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Irrational Arbitration Awards can be taken on Review

By Magate Phala

 

Section 145 (1) of the Labour Relations Act, 66 of 1995 provides that any party to a dispute who alleges a defect in any arbitration proceedings under the auspices of the Commission may apply to the Labour Court for an order setting aside the arbitration award –

 

(a)   Within six weeks of the date that the award was served on the applicant, unless the alleged defect involves the commission of an offence referred to in Part 1 to 4 of the Prevention and Combating of Corrupt Activities Act 12 of 2004.

 

(b)   If the alleged defect involves an offence referred to in Part 1 to 4 of the Prevention and Combating of Corrupt Activities Act 12 of 2004, within six weeks of the date that the applicant discovers such offence, The Labour Court may on good cause shown condone the late filing of an application that has been made after the expiry of six weeks.

 

Subsection 2 provides that the defect in any arbitration proceedings means that the commissioner:

 

  • committed misconduct in relation to the duties of the commissioner as an arbitrator;

 

  • committed a gross irregularity in the conduct of the arbitration proceedings; or

 

  • exceeded the commissioner’s powers; or

 

  • that an award has been improperly obtained.

 

If the award is set aside, the Labour Court may determine the dispute in the manner it considers appropriate or make an order it considers appropriate about procedures to be followed to determine the dispute.

 

The Labour Court has recently reviewed and set aside the arbitration award of Commissioner Harold Maloka in Spar Group Ltd v Maloka N.O. and Others (JR748/13) [2015] ZALCJHB 194. The applicant (Spar) has taken Commissioner Harold Maloka on review for his award issued under case number MP5499/12. The Commissioner had found that the dismissal of Mr Maphanga was substantively unfair. He ordered Spar Group Ltd to reinstate Mr Maphanga with back pay equivalent to five months’ remuneration in the amount of R30 250.00. Maphanga was employed by the Spar as an inventory clerk. He was dismissed on the 4th of June 2012 for refusing to work night shift.

 

In its grounds for review, Spar Group Ltd premised its application for review on the following grounds:

 

(1)   that the Commissioner misconstrued both the law and facts that he was presented with and in so doing he committed a gross irregularity or reached a conclusion that no commissioner could reasonably have reached on the evidence before him and

 

(2)   that the Commissioner failed to take into account relevant evidence as he was asleep during the testimony of the Spar’s witnesses.

 

Spar further argued that the Commissioner failed to entertain the issue of an agreement on night shift work which was seriously contested during the arbitration proceedings.

 

The court found that the Commissioner misconstrued the provisions of section 17(2)(b) of the BCEA and, as a result, arrived at an unreasonable conclusion that a reasonable arbitrator could not reach on all the material that was before him. The Court ultimately replaced the Commissioner’s award with an order that the dismissal of Mr Maphanaga was substantively fair.

 

In Sidumo & Another v Rustenburg Platinum Mines Ltd & Others (2007) 28 ILJ 2405 (CC) the Constitutional Court held that the test to be used when determining whether an arbitration award would be unreasonable, and, therefore, reviewable, is whether the decision of the arbitrator is a decision “that a reasonable decision maker could not reach.” In that case, the Constitutional Court found that for a review to be successful, it must be established by the Applicant that the result of the arbitration award falls outside of a “range of reasonableness”.

 

The Supreme Court of Appeal upheld the latter decision of the Labour Appeal Court in Herholdt v Nedbank Ltd [2013] 11 BLLR 1074 (SCA); (LAC citation: (2012) 33 ILJ 1789 (LAC). In this judgment, the LAC had found that “Where a commissioner fails to have regard to material facts, this will constitute a gross irregularity in the conduct of the arbitration proceedings because the commissioner would have unreasonably failed to perform his or her mandate and thereby have prevented the aggrieved party from having its case fully and fairly determined. Proper consideration of all the relevant and material facts and issues is indispensable to a reasonable decision, and if a decision maker fails to take account of a relevant factor which he or she is bound to consider, the resulting decision will not be reasonable in a dialectical sense. Likewise, where a commissioner does not apply his or her mind to the issues in a case the decision will not be reasonable”.

 

In Fidelity Cash Management Service v Commission for Conciliation, Mediation and Arbitration and Others (2008) 29 ILJ 964 (LAC) at para 92. When specifically interpreting the Sidumo test, the Court held as follows: “To this end, a CCMA arbitration award is required to be reasonable because, if it is not reasonable, it fails to meet the constitutional requirement that an administrative action must be reasonable and, once it is not reasonable, it can be reviewed and set aside.‟

 

In CUSA v Tao Ying Metal Industries and Others (2008) 29 ILJ 2461 (CC) at para 84. O' Regan J held: “It is clear... that a commissioner is obliged to apply his or her mind to the issues in a case. Commissioners who do not do so are not acting lawfully and/or reasonably and their decisions will constitute a breach of the right to administrative justice. ‟

 

In Southern Sun Hotel Interests (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2010) 31 ILJ 452 (LC), it was held as follows at para 17: “In summary, section 145 requires that the outcome of CCMA arbitration proceedings (as represented by the commissioner's decision) must fall within a band of reasonableness, but this does not preclude this court from scrutinizing the process in terms of which the decision was made. If a commissioner fails to take material evidence into account, or has regard to evidence that is irrelevant, or the commissioner commits some other misconduct or a gross irregularity during the proceedings under review and a party is likely to be prejudiced as a consequence, the commissioner's decision is liable to be set aside regardless of the result of the proceedings or whether on the basis of the record of the proceedings, that result is nonetheless capable of justification.‟

 

In Carephone (Pty) Limited v Marcus NO & Others 1998 19 ILJ 1424 (LAC), the Labour Appeal Court held that awards can be set aside when they are not “justifiable” – i.e. where the Commissioner could be deemed to have exceeded his or her powers as envisaged in section 143. “An award is considered to be unjustifiable when the answer to the following question is negative: Is there a rational objective justifying the connection made by the (commissioner) between the material properly available to him and the conclusion he or she eventually arrives at?”

 

Magate Phala specialises in Labour Law, he writes in his private capacity. 

For more information kindly contact Magate at This email address is being protected from spambots. You need JavaScript enabled to view it.

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