Nearly 1,000 parolees and awaiting-trial prisoners, as well as serious and violent offenders under house arrest, could walk free if a payment dispute between the Department of Correctional Services and a service provider is not resolved.

The service provider, Engineered System Solutions (ESS), last month asked the Pretoria High Court to force the department to pay it R74-million.

The company supplies the electronic GPS tracking devices that parolees can be ordered to wear.

The court granted the application and the dispute between the department and Pretoria-based ESS will now be decided by arbitration.

The company wants two invoices, dated December and November 2016 and each for more than R37-million, to be paid.

The reason for the department defaulting on the contract, after paying consistently every 30 days for two years, is not known.

The department filed a notice that it would oppose ESS's application but not an affidavit in support of its position.

Department spokesman Logan Maistry said the case was sub judice and the department could not comment - but the High Court has already ruled that the contract between the department and the company is binding.

Piet du Plessis, a criminal lawyer and former prosecutor, said if the dispute were not resolved the court would have to reconsider the bail conditions of parolees wearing ESS tracking devices and might be forced to return them to custody - arguably infringing their right to freedom.

"If this [electronic tracking] is a condition of a person's bail, and that condition cannot be fulfilled any further, the court would have to review its decision," he said.

"There is obviously a good reason for people being electronically monitored and the court or Correctional Services decided in favour of bail or parole on condition that the person is tracked.

"If tracking cannot be done, the court will have to bring all those people back for it to reconsider."

In his affidavit, ESS CEO Pragason Reddy said he would explain to the court "to what extent it might affect the safety and security of thousands of innocent civilians" if the case were not heard urgently.

Reddy said ESS was awarded a contract in 2011 for a pilot system for monitoring 150 offenders.

In 2013, to much fanfare, then Correctional Services minister S'bu Ndebele announced the rollout of a more developed system and invited the media to a control room to demonstrate its effectiveness.

Reddy said ESS was awarded a five-year contract to roll out the system in 2014.

But in mid-2016 the company's invoices were suddenly not paid. E-mailed queries were sent but to no avail.

As early as March this year ESS issued a letter of demand.

It waited nearly a year after receiving its last payment before approaching the courts.

"At present ESS monitors 1000 individuals," Reddy said.

"Some of them are criminals convicted of serious offences and I have absolutely no doubt that the termination or interruption of the monitoring service will cause these individuals to disappear, only to become a further burden on the already overburdened and exhausted police."

The dispute must now be arbitrated before a retired High Court judge within 45 days.

The arbitration will decide whether ESS will be paid for its services, but the contract itself is still in dispute.

ESS has been told in a lawyer's letter that its agreement with Correctional Services has been "cancelled". No reasons are given.

Gert van der Merwe, a lawyer representing ESS, told The Times that the cancellation was a ploy by the department to evade paying.

"We will, of course, be opposing the so-called cancellation of the contract."

Attempts by The Times to gain clarity about the categories of offenders being monitored were rebuffed by Van der Merwe.

"My client may not, for confidentiality reasons, divulge the identity of any person being monitored, but we can confirm that they are people who fall under a wide spectrum of offences, including convicted violent and serious offenders," he said.