Motseoa Pule & 90 Others V Ministry of Tourism, Environment and Culture & 2 Others (C of A (CIV) 80/2024) [2025] LSCA 37 (2 May 2025)

IN THE COURT OF APPEAL OF LESOTHO LESOTHO HELD AT MASERU C OF A (CIV) NO. 80/2024 CIV/APN/0028/2023 In the matter between: MOTSEA PULE & 90 OTHERS APPELLANT AND MINISTRY OF TOURISM ENVIRONMENT AND CULTURE LESOTHO HIGHLANDS DEVELOPMENT AUTHORITY ATTORNEY GENERAL 1st RESPONDENT 2ND RESPONDENT 3RD RESPONDENT CORAM: DAMASEB AJA CHINHENGO AJA VAN DER WESTHUIZEN AJA HEARD: DELIVERED: 02 May 2025 16 APRIL 2025 FLYNOTE Public Service – Termination of Fixed-term Contracts – Arbitration Clause – Jurisdiction of the High Court – Interim Interdicts – Arbitration Act 1980 (Lesotho), ss 4, 22 The appellants, seventy-two former contract employees of the Ministry of Tourism, Environment and Culture, challenged the termination of their fixed-term employment contracts. Their contracts contained an arbitration clause stipulating that disputes were to be resolved by binding arbitration. The termination letters cited statutory irregularities in their appointments and relied on a circular issued by the Ministry of the Public Service directing the regularisation or termination of unlawful appointments. The appellants approached the High Court seeking, inter alia, urgent interim interdicts and review relief. The High Court dismissed the application for want of jurisdiction on account of the arbitration clause. Held, dismissing the appeal— 1. The High Court was correct to decline jurisdiction. The existence of an arbitration clause in the employment contracts precluded judicial intervention on the merits unless the clause had been set aside or rendered inoperative under section 4 of the Arbitration Act 1980. No such application was made. 2. The arbitration clause, being a distinct and binding agreement, survived termination of the employment contracts and governed disputes arising from or connected with the contract. 3. The jurisdictional objection taken by the Ministry was properly determined in limine, consistent with established principles that questions of jurisdiction must be adjudicated prior to merits. 4. Although the appellants sought interim interdicts, these were not permissible under section 22 of the Arbitration Act 1980, as the relief was not to facilitate arbitration but to pre-empt it by pursuing a parallel review process. Interim relief may only be granted in aid of arbitration. 5. The court below erred in ordering costs against the appellants. While the appeal was unsuccessful, the circumstances of their sudden dismissal and their lowly status militated against a punitive costs order. Accordingly, the appeal was dismissed with no order as to costs. Appeal dismissed. No order as to costs. JUDGMENT P. T. DAMASEB AJA Introduction [1] This appeal raises the issue whether the High Court (Khabo J) was correct to decline jurisdiction in respect of an urgent application seeking an interim interdict pending a review application to set aside a dismissal of public servants whose written contracts of employment contain an arbitration clause for the settlement of disputes. [2] It is common cause that all the 72 appellants (hereafter employees) had entered into fixed-term written contracts of employment with the first respondent (the Ministry). [3] The contract of each of them states in clause 10: ‘It is specifically recorded that any claim or dispute relating to the interpretation or execution of this Agreement which cannot be settled amicably shall be settled by binding arbitration’. [4] On 16 January 2023, each of the appellants received a termination letter from the Permanent Secretary of the Ministry stating: ‘Your engagement in terms of the contract of employment which you signed on the 17/03/22 was done in contravention of the laws and policies that govern employment into the public service, to wit: [section] 137 of the Constitution read with; Sections (sic) of the Public Service Act Section 25 read with Section 29 Section 8 of the Public Service Act 2005 Section 9(1), (3), (6) and Sections 20-26 of the Public Service Regulations 2008; Section 3(1), and (5) of the Basic Conditions of Employment for Public Officers Notice 2011. The authority or person who engaged you did not have the power nor authorized to engage you to work for the Ministry. Further, your engagement did not follow the procedure prescribed in the above pieces of legislation. I have therefore decided to terminate your engagement, as I hereby do, with immediate effect’. [5] The employees approached the High Court by way of urgency and sought the following relief: ‘1. A rule nisi …calling upon the Respondents to show cause …why the orders sought herein shall not be granted. 2. … 2.1. The Respondent is interdicted, prohibited and restrained from; 2.1.2. Proceeding with the plan of recruiting people in replacement of the positions held by Applicants pending finalization hereof; 2.1.3. Taking any steps in relation to the performance any activity pursuant to the contents of the [dismissal] letter ... pending finalization hereof; 2.1.4. An order directing the 1st Respondent to dispatch the documents incidental and connected with the decision to terminate the contracts of Applicants…; 2.1.5. An order that suspends the implementation of the decision of the 1st Respondent envisaged letters of termination of employment …pending finalization hereof. 3. It be declared that the decision to terminate the employment contracts of Applicants be declared null and void and of no force to the extent of deviating from Ministry of the Public Service Circular Notice NO. 11 of 2022. 4. An order reviewing and setting aside the decision of the Acting Principal Secretary to override the decision of the former Principal Secretary in terms of which Applicants were recruited and absorbed in the employment without recourse to self-review as irregular and of no legal effect. 5. An order declaring the failure of the government to pay salaries of Applicants as unlawful to the extent of taking away the benefits of applicants contrary to section 17(1) of the constitution. 6. An order determining the date by which the salary arrears of Applicants must be paid. 7. A declaratory order that applicants are entitled to the benefits and salaries up to 31st March 2025. ... An order directing that Applicants be reinstated to their employment in the Ministry of Tourism, Environment and Culture. … 10. That prayers 1-2.1.5 operate as interim orders with immediate effect, and will remain in full force and effect until the final determination of this application and, if the rule nisi should be confirmed, also thereafter.’ [6] The backdrop against which the dismissals are challenged is a Circular of 15 December 2022 (the Circular) by the Acting Principal Secretary of the Ministry of the Public Service, Labour and Employment addressed to all Government Departments. In relevant part, the Circular states: ‘1. TERMINATION OF UNLAWFUL APPOINTMENTS It has been discovered that Ministries, Department (sic) and Agencies (MDAs) have been appointing officers without following proper recruitment processes. These are appointments that were not authorized by the relevant appointing Authorities. Such appointments are mostly done on Temporary basis and Contract terms. MDAs are therefore requested to terminate all employments of staff outside legal requirement processes by the 31st of January 2023. However please take note that necessary processes and procedures are followed in terminating such appointments because an administrative decision made by an organ of state, even if impugnable, is binding until it has been reviewed and declared unlawful by a court. All MDAs involved are therefore advised to approach courts of law to have their unlawful appointments and recruitments reviewed and declared unlawful before they could be terminated’ [7] In a nutshell, the employees’ case was that the termination of their contracts was unlawful, because it failed the standard set by the Government itself in the Circular: that an organ that wished to terminate the employees’ contracts had to approach a court of law to set aside the appointments. In other words, the Government of Lesotho (GoL) had, by way of the Circular, bound itself not to dismiss except by an order of court an employee it considered to have been hired unlawfully. [8] In limine, the Ministry raised two objections, both of which it posited were dispositive of the relief sought by the appellants. First, as employees in the public service, the appellants' cause of complaint ‘presents itself as a matter pre-eminently and ordinarily lying within the remit and jurisdiction of labour forums’. Second, ‘that the parties have expressly indicated their intention to exclude the jurisdiction of the court through a binding arbitral clause in terms of clause 10 of the signed contract between and by the parties…and that the scope of the application of this clause is wide enough to cater for disputes such as the present matter.’ [9] The Ministry added: ‘…despite the termination of the contract of employment in relation to the [employees] …as communicated …in [the] letter dated 16th January 2023, the arbitral clause survives the termination. I am advised that the courts have developed a principled approach to give effect and respect to arbitration agreements unless there are compelling reasons not to do so. …Therefore I pray that this court should decline to hear and determine the matter as it lacks jurisdiction’. The High Court [10] Section 4 of the Arbitration Act reads: ‘Binding effect of arbitration agreement and power of court in relation thereto (1) Unless the agreement otherwise provides, an arbitration agreement shall not be capable of being terminated except by consent of all the parties thereto. (2) The court may at any time on the application of any party to an arbitration agreement, on good cause shown— (a) set aside the arbitration agreement; or (b) order that any particular dispute referred to in the arbitration agreement shall not be referred to arbitration; or (c) order that the arbitration agreement shall cease to have effect with reference to any dispute referred.’ [11] Relying on dicta from this Court1 and also on s 4 of the Arbitration Act 1980, Khabo J held: ‘[22] …by opting for arbitration, the parties voluntarily selected a dispute resolution mechanism as an alternative to litigation. That choice ought to be respected by the courts. Indeed if a party wishes to abandon an arbitration agreement, it is at liberty to do so as provided for under Section 4(2) of the [Arbitration] Act…’ [12] According to Khabo J, the Court Appeal in Kompi and 12 Others v Government of the Kingdom of Lesotho and 7 Others2 emphasized that a party bound to an arbitration agreement should approach the High Court in terms of s 4(2) of the Arbitration Act to resile from an arbitration agreement. But that in the present case, the 1 Chabeli Constructions (Pty) Lt v Road Fund and 5 Others C of A (CIV) 34/2020; Kompi and 12 Others C of A (CIV) 43B/ 2021. 2 C of A (CIV) 43B/2021. appellants did not exhaust this mechanism which they had an option to resort to if they were not happy with clause 10. [13] Khabo J added: ‘The foregoing analysis leads me to the conclusion that as long as arbitration remains the declared route of resolving disputes under the contract, it is not proper for the appellants to change course and follow the litigation route through the courts. … Without jurisdiction, this court cannot consider the merits of this case… [and] …I …respect the contractual arrangement between the parties.’ [14] Khabo J dismissed the application ‘for want of jurisdiction with costs on an ordinary scale’. The appeal [15] Aggrieved, the employees appealed to this Court on several grounds, amongst others, criticising the court for failing to deal with the merits when the Ministry ‘waived’ the arbitration process. The grounds of appeal also allege that: ‘The court a quo erred in making a vague and speculative finding to justify clause 10 of the contracts of employment is an absolute barrier to judicial intervention in circumstances where it is clear that the Acting Principal Secretary terminated the employment contracts in the context of a quasi- administrative procedure aimed at determining whether or not her predecessor in office had power or not to employ Appellants.’ Discussion Was it a misdirection for the court a quo to avoid dealing with the merits? [16] This Court has made it clear times without number that a court’s jurisdiction to deal with a dispute is so foundational that where it is raised it must be determined first.3 [17] There is no merit to the criticism that the court a quo misdirected itself in not dealing with the merits. The Ministry mounted a jurisdictional objection in limine and was entitled to it being adjudicated. The only question is whether the court was wrong. I turn to that issue next. Did the High Court lack jurisdiction? [18] Of course, it did! This case is both on the facts and principle no different from the facts of Kompi4. In Kompi too, the employees had included in their written employment contract an arbitration clause that: ‘It is specifically recorded that any claim or dispute relating to the interpretation or execution of this Agreement which cannot be settled amicably shall be settled by binding arbitration according to the provisions of the Public Service Act 2005 as amended’. 3 For example, in: Mokhali Shale v “Mamphele Shale and 3 Others C of A (CIV) No. 23/ para 8; Ramoepana v The Crown [2021] LSCA 38; CGM Industrial (Pty) Limited v Lesotho Clothing and Allied Workers Union and Others (C of A CIV/10/99); The Ministry of Trade and Industry v Seleke (C of A No. 41/2021) [2022] LSCA 9 (13 May 2022); Tau Makhalemele v Board of Enquiry of the National Security Service and Others (C of A (CIV) 38/2022). 4 C of A (CIV) 43B/2021. See also Bataung Chabeli Constructions (Pty) Ltd v Road Fund (C of A (CIV) 34 of 2020) [2021] LSCA 17 (14 May 2021); [19] In Kompi this Court dismissed an appeal after the High Court declined to entertain a review application which sought to impugn their summary dismissal. [20] In Kompi5 we laid down the following important principles: a) Public policy encourages respect for adherence to agreements to submit disputes to arbitration instead of recourse to courts; b) There must be a weighty and cogent reason for a party to be allowed to resile from an agreement to submit a dispute to arbitration and the onus rests on the party wishing to do so; c) Section 4 of the Arbitration Act is the conduit for a party to an arbitration agreement to resile from it; and if the other contracting party does not consent to opting out of arbitration, the arbitration agreement remains binding; d) An arbitration clause survives the termination of an agreement; e) An arbitration clause applies to cases involving facts before the end of the contract and after its end as long as the dispute in question is related to a right that was vested under the terminated agreement; f) An arbitration agreement is a distinct and separate contract which survives the termination of the parties’ obligations to 5 Supra. perform the primary obligations created by the terminated agreement. [21] Specifically, we held: ‘[77] It goes against the letter and spirit of s 4…to seek to make arbitration an optional remedy which a party that has agreed to refer a dispute to arbitration may ignore in favour of seeking redress in the High Court – and casting the onus on the other party to seek the remedy of stay in terms of s 7(2) of the Arbitration Act 1980.’ [22] The employees were bound by the arbitration clause unless they obtained relief from the High Court in terms of s 4 of the Arbitration Act. [23] The appellants’ grounds of appeal mischaracterise the court’s approach by suggesting that it treated the arbitration clause as an absolute bar to seeking relief in the High Court. Except for the possibility of seeking interim relief under s 22 as discussed below, the court could only assume jurisdiction on the merits if s 4 was successfully engaged. It was open to the employees to approach court to make the case, for example, that the Ministry had waived the right to arbitration or that the circumstances of the case were such that there was ‘good cause’ for the arbitration agreement not to apply. [24] Therefore, Khabo J correctly declined jurisdiction. Was it permissible for the employees to seek an interdict? [25] As I demonstrated earlier, the employees had approached the High Court on urgent basis to seek interim relief including an interdict but pending the adjudication of the review application. Where there is an arbitration agreement, an interdict is only possible if the purpose is to facilitate the arbitration between the parties. [26] According to s 22 of the Arbitration Act: ‘General powers of the court (1) For the purposes of and in relation to a reference under an arbitration agreement, the court shall have the same power of making orders in respect of— (a)security for costs; (b)discovery of documents and interrogatories; (c)the examination of any witness before a commissioner in the Republic or in the territory or abroad and the issue of a commission or a request for such examination; (d)the giving of evidence by affidavit; (e)the inspection or the interim custody or the preservation or the sale of goods or property; (f)an interim interdict or similar relief; (g)securing the amount in dispute in the reference; (h)substituted service of notices required by this Act or of summonses; and (i)the appointment of a receiver, and it has for the purposes of and in relation to any action or matter in that court.’ (Emphasis supplied). [27] What the employees sought was not a stand-alone ‘interim interdict or similar relief’ intended to facilitate an arbitration. They sought interim relief as a precursor to a review application to challenge their dismissals. Whether or not the dismissals were unlawful, is the subject matter of the arbitration clause. The part of the relief seeking an interim interdict therefore fell outside s 22(1)(f) and was therefore properly declined by the court a quo. Costs [28] The record shows that the employees were lowly paid public servants. Their dismissal was sudden and came without warning. The impact of the dismissals must no doubt have been devastating. This is not a proper case for mulcting the employees with a costs order which will only add to their hardships. Each party must therefore bear their own costs. Order [29] The appeal is dismissed with no order as to costs. ______________________________ P. T. DAMASEB ACTING JUSTICE OF APPEAL I agree: I agree: _____________________________ M. H. CHINHENGO ACTING JUSTICE OF APPEAL _____________________________ J. VAN DER WESTHUIZEN ACTING JUSTICE OF APPEAL FOR APPELLANTS: ADV C. J LEPHUTHING FOR RESPONDENT: ADV P. T. B. N THAKALEKOALA 15