Examine the procedure for voluntary reference of disputes to arbitration.

Question: Examine the procedure for voluntary reference of disputes to arbitration.

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Answer

Voluntary arbitration is a process of settling disputes by submitting the issue to an independent and neutral third party for a final and binding decision, which is mainly said to be an ‘award’ or ‘decision’. Arbitration in some form has an important place in most of the government systems of labour dispute settlement and is also at times used voluntarily by disputing parties for settling their disputes. The terms of collective agreements may be provided to deal explicitly with rights disputes originating out of the agreement, as is common in the United States and Canada, or to deal with interest disputes that are occurring elsewhere.

Voluntary arbitration, though an easier method of settling disputes, was still not encouraged in India before 1956. After several criticisms of the conciliation and adjudication system, it led to the introduction of Section 10A relating to voluntary arbitration by the Industrial Disputes (Amendment) Act, 1956. This amendment, to some extent, gave binding force to voluntary arbitration.

Section 10A(1) of the Industrial Disputes Act, 1947, permits the parties to make a reference to the voluntary arbitrator. Nevertheless, before a reference may be made to the arbitrator, four conditions must be met :

•  Industrial disputes must exist or be apprehended;
• The agreement made by the parties must be in writing;
• Under Section 10A, the reference must be made before a dispute has been referred to a labour court, tribunal or national tribunal;
•  The name of the arbitrator or arbitrators must be specified.

Some essentials of voluntary arbitration are as follows:

• Submission of the dispute to the arbitrator must be voluntary.
• Investigation and examination of witnesses.
• The decision is not necessarily binding on the parties.
• Disputes arising out of agreements between the parties.

Voluntary arbitration takes mainly two forms:

• Pre-dispute arbitration: There must be a contract between the parties before the dispute arises through an arbitration clause.
• Post-dispute arbitration: There may not be an arbitration clause beforehand, but the parties may enter into an agreement after the dispute arises to resolve the dispute through arbitration.

The jurisdiction of the arbitrators is derived from the agreement of the parties under Section 10A when an arbitrator is appointed by the parties. He acts beyond his jurisdiction when he decides matters not referred to him by the parties.

Under Section 10A, an arbitrator ceases to have jurisdiction after the expiration of the time period that was mentioned in the agreement. The court also stated that if the parties themselves do not raise any objections against the expiration of the time limit of the arbitrator that was mentioned in the agreement then they cannot, later on, challenge the decision of the arbitrator under Article 226 of the Constitution.

In the case of Engineering Mazdoor Sabha v. Hind Cycles Ltd. (1963) AIR 874, the Supreme Court of India observed that an arbitral tribunal set up under Section 10A, arbitration was statutory. It was held that the decision given by an arbitrator was a quasi-judicial decision and open to judicial review by the Supreme Court under Article 136. In the future, it will be asserted that it is open to the writ jurisdiction of high courts under Article 226 and stated that the arbitrations are different in nature from those adjudicated upon by private arbitrators.

In the case of Rohtas Industries Ltd. v. Rohtas Industries Staff Union (1976) AIR 425, the Apex Court further expanded the meaning of Section 10A. The court explicitly observed that since this section had the power to bind even the parties who are not directly involved in the agreement, it was amenable to the jurisdiction of the High Courts under Article 227, as these tribunals formed an extension of the sovereign justice system.