look like? What about service to a party outside your jurisdiction?
Domestic service: Judicial documents are served by the Court Sheriff. Natural persons can be served at their last known place of residence or place of employment. In the event that such a person is not present, the service can be effected on any person who is an adult at that place. Where a party to be served is a corporate entity, service shall be deemed to have been effected if made at its place of business or registered office.
Where it is known that a party is still resident in Lesotho, but his place of residence in case of a natural person or place of business for a legal person is unknown, a request can be made to the court for notice to be published in the newspaper. The Sheriff will then file a return of service with the registrar of the court stipulating briefly whether service has been effected.
Service abroad: Where the award debtor resides outside Lesotho, the applicant can request the leave of court to effect such service through edictal citation in terms of Rule 5 of the High Court Rules. The court has discretion to direct a way in which service can be made, which can be through an attorney or diplomatic or consular office in the country abroad.
Are there any differences in the procedure of the enforcement of domestic and foreign arbitral awards?
There are no major differences for the enforcement of domestic and foreign awards as applications are both made before the same court and follow the same procedure. The only difference is that domestic awards are governed by the Arbitration Act and foreign awards are governed by the New York Convention.
Do courts recognize and enforce partial or interim awards or only final awards?
Domestic awards: The Arbitration Act only addresses interim awards and not partial awards under its Section 2, which stipulates that an award includes an interim award. The Arbitration Act further provides that a party may make an application to have an award be made an order of court under Section 32 (1). Thus, qualifying as an award under the Arbitration Act, interim awards can be enforced in the same way as interim court orders.
Foreign awards: Interim and partial foreign awards, being creatures of the New York Convention, can only be enforced if they are final and dispose of the issues in dispute.
What are the grounds on which an award may be refused recognition? Do the relevant provisions differentiate between domestic and foreign arbitral awards? If yes, what are the differences in their requirements?
Domestic awards: The Arbitration Act provides for matters which are not arbitrable under Section 3. These matters include matrimonial cases or related matters and any matter relating to status. An award based on such arbitration would be grounds for refusal of recognition of such award. Recognition and enforcement of an award may also be denied where such an award is contrary to public policy.
Foreign awards: The grounds for refusing recognition and enforcement of foreign arbitral awards are the ones provided for in Art. V of the New York Convention.
How does your home jurisdiction interpret and construe the public policy violation defence?
The Court of Appeal of Lesotho in The Ministry of Public Works and 3 Others v Lesotho Consolidated Civil Contractors (Pty) Ltd C of A (CIV) No. 9 2014 accepted the interpretation of public policy by the South African Constitutional Court in Barkhuizen v Napier 2007 (5) SA 323 (CC). The latter decision reasoned that the notion of public policy must be determined with reference to the Constitution and the values that underlie it. This includes ‘the values of human dignity, the achievement of equality and the advancement of human rights and freedoms and the rule of law.’ Any decision contrary to these fundamental principles would be contrary to public policy.
EFFECTS, REMEDIES & PROCEDURAL REQUESTS
What is the effect of a decision recognizing the award in your jurisdiction? Is it immediately enforceable?
An award that is recognized and made an order of court has the force and effect of a regular court order. It can be enforced immediately through the filing of such an order with the Court Sheriff.
Are any remedies available against a decision recognizing an arbitral award in your jurisdiction and, if yes, what are they?
An award debtor against who recognition and enforcement has been obtained may, if dissatisfied with the substantive aspects of the case, appeal to the Court of Appeal. Other remedies would be rescission of the order where there were procedural irregularities in the proceedings or an application for variation of the court order.
What remedies, if any, are available against a decision refusing to recognize an arbitral award in your jurisdiction?
There is no provision for this in the Arbitration Act. However, given that the application for recognition would be before the High Court, the remedy available to the award creditor would be an appeal before the Court of Appeal for further relief if such party feels there were no grounds for refusal of recognition.
Are any additional defences such as a set-off claim possible in enforcement proceedings?
The Arbitration Act makes no provision for a defence of set-off.
Is it possible to obtain the recognition and enforcement of an award that has been fully or partly set aside at the seat of the arbitration? In case the award is set aside after the decision recognizing the award has been issued, what remedies, if any are available against this decision?
It is not possible to obtain recognition and enforcement of an award which has been fully set aside at the seat of arbitration because the award would no longer be binding on the parties. In case of an award that has been partially set aside, recognition and enforceable can be sought for those parts of the award which have not been set aside, provided that such parts are operative and capable of being performed and/or enforced.
Where the award is set aside after the decision recognizing the award has been issued, the award debtor may make an application for variation of the court order on the basis of new facts.
Are interim measures against assets available in your jurisdiction? And if yes, what kind of measures are they?
Yes, the following interim measures are available:
- Attachment of the property of the award debtor pending the outcome of the case.
- Interdict ordering the award debtor to refrain from disposing off the property.
- Security for costs against the award debtor.
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