SCA Judgment on Arbitration Clause in Divorce Settlement: VJ v VJ and Another

Introduction

In June 2024 the Supreme Court of Appeal (SCA) delivered a significant judgment in the case of VJ v VJ and Another (258/2023) [2024] ZASCA 92. The case revolved around whether an arbitration agreement included in a divorce settlement deed could be used to resolve disputes related to arrear maintenance. The SCA ruled that such disputes are not arbitrable and upheld the jurisdiction of the Maintenance Court.

Summary of the Law

The Arbitration Act 42 of 1965 (the Arbitration Act) governs the use of arbitration to resolve disputes in South Africa. Section 2(a) of this Act specifies that arbitration cannot be used for “any matrimonial cause or any matter incidental to any such cause.” This provision aims to ensure that certain personal and family matters, which require special legal handling, are not subject to arbitration but are adjudicated by courts that are specifically empowered to address them.

Case Background

In this case, the appellant and the first respondent were divorced in 2015, with a deed of settlement incorporated into the divorce decree. This deed included an arbitration clause for resolving disputes between the parties. In 2018, the appellant sought to enforce a maintenance order and recover arrear maintenance payments from the first respondent.

The appellant approached the Maintenance Court under Section 26 of the Maintenance Act 99 of 1998 to obtain a court order for these arrears. On March 1, 2021, the Maintenance Court granted the order and barred Capitec Bank from releasing funds from the first respondent’s account.

Displeased with this order, the first respondent argued that the dispute should be settled through arbitration according to the settlement deed’s arbitration clause. The Maintenance Court dismissed this objection, maintaining its jurisdiction to handle the case. The first respondent appealed this decision to the High Court, which ruled in favour of arbitration. The appellant then sought special leave to appeal to the SCA.

Findings of the Court

The SCA was tasked with interpreting Section 2(a) of the Arbitration Act to determine whether arrear maintenance issues could be resolved through arbitration. The Court concluded that the phrase “matrimonial cause or any matter incidental to any such cause” in Section 2(a) is broad enough to exclude arrear maintenance from arbitration.

The Court emphasized that maintenance disputes are closely tied to matrimonial causes and thus fall within the scope of issues that the Arbitration Act excludes from arbitration. The purpose of the Maintenance Act is to provide a streamlined, cost-effective process for resolving maintenance disputes, which the SCA noted could not be adequately achieved through arbitration.

Furthermore, the SCA highlighted that Maintenance Courts have specific powers to enforce, vary, or suspend maintenance orders—functions that arbitrators do not possess. This distinction underlined the necessity of keeping maintenance matters within the jurisdiction of the Maintenance Court.

The Court also addressed the issue of res judicata, which was raised by the first respondent, asserting that the argument did not apply in this context due to the provisions of Section 8(1) of the Divorce Act.

Conclusion

The SCA's judgment in VJ v VJ and Another affirms that disputes over arrear maintenance and the enforcement of maintenance orders are not arbitrable under South African law. The Court's ruling underscores the importance of maintaining the Maintenance Court's exclusive jurisdiction over such matters, aligning with the intent of the Maintenance Act to ensure accessible and efficient resolution of maintenance issues. Consequently, the SCA set aside the High Court’s decision and upheld the Maintenance Court’s original ruling, reinforcing the proper application of the Arbitration Act in family law contexts.