Arbitration: A Practical Explanation

By Nicolene Erasmus

What is the nature of an arbitration and when may an arbitration be conducted?

An arbitration is a new (de novo) hearing, which means that the evidence concerning the reason for the employer’s decision (which is challenged or in dispute) is heard afresh. The arbitrator must consider the fairness of the employer’s decision on the evidence admitted and submissions made at the arbitration.

During an arbitration the three different actors, i.e., the representatives of the two opposing parties and the arbitrator, get together in what is referred to as a hearing. At the hearing the representatives present all the relevant factual information, referred to as evidence, to the arbitrator. They also make submissions as to what conclusions the arbitrator should reach and, having regard to the applicable legal principles, what the ultimate outcome should be.

The arbitrator proceeds to examine all the fact introduced through evidence and the submissions made by the different representatives. The arbitrator considers the provisions of any collective agreement and any prior decisions by other arbitrators or courts that have dealt with similar problems. He or she then makes an award^[1].

The LRA provides that a dispute may only be arbitrated if a commissioner has certified that the dispute is unresolved^[2]. This does not mean that a certificate must have been issued before arbitration can proceed – the lapse of the prescribed 30 day period in which the matter must be conciliated is sufficient to found jurisdiction to arbitrate^[3].

The use of the word “or” indicates that either of the two conditions (the issue of a certificate of outcome or effluxion of the 30-day period) must be satisfied in order to validly refer a dispute to arbitration or adjudication^[4].

How does a party request the CCMA to arbitrate a dispute?

A party may request the Commission to arbitrate a dispute by delivering a document in the form of Annexure LRA 7.13. The referring party^[5] must sign the referral document in accordance with rule 4 and attach to the referral document written proof that the referral document was served on the other parties to the dispute in accordance with rule 6. If the referral document is served out of time, an application for condonation must be attached. The Commission must accept, but may refuse to process a referral document until subrule (2) has been complied with. This Rule does not apply to con-arb proceedings held in terms of section 191 (5A).^[6]

Beyond the completion, filing and serving of the LRA 7.13 form, the LRA does not require referring parties to take any further steps before the matter is enrolled for arbitration.

What notice must be given of the arbitration hearing?

The Commission must notify the parties in writing of an arbitration hearing^[7] at least twenty one (21) days prior to the scheduled date, unless the parties agree to a shorter period or reasonable circumstances require a shorter period. The time period of twenty one (21) days runs from the date the notification is sent by the Commission unless sent by registered mail in which case an additional seven (7) days must be allowed.

In terms of Rule 19 the Commission or a commissioner may direct the referring party in an arbitration to deliver a statement of case and the other parties to deliver an answering statement.

This statement must set out the material facts upon which the party relies and the legal issues that arise from the material facts and must be delivered within the time period specified by the commissioner. The commissioner has a discretion to continue with the matter despite noncompliance with a commissioner’s directive. However, any noncompliance may be taken into account when considering costs at the conclusion of the arbitration hearing.

The purpose of a statement of case is to discover what facts are common cause, what facts are in dispute and what issues must be decided. The purpose may also be to discover precisely what is alleged by the referring party in order to conclude whether the CCMA has jurisdiction to arbitrate. It assists the parties to prepare for the arbitration and to decided in advance who should be called as witnesses.^[8]

It is suggested that that such directives should be used only in complicated cases, where a commissioner feels that without clarification the arbitration may be stalled.^[9]

How to postpone an arbitration

The CCMA rules provide for postponement of scheduled arbitration proceedings either by agreement between the parties or on application by one of the parties^[10].

An arbitration may be postponed—

(a) by written agreement between the parties; or

(b) by application and on notice to the other parties in terms of subrule (3).

(2) The Commission must postpone an arbitration without the parties appearing if—

(a) all the parties to the dispute agree in writing to the postponement; and

(b) the written agreement for the postponement is received by the Commission at least seven (7) days prior to the scheduled date of the arbitration.

(3) If the conditions of subrule (2) are not met, any party may apply in terms of rule 31 to postpone an arbitration by delivering an application to the other parties to the dispute and filing a copy with the Commission before the scheduled date of the arbitration.

(4) After considering the written application, the Commission may—

(a) without convening a hearing, postpone the matter; or

(b) convene a hearing to determine whether to postpone the matter.

Mere non-compliance with the rules relating to postponements is not necessarily in itself sufficient ground for rejecting an application for postponement; it may well be that a reason beyond a party’s control has cropped up at the last minute. In these cases, the applicant must make out a compelling case^[11]. Mere unavailability of a representative is unlikely to suffice. The proper test is whether the other party will suffer irreparable harm if the matter is postponed.

In Erasmus NO v Commission for Conciliation, Mediation & Arbitration & others^[12] the court noted the well-established principles relevant in deciding whether to grant a postponement.^[13]

“The above principles should have thus been applied by the Second Respondent in determining the postponement application of the Applicant, in terms of the facts set out above. The Second Respondent, in a grossly irregular manner, did not do so.

Application: General principles

[71] The principal reason for the Applicant’s application that the matter be postponed was the unavailability of its main witness. This is proper basis for postponement per se.

[72] In Foschini Group (Pty) Ltd v Commission for Conciliation, Mediation & Arbitration and Others where it was held as follows:

‘…The commissioner’s failure to grant the applicant an opportunity to call witnesses (by adjourning the proceedings for a short while) was grossly irregular and unreasonable.

By refusing the applicant the opportunity to call witnesses, the commissioner ignored the principle of audi alteram partem and denied the applicant a proper opportunity to be heard which prevented a fair trial of the issues. In my view, the failure to observe the audi alteram partem rule renders the decision invalid…’

[73] On the common cause facts before the Second Respondent, as set out above, Liebenberg was not available to give evidence. It is also clear that Liebenberg was the principal witness. In fact, even on the default award and the record of the proceedings, it is clear that Liebenberg was the person that caused– according to the Third Respondent – that he left the workplace after his 8-hours had lapsed. It is clear that his evidence was indispensable, and crucial to the arbitration, and is clearly proper cause for a postponement.

[74] In fact, all that the Second Respondent did was to state that despite Liebenberg not being available, the Applicant could have presented the evidence of “ other witnesses” who were available. Clearly, this is an untenable finding by the Second Respondent, and clearly not a valid basis at all to refuse the postponement. The Applicant was clearly entitled to call its central witness first. The Second Respondent was in effect saying to the Applicant what witnesses it should call and in what order. Also, even if the Applicant led the witnesses, the matter would still have to postpone to call Liebenberg later, as it is clear that Liebenberg was instrumental and vital to the Applicant’s case. The Second Respondent clearly dealt with this issue in a grossly irregular manner.”

^[1] Brand, Lötter et al 2011 Labour Dispute Resolution

^[2] 136. Appointment of commissioner to resolve dispute through arbitration.—(1) If this Act requires a dispute to be resolved through arbitration, the Commission must appoint a commissioner to arbitrate that dispute if—

(a) a commissioner has issued a certificate stating that the dispute remains unresolved; and

(b) within 90 days after the date on which that certificate was issued, any party to the dispute has requested that the dispute be resolved through arbitration. However, the Commission, on good cause shown, may condone a party’s non-observance of that time-frame and allow a request for arbitration filed by the party after the expiry of the 90-day period.

^[3] 191(5) If a council or a commissioner has certified that the dispute remains unresolved, or if 30 days or any further period as agreed between the parties have expired since the council or the Commission received the referral and the dispute remains unresolved—

(a) the council or the Commission must arbitrate the dispute at the request of the employee if—

(i) the employee has alleged that the reason for dismissal is related to the employee’s conduct or capacity, unless paragraph (b) (iii) applies;

(ii) the employee has alleged that the reason for dismissal is that the employer made continued employment intolerable or the employer provided the employee with substantially less favourable conditions or circumstances at work after a transfer in terms of section 197 or 197A, unless the employee alleges that the contract of employment was terminated for a reason contemplated in section 187;

(iii) the employee does not know the reason for dismissal; or

(iv) the dispute concerns an unfair labour practice

^[4] NUMSA v Driveline Technologies (Pty) Ltd & another [2000] 1 BLLR 20 (LAC). “The Act does contemplate that the Labour Court will have jurisdiction to adjudicate a dispute even when there has been no meaningful conciliation in respect of such a dispute. This is supported by the fact that section 191(5) of the Act contemplates, among others, that a dispute may be referred to arbitration or adjudication if the dispute remains unresolved after a period of 30 days has lapsed since the council or the CCMA received the referral of such dispute to conciliation. Obviously, this provision was the product of past experience under the old Act.

Under the old Act our experience taught us that, without a provision, such as is referred to in the preceding paragraph, there could be long delays in the conciliation of disputes. All an employer would need to do in order to frustrate the process if a meeting for conciliation was a sine qua non before a dispute could be adjudicated would be to ensure that he did not co-operate in having the conciliation meeting held.

^[5] Any other person who in terms of the LRA or Rules may represent such party may sign the request.

^[6] Rule 18 CCMA Rules

^[7] Rule 21. The days must be calculated in accordance with Rule 3 read with Rule 21

^[8] CCMA 2014 Practice and Procedure Manual

^[9] Grogan 2010 Labour Litigation and Dispute Resolution

^[10] Rule 23 CCMA Rules

^[11] Grogan 2010 Labour Litigation and Dispute Resolution

^[12] (2012) 33 ILJ 1670 (LC)

^[13] 1 The trial judge has a discretion as to whether an application for postponement should be granted or refused.

2 That discretion must at all times be exercised judicially. It should not be exercised capriciously or upon any wrong principle, but for substantial reasons.

3 The trial judge must reach a decision after properly directing his/her attention to all relevant facts and principles.

4 An application for postponement must be made timeously, as soon as the circumstances which might justify an application become known to the applicant. However, in cases where fundamental fairness and justice justify a postponement, the court may in an appropriate case allow such an application for postponement, even though the application was not timeously made.

5 The application for postponement must always be bona fide and not used simply as a tactical manoeuvre for the purpose of obtaining an advantage to which the applicant is not legitimately entitled.

6 Considerations of prejudice will ordinarily constitute the dominant component of the total structure in terms of which the discretion of a court will be exercised. What the court has primarily to consider is whether any prejudice caused by a postponement to the adversary of the applicant for a postponement can fairly be compensated by an appropriate order of costs or any other ancillary mechanisms.

7 The Court should weigh the prejudice which will be caused to the respondent in such an application if the postponement is granted against the prejudice which will be caused to the Applicant if it is not.

8 Where the applicant for a postponement has not made the application timeously, or is otherwise to blame with respect to the procedure which the applicant has followed, but justice nevertheless justifies a postponement in the particular circumstances of a case, the court in its discretion might allow the postponement but direct the applicant in a suitable case to pay the wasted costs of the respondent occasioned to such a respondent on a scale of attorney and client. Such an applicant might even be directed to pay the costs of the adversary before the applicant is allowed to proceed with the action or defence in the action, as the case may be.