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

During October 2016, Dis-Chem Pharmacies Limited (the appellant) entered into a written lease agreement with Dainfern Square (Pty) Ltd (first respondent) as landlord of Dainfern Square Shopping Centre. Dis-Chem occupied shop 27 and was liable for monthly rental and turnover rental calculated according to a formula in annexure 'F' to the lease agreement. Dainfern issued invoices for turnover rental in May 2016, 2017 and 2018 in amounts totalling R4,199,624.57, which Dis-Chem paid on 1 June of each respective year. Dis-Chem subsequently alleged that these payments were made under a bona fide but mistaken belief that they were due, when in fact no turnover rental was payable because 1.75% of Dis-Chem's turnover did not exceed the basic rental in the relevant periods. Dis-Chem claimed the overpayments constituted unjustified enrichment. In May 2020, Dis-Chem lodged a claim with the arbitrator (second respondent, Mr Mpilo Winston Dlamini SC) seeking repayment. Dainfern entered special pleas on jurisdiction and prescription, arguing that the enrichment claim fell outside the arbitration clause (clause 33.1) which covered disputes relating to 'interpretation of any provision' of the lease or 'implementation thereof'. The arbitrator ruled he had jurisdiction as the central dispute concerned interpretation of annexure 'F'. Dainfern applied to the Gauteng High Court, Pretoria for a declaration that the arbitrator lacked jurisdiction.

• Whether the arbitrator had jurisdiction to determine a claim for unjustified enrichment arising from alleged overpayment of turnover rental under a lease agreement
• Whether the unjustified enrichment claim fell within the scope of the arbitration clause (clause 33.1) which covered disputes regarding interpretation or implementation of lease provisions
• Whether the application for declaratory relief against the arbitrator's jurisdictional ruling was premature before the arbitration reached finality on the merits
• The proper interpretation of arbitration clauses in commercial agreements

1. The appeal was upheld with costs, including costs of two counsel where so employed. 2. The order of the high court was set aside and substituted with: (1) The application is dismissed with costs; and (2) It is declared that the arbitrator has jurisdiction over the respondent's claim.

An arbitration clause covering disputes relating to 'interpretation of any provision' of an agreement or 'implementation thereof' extends to claims for unjustified enrichment where the enrichment claim depends entirely on the determination of the correct interpretation and implementation of contractual provisions. Arbitration clauses in commercial contracts should be liberally construed with a presumption that rational businessmen intend all disputes arising from their relationship to be decided by the same tribunal, unless the language clearly excludes certain questions from the arbitrator's jurisdiction. An enrichment claim that arises from the alleged misapplication of a contractual formula falls within the arbitrator's jurisdiction when the central dispute concerns the correct interpretation of that contractual provision. Applications for declaratory relief challenging an arbitrator's jurisdictional ruling are premature when made before the arbitration has reached finality and certainty on the merits of the underlying dispute.

The Court noted that Dainfern had failed to plead-over regarding the allegation that it applied an incorrect interpretation in generating the invoices when implementing the formula in annexure 'F'. The Court also observed that neither Dainfern in its pleadings nor the high court attempted to identify or define the 'other requirements' of unjustified enrichment that were alleged to fall outside the arbitrator's jurisdiction, noting that the high court's reasoning based on these unnamed 'other requirements' amounted to speculation and conjecture about what may or may not arise during arbitration. The Court emphasized that until the determination of the correct interpretation of annexure 'F' is made, the issue of whether any party was unjustifiably enriched or impoverished does not arise. The misplaced reliance on Tzaneng Treated Timbers regarding the permissibility of declaratory relief before arbitration finality was noted.

This case provides important guidance on the interpretation of arbitration clauses in commercial contracts in South African law. It affirms the principle of liberal construction of arbitration clauses, following the English approach in Fiona Trust, and reinforces the presumption in favor of 'one-stop arbitration' - that parties intend all disputes arising from their commercial relationship to be resolved by the same tribunal. The judgment clarifies that where a claim for unjustified enrichment arises from an alleged misinterpretation or misapplication of contractual provisions, and the determination of that interpretation is central to resolving the enrichment claim, the entire dispute falls within the arbitrator's jurisdiction under an arbitration clause covering interpretation and implementation of the agreement. The case also establishes important procedural principles regarding the timing of applications to review or challenge arbitral rulings - such applications are premature when made before the arbitration has reached finality on the merits. This promotes the efficiency and integrity of the arbitration process by preventing piecemeal court intervention.