When parties to a dispute concerning employment issues agree to private arbitration does section 145 of the Labour Relations Act 66 of 1195 [“LRA”] apply to any review or does section 33 of the Arbitration Act 42 of 1965 apply ?

This is important because the grounds in the Arbitration Act are limited whereas the Constitutional Court has held that reviews of the outcome of compulsory awards may not be reviewed and set aside unless the award is one that a  reasonable arbitrator could not have made.

In NUM v Grogan NO (De Beers Geology) [2010] ZALAC 3 (24 February 2010) the Labour Appeal Court [“LAC”] per Leeuw JA unanimously decided that only the grounds referred to in section 33 of the Arbitration Act were applicable.   This means that the review test formulated by Sidumo v Rustenburg Platinum Mines Ltd [2007] ZACC 22 (5 October 2007) at par [119] is inapplicable to private arbitration awards.

The matter has a long history.   The services of 35 employees were terminated on 24.07.2002.   After a dispute was referred to the CCMA by the trade union the parties agreed that the dispute would be determined by private arbitration in terms of the Arbitration Act and further that:

“2.4     The arbitrator shall have the powers contained in section 14 of the Arbitration Act, 42 of 1965 (“the Arbitration Act“).

2.5       The Respondent shall record the proceedings by means of cassette tape recording or such other form of electronic recording as may be necessary.

2.6       The arbitrator shall finalise and deliver to the parties an award in writing within 14 (fourteen) days from the date of completion of the arbitration proceedings or the delivery of the parties heads of argument, whichever is the latest.    The award shall be deemed to have been published on the date of receipt by the parties.

2.7       The award shall be final and binding on the parties, but shall be subject to review on the same grounds to which parties are entitled to review CCMA arbitration awards in terms of the Labour Relations Act No 66 of 1995 (“the Act”) and the Constitution of the Republic of South Africa No 108 of 1996.”

The hearing was held and the award was issued on 4.08.2003.   John Grogan held that the terminations of employment were both substantively and procedurally fair.

The trade union applied to the Labour Court to review and set aside the award but on 21.11.2006 that application was refused by Murphy AJ, as he then was, [see National Union of Mineworkers v Grogan NO [2007] 4 BLLR 289; (2007) 28 ILJ 1808 (LC)].

Before the LAC it was argued on behalf of the former employer, De Beers Geology, that arbitration awards issued pursuant to private arbitrations in cases of labour disputes may only be reviewed by the Labour Court in the exercise of its powers and grounds laid down in section 33 of the Arbitration Act.

It was further submitted that if parties were to be allowed to specify what the grounds of review should be “it would amount to a dictation to the reviewing court (the Labour Court) to exercise powers of review not granted to it by statute, especially because . . .  the Labour Court has no common law powers of review”.

The LAC agreed with the submission on behalf of De Beers that the review should be confined to the ground that Grogan NO committed gross irregularities.

The LAC explained in para [32]:

“As indicated above, the parties differ on whether it is the grounds of review set out in sec 33 of the Arbitration Act or those set out in sec 145 of the LRA which apply in this case.    This issue arises simply because in their arbitration agreement the parties included a provision to the effect that the resultant arbitration award could be reviewed under sec 145 of the LRA which is a section of the LRA applicable to CCMA arbitration awards.    The grounds of review set out in sec 145 of the LRA are the same as the grounds of review set in sec 33 of the Arbitration Act.    The only difference is that there are Court decisions which have interpreted some of the grounds of review set out in sec 145 of the LRA to include certain grounds of review taken from the Constitution whereas, as far as I know, there is no decision of any court which has interpreted sec 33 of the Arbitration Act to include any grounds of review that are not explicitly expressed in sec 33 of the Arbitration Act.    Of course, I am, in this regard, referring to the grounds of review of unjustifiability of CCMA awards articulated by this Court in Carephone (Pty) v Marcus NO supra of the irrationality of CCMA awards as articulated by the Court in Shoprite Checkers (Pty) Limited v Ramdaw NO [2001] 22 ILJ 1603 (LAC) as well as that of the unreasonableness of CCMA awards imputed to sec 145 of the LRA by the Constitutional Court in Sidumo and Another v Rustenburg Platinum Mines Ltd and Others supra“.

The LAC concluded in para [33]:

“I am inclined to agree with Counsel for the first respondent that, on the facts of this case, it would not matter whether one used the standard of review applicable to CCMA awards as stipulated in sec 145 of the LRA or one used the standard of review contained in sec 33 of the Arbitration Act as the result would be the same.    However, in so far as it may be necessary to decide the issue, I am of the view that the respondent’s Counsel is correct that, since this is a review of a private arbitration award, it can only be reviewed on the grounds set out in sec 33 of the Arbitration Act and not in terms of the grounds set out in sec 145 of the LRA as extended by the judgments of this Court in Carephone and Shoprite Checkers and by the judgment of the Constitutional Court in Sidumo.    In my view, while parties to a dispute are able to give an arbitrator powers which he otherwise does not have in resolving their dispute, they cannot do the same with regard to a court such as the Labour Court which has statutory power to review arbitration award issued by such arbitrator.    Parties to a dispute such as the parties in this case cannot confer on the Labour Court powers to review a private arbitrator’s award on grounds which it otherwise has no power to rely upon to review such an award.    It would be different if there was a provision of the LRA which conferred upon the Labour Court the power to review such an award on any grounds upon which the parties to a dispute may agree.    That is not the case here.    Accordingly, I hold that the grounds of review applicable in this case are only those grounds set out in sec 33 of the Arbitration Act on which the appellant has relied in its papers.    In this regard the appellant relied upon gross irregularity”.

In disallowing the trade union’s appeal against the order of Murphy AJ in the Labour Court and upholding the award, the LAC decided in para [41] that none of criticisms of the award established a gross irregularity and that no misconduct on the part of Grogan NO had been shown.