What to do when you have lost an arbitration
Arlene Jacobs, dispute resolution official shares two ways to set aside an arbitration.
By Arlene Jacobs, a dispute resolution official at the Consolidated Employers Organisation.
In terms of the Labour Relations Act, an arbitration award issued by a commissioner is final and binding and may be enforced as if it were an order of the Labour Court.
The LRA does not allow any party to appeal against an arbitration award, but these awards can be overturned by other means. In fact, there are two ways of going about setting aside an arbitration award: by rescission application or by Labour Court review.
On the one hand, the rescission application is normally made to the same arbitrator who made the original arbitration award. It stipulates that a party may, within 14 days of becoming aware of the arbitration award, apply to the arbitrator to rescind (cancel) the award.
This can be done on the grounds that the award:
- Was erroneously sought or made in the absence of any party affected by it;
- Contained an ambiguity (i.e. could mean two different things) or an obvious error or omission; or
- Was granted because of a mistake common to the parties.
The grounds for rescission are very narrow, and such applications are mostly brought when one party has not attended the arbitration hearing, and the award has been made in that party's absence. For example, if the employer fails to attend the arbitration hearing, the arbitrator might, on the employee's evidence, decide that the dismissal was unfair.
However, parties are warned that the CCMA is unlikely to accept excuses for the absence of parties where the employer could have avoided the cause of absence. That is, if it had been within the power of the absent party to have attended the arbitration, the chances of a rescission being granted are slim.
In the case of Shoprite Checkers vs CCMA & others (2005, 8 BLLR 816), the employer party failed to attend the arbitration hearing, and the arbitrator held the hearing in absentia and granted an award in favour of the employee. The employer then applied for a rescission on the grounds that the assistant of the person in charge of the matter had mis-diarised the date of the arbitration.
The CCMA turned down the rescission application. On review to the Labour Court, the court upheld the CCMA's decision, saying that a negligent error by the employer is not grounds for rescission. The court ordered the employer to pay the employee's legal costs expended on defending the Labour Court review application.
A Labour Court review application, on the other hand, can be brought by the party that is unhappy with the award to request the Labour court to set the award aside on the grounds that the arbitrator, in making the award, "misconducted himself/herself".
Even though arbitration awards are not subject to appeal, they are, however, subject to review in certain limited circumstances. The court has distinguished between these two processes in Tao Ying Industry (Pty) Ltd v Pooe NO & Others  SCA 54 (RSA), by stating that the focus of an appeal is whether the decision was right, whereas the focus of a review, is on how the arbitrator arrived at the conclusion.
Any party to a dispute can take the commissioner's conduct on review if he/she believes that the commissioner has acted incorrectly.
A review application should be viewed as a claim that the arbitrator:
- Committed misconduct in relation to his/her arbitration duties;
- Committed a gross irregularity in the conduct of the arbitration proceedings;
- Exceeded his/her powers; or made the award improperly.
In terms of the LRA, any party to a dispute who alleges a defect in arbitration proceedings may apply to the Labour Court, within six weeks after service of the award, for an order reviewing and setting aside the award.
In the landmark case of Sidumo & Another v Rustenburg Platinum Mines Ltd & Others (2007) 28 ILJ 2405 (CC), the Constitutional Court held that the test for the review of a commissioner’s arbitration awards is as follows:
“Is the decision reached by the commissioner one that a reasonable decision-maker could not reach? If so, is it reviewable? If not, it is not.”
As a result of an amendment introduced by the Labour Relations Amendment Act 2014, a review application does not suspend the operation of an arbitration award, unless the applicant furnishes security to the satisfaction of the Labour Court.
Unless the Labour Court directs otherwise, the security furnished in respect of arbitration awards, that order reinstatement and re-employment, must be equivalent to 24 months' remuneration and if compensation is awarded, the security furnished must be equivalent to the amount of compensation awarded.
This amendment, as interpreted by the Labour Court, allows the Labour Court to decide whether security must be paid, and the amount of security required.
In Free State Gambling and Liquor Authority v Commission for Conciliation Mediation and Arbitration & Others (2015) 36 ILJ 2867 (LC), the applicant, a gambling and liquor industries regulator, brought two urgent applications seeking to stay the certification and enforcement of two arbitration awards.
The applicant also sought an order absolving it from paying security; alternatively, relief declaring the amendment unconstitutional.
The court held that the amendment, “should also be read to allow for the court to exercise its unfettered discretion to order that security be paid or not, and if so, whether there should be a deviation from the quantum…”.
In arriving at its decision, the court took into account that the amendment was drafted to speed up the finalisation of review applications and to deter litigants that bring review applications to delay compliance with arbitration awards. The court held that its interpretation was aligned with the Constitution.
The court held that where the applicant's budget and financial management is governed by Treasury Regulations and the Public Finance Management Act, No 1 of 1999, as was the case, the object of security is satisfied. The court was of the view that it was impractical and unnecessary for the applicant to furnish security as it meant that a notice would have to be gazetted by the minister of finance each time security is furnished.
Flowing from the Free State Gambling decision, state-owned entities are unlikely to be required to furnish security when instituting review applications. However, in respect of private employers, the court has the discretion to direct whether security is required and if so, the amount.
In conclusion, there is recourse for a party to a dispute who is not satisfied with an arbitration award, as long as the party has good and valid reasons to take the award on review or bring a rescission application. Launching a review application in the Labour Court could be incredibly expensive, and parties should consult with a labour law expert before doing so.