Dis-Chem Pharmacies Limited v Dainfern Square (Pty) Ltd and Others

Dis-Chem Pharmacies Limited, as tenant, concluded a written lease agreement with Dainfern Square (Pty) Ltd, the landlord, for premises in a shopping centre. The lease included a turnover rental calculated in terms of annexure F. Over three consecutive years, Dainfern invoiced Dis-Chem for turnover rental, which Dis-Chem paid in the bona fide but mistaken belief that the amounts were due. Dis-Chem later contended that, on a proper interpretation and implementation of annexure F, no turnover rental was payable because 1.75% of its nett turnover did not exceed the basic rental. It referred a claim to arbitration for repayment of the alleged overpayments, characterising the claim as one of unjustified enrichment. Dainfern raised a special plea that the arbitrator lacked jurisdiction because unjustified enrichment was not covered by the arbitration clause, and alternatively that part of the claim had prescribed. The arbitrator ruled that he had jurisdiction. The High Court set aside that ruling and declared that the arbitrator lacked jurisdiction, prompting Dis-Chem’s appeal to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the High Court was set aside and replaced with an order dismissing the application with costs and declaring that the arbitrator has jurisdiction to determine Dis-Chem’s claim.

The judgment reinforces the liberal and commercially sensible interpretation of arbitration clauses in South African law and affirms the principle of one-stop arbitration. It clarifies that the juridical nature of the remedy sought, including unjustified enrichment, does not oust arbitral jurisdiction where the dispute fundamentally arises from the interpretation or implementation of a contract. The case also underscores that court challenges to arbitral jurisdiction or rulings are premature before the arbitration process has reached finality.