National Bargaining Council for the Road Freight Industry and Another v Carlbank Mining Contracts (Pty) Ltd and Another (JA 52/10) [2012] ZALAC 11; [2012] 11 BLLR 1110 (LAC); (2012) 33 ILJ 1808 (LAC) (20 March 2012)

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[2012] ZALAC 11
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National Bargaining Council for the Road Freight Industry and Another v Carlbank Mining Contracts (Pty) Ltd and Another (JA 52/10) [2012] ZALAC 11; [2012] 11 BLLR 1110 (LAC); (2012) 33 ILJ 1808 (LAC) (20 March 2012)

REPUBLIC OF SOUTH AFRICA
IN THE LABOUR APPEAL COURT OF SOUTH
AFRICA
HELD AT JOHANNESBURG
CASE NO: JA 52/10
In the matter between
THE NATIONAL BARGAINING COUNCIL
FOR THE ROAD FREIGHT INDUSTRY
….........................................
First
Appellant
J MOSOEU
…................................................................................
Second
Appellant
and
CARLBANK MINING CONTRACTS (PTY) LTD
….......................
First
Respondent
E FOURIE N.O.
….....................................................................
Second
Respondent
Heard: 21 September 2011
Decided: 20 March 2012
Summary: Dismissal – Contract
of employment - Interpretation of the Collective Agreement -
Arbitration clause – Whether
an arbitration clause of the
contract of employment is valid – Court found clause to be
invalid and Council to have jurisdiction
on account of the clause
permitting treatment less favourable than that prescribed by the
collective agreement.
______________________________________________________________
JUDGMENT
______________________________________________________________
MURPHY AJA
[1] This appeal raises important
questions about the right of persons, who are subject to the terms of
a collective agreement providing
for dispute resolution, to opt for
private arbitration in labour disputes on terms different to the
provisions of the collective
agreement. The determination of the
issues requires interpretation of section 199 of the Labour Relations
Act 66 of 1995 (‘the
LRA”), which
inter alia
provides that a contract of employment may not permit treatment less
favourable than that prescribed by the collective agreement
or waiver
of the application of the provisions of the collective agreement.
[2] The first respondent, Carlbank
Mining Contracts (Pty) Ltd (“Carlbank”), falls within the
registered scope of the
National Bargaining Council for the Road
Freight Industry, the first appellant (“the NBC”), and
conducts a labour broking
business in the road freight industry. It
employs and supplies staff to its clients in terms of labour broking
contracts.
[3] The second appellant, Mr. J Masoeu
(“Masoeu”), entered into a contract of employment with
Carlbank during April
2007, in terms of which he was employed as a
motorbike driver and placed at Railit Total Transport’s MTN,
one of Carlbank’s
clients. According to Carlbank, the contract
terminated by the effluxion of time on 14 May 2007. Mosoeu maintains
that he was unfairly
dismissed. The issue of whether the relationship
was terminated by dismissal or otherwise is however not material to
the determination
of this appeal.
[4] On 23 May 2007, Masoeu declared an
unfair dismissal dispute against Carlbank and referred the dispute to
the NBC for conciliation.
Section 191(1)(a) of the Labour Relations
Act 6 of 1995 (“the LRA”) provides:
(a)
If there is a dispute about the fairness of a dismissal, or a dispute
about an unfair labour practice, the dismissed employee
or the
employee alleging the unfair labour practice may refer the dispute in
writing to -
(i)
a council, if the parties to the dispute fall within the registered
scope of that council.
In terms of section 191(4) of the LRA,
once there has been a proper referral of the dispute, the council
must attempt to resolve
the dispute through conciliation. Should
conciliation fail, or 30 days expire after the referral, in terms of
section 191(5), the
council must arbitrate the dispute at the request
of the employee, provided the dispute falls into the category of
disputes contemplated
in section 191(5)(a), as in this case.
[5] The power of bargaining councils
to perform dispute resolution functions is conferred by section
28(1)(d) of the LRA which provides:
(1)
The powers and functions of a bargaining council in relation to its
registered scope include the following-
(d)
to perform the dispute resolution functions referred to in section
51.
[6] Section 51(3) of the LRA provides:
‘
If
a dispute is referred to a council in terms of this Act and any party
to that dispute is not a party to that council, the council
must
attempt to resolve the dispute-
(a)
through conciliation, and
(b)
if the dispute remains unresolved after the conciliation, the council
must arbitrate the dispute if -
(i)
this Act requires arbitration and any party to the dispute has
requested that it be resolved through arbitration; or
(iii)
all the parties to the dispute consent to arbitration under the
auspices of the council.
Neither party in this case is a party
to the Council, but it is common cause that they both fall within the
registered scope of
the council and that the dispute is an unfair
dismissal dispute.
[7] Section 51(3) of the LRA contains
a footnote, namely footnote 11, which identifies the disputes
contemplated by sub-section
(3) which must be referred to a council.
It expressly includes disputes about unfair dismissals referred in
terms of section 191
of the LRA.
[8] Section 51(9) provides that a
bargaining council may, by collective agreement, establish procedures
to resolve any dispute contemplated
in the section. The NBC, pursuant
to its statutory powers and constitution, has adopted an Exemptions
and Dispute Resolution Collective
Agreement for, amongst other
things, the resolution of disputes (“the collective
agreement”). The collective agreement
sets out in some detail
the procedures for dispute resolution and the rights of the parties
in relation to both conciliation and
arbitration. I will look more
closely at these provisions later in this judgment. Suffice it now to
mention that the collective
agreement was concluded between the
employers’ organisation (the Road Freight Employers’
Association) and the various
trade unions that are parties to the
NBC. The collective agreement is binding on the parties to the
present dispute because it
has been extended to non-parties within
its registered scope by the Minister of Labour in terms of section 32
of the LRA.
[9] Section 52(1) of the LRA obliges
bargaining councils wishing to perform dispute resolution functions
in terms of section 51
to apply to the Commission for Conciliation,
Mediation and Arbitration (“the CCMA”) for accreditation
to perform those
functions. It is common cause that the NBC has been
accredited by the CCMA to conduct both conciliation and arbitration
proceedings
in terms of the LRA and that it has appointed persons
experienced in labour relations for that purpose.
[10] The dispute referred by Masoeu to
the NBC was set down for conciliation before the second respondent,
Ms Emily Fourie, on 29
June 2007. At the conciliation meeting,
Carlbank’s representative, Mr Craig Morton, raised preliminary
objections to the
jurisdiction of the NBC. The first objection was
that there had been no dismissal because the contract of employment
was of limited
duration and had expired through the effluxion of
time. That point was not persisted with on review before the Labour
Court, nor
on appeal before us. The second objection was that the NBC
lacked jurisdiction because the parties had contracted to refer any
dispute arising out of or pertaining to the contract of employment to
private arbitration. This point is the sole question for
determination on appeal.
[11] The arbitration clause upon which
Carlbank relies is contained in clause 13 of the written contract of
employment concluded
between Carlbank and Masoeu, which is headed:
“Limited Duration Contract of Employment”. Clause 13
reads:
‘
DISPUTE
PROCEDURE
In
the event of a dispute arising as a result of this agreement, the
dispute will be submitted to arbitration in terms of the
Arbitration
Act of 1965
, by way of written notice thereof. The arbitration will
be held within 2 weeks of same being requested or as soon thereafter
as
an appointed Arbitrator is available.
The
Arbitrator will be selected from the Tokiso list of panellists.
Tokiso is an established and
accredited agency which provides dispute resolution services in the
labour relations field.
[12] Ms Fourie rejected the points
in
limine
without providing any reasons and on 29 July 2007 issued a
certificate of non-resolution of dispute, a jurisdictional
requirement
in terms of both the LRA and the collective agreement for
the dispute to be referred to arbitration. Carlbank filed a review
application
on 8 August 2007 seeking
inter alia
the following
orders:
‘
1.
Staying any proceedings under case number D683/JHB/4302/07 and the
determination of the dispute between the applicant (Carlbank)
and the
third respondent (Masoeu) under this case number pending final
adjudication of this review application;
2.
Reviewing and setting aside the certificate of outcome of a dispute
referred to conciliation issued by the second respondent
(Fourie)
acting under the auspices of the first respondent (NBC) under case
number D683/JHB/4302/07…
3.
Dismissing the third respondent’s referral under Council case
number D683/JHB/4302/07 on the basis that:
“
First
respondent (NBC) has no jurisdiction to conciliate and/or determine
the matter.
[13] Prior to the review application
being heard by the Labour Court, Ms Fourie on 23 May 2008 furnished
written reasons for dismissing
the preliminary point and for
accepting jurisdiction. She dealt with the point as follows:
4.
The Applicant argued that the First Respondent does not have
jurisdiction to deal with the Third Respondent’s dispute due
to
the fact that the contract of employment between the Applicant and
Third Respondent provides for any dispute arising from the
employment
contact to be submitted to private arbitration in terms of the
Arbitration Act 42 of 1965
. It was not argued that an arbitration in
terms of this provision was pending or had been held, but simply that
the existence of
this clause on its own ousted the First Respondent’s
jurisdiction.
5.
I considered the preliminary point raised by the Applicant and ruled
that the First Respondent retained jurisdiction to deal
with this
dispute. Set out below are my reasons for this ruling.
6.
In the first instance I reasoned that the relevant clause of the
employment contract did not expressly state that the Bargaining

Council’s jurisdiction was excluded by it. I appreciate that if
the dispute between the Applicant and Third Respondent had
been
referred to private arbitration then a possible defence of
lis
pendens
could arise. If the private arbitration had in fact been
concluded and an arbitration award issued then the defence of
res
judicata
could arise. I do not believe that the mere existence of
an arbitration clause precludes a body like the Bargaining Council
(or
the CCMA) from hearing a dispute over which it would otherwise
have jurisdiction.
7.
In any event insofar as the Arbitration Agreement did attempt to oust
the jurisdiction of the Bargaining Council I had regard
to the
provisions of
Sections 199(1)
and (2) of the LRA. In light of those
provisions I am of the view that the Exemptions and Dispute
Resolution Collective Agreement
of the First Respondent would take
precedence over the Arbitration Agreement if the Arbitration
Agreement attempted to oust the
First Respondent’s
jurisdiction.
8.
I furthermore considered that:-
8.1
The referral of the dispute to private arbitration would have the
likely effect of being prejudicial to the employee. He would
be faced
with the logistical of having to locate Tokiso and complete the
documentation necessary to commence an arbitration under
its
auspices. He could also, on the face of the contract, face possible
financial difficulties in having to contribute to the costs
of such
arbitration.
8.2
The LRA prescribes that there should always be an attempt at
conciliation prior to the resolution of disputes through arbitration

or adjudication. The arbitration clause foregoes any attempt at
conciliation. The arbitration clause thus appeared to be at variance

with this trend of the LRA.
[14] This line of reasoning defined
the parameters of the debate on review before the Labour Court (van
Niekerk J). The learned
judge set the stage for the argument with the
following opening remarks:
‘
This
application raises the following question: Should this court enforce
a term of an employment contract that requires disputes
to be
referred to private arbitration, in circumstances where the parties
are subject to the jurisdiction of a bargaining council
that has
concluded a collective agreement providing for the resolution of
disputes under the auspices of the council? Put another
way, can an
employer and employee who are bound by a collective agreement
concluded in a bargaining council ‘contract out’
of the
agreement, at least in so far as it concerns the resolution of
disputes, by agreeing to refer disputes to private arbitration?
At
first blush, the answer seems obvious - commonly held wisdom is that
the
Labour Relations Act encourages
private dispute resolution, and
if parties agree in a contract of employment that any disputes
arising between them will be privately
arbitrated, then
pacta
sunt servanda
.
But the LRA also promotes collective bargaining at sectoral level,
and establishes mechanisms for collective agreements concluded
in
bargaining councils to be extended to all employers and employees in
the sector for which the council is registered, and to
bind them to
those agreements unless an exemption has been granted by the
council. Many bargaining councils that have been accredited
to
perform dispute resolution functions have concluded collective
agreements to establish structures and processes for the resolution

of disputes between parties who fall within their registered scope.
This case raises the potential tension between these two
objectives.
[15] The Labour Court was called upon
to answer the question with reference to three issues. The first was
whether the arbitration
clause contravened
section 199(1)(b)
of the
LRA because the clause permitted an employee to be treated in a
manner, or to be granted a benefit, that is less favourable
than that
prescribed by the collective agreement. The second was whether the
arbitration clause was invalid because it contravened
section
199(1)(c)
of the LRA by waiving the application of the provisions of
the collective agreement. The third issue arises only if the
arbitration
clause is held to be valid; and that is whether the
arbitration agreement excluded the jurisdiction of the NBC to
determine the
unfair dismissal dispute.
[16]
Section 199
of the LRA reads as
follows:
‘
(1)
A contract of employment, whether concluded before or after the
coming into operation of an applicable collective agreement
or
arbitration award, may not -
(a)
Permit a employee to be paid remuneration that is less than that
prescribed by that collective agreement or arbitration award;
(b)
Permit an employee to be treated in a manner, or to be granted any
benefit, that is less favourable than that prescribed by
that
collective agreement or arbitration award;
(c)
Waive the application of any provisions of that collective agreement
or arbitration award.
(2)
A provision in any contract that purports to permit or grant any
payment, treatment, benefit, waiver or exclusion prohibited
by
subsection (1) is invalid.
[17]
Section 199
of the LRA must be
read with
section 23(3)
which reads:
‘
Where
applicable, a collective agreement varies any contract of employment
between an employee and employer who are both bound by
the collective
agreement.
[18] The two provisions together aim
at advancing a primary object of the LRA, namely the promotion of
collective bargaining at
sectoral level and giving primacy to
collective agreements above individual contracts of employment.
1
The policy is in keeping with the
ILO
Collective Agreements Recommendation
2
which states:
‘
Employers
and workers bound by a collective agreement should not be able to
include in contracts of employment stipulations contrary
to those
contained in the collective agreement.
[19] The Labour Court
rejected
the submissions that there had been an unlawful waiver or less
favourable treatment. It found also, in effect, that the
arbitration
agreement excluded the jurisdiction of the NBC to determine the
dispute. It therefore reviewed and set aside the ruling
of the NBC
that it retained jurisdiction to entertain the referral of the
dispute.
[20] In both the Labour Court and on
appeal, the appellants submitted that clause 13 of the contract of
employment was invalid in
terms of
section 199(1)(b)
read with
section 199(2)
of the LRA because it permitted less favourable
treatment than that prescribed by the collective agreement. They
advanced two reasons
for this proposition. Firstly, the arbitration
clause is silent on the question of the costs of the arbitration,
which could result
in the employee incurring a liability which he
would not incur under the collective agreement. Secondly, the
arbitration clause
dispenses with the requirement of conciliation
imposed by both the LRA and the collective agreement. It instead
requires disputes
to be referred directly to arbitration in terms of
the
Arbitration Act.
3
Thus
, in respect of these two aspects,
it was submitted, the contract of employment permits an employer to
be treated in a manner, or
to be granted a benefit, that is less
favourable than that prescribed by the collective agreement as
contemplated in
section 199(1)(b)
, with the result that the clause is
invalid in terms of
section 199(2)
of the LRA.
[21] Clause 5 of the collective
agreement provides that all disputes shall, if required by the Act,
be referred to the council for
conciliation and arbitration. It sets
out in detail the procedure to be followed in respect of both
processes. The envisaged conciliation
process may be formal or
informal. In terms of clause 5(2), a party to the dispute shall
appear in person and may be represented
by an industrial relations
practitioner, legal practitioner or a trade unionist in any
conciliation proceedings that may be held.
The process may result in
the conciliator issuing an advisory award if it is apparent that the
employer has made no reasonable
attempt to comply with the provisions
of the Act or any Codes of Good Practice, or, where the dispute is
found to be without merit,
and having no possible prospects of
success, the referral is construed as frivolous and/or vexatious.
Where the conciliator makes
an advisory award, he or she is obliged
to inform the affected party that if the dispute proceeds to
arbitration and the arbitrator’s
award concurs substantially
with the advisory award, costs will in all probability be awarded
against the affected party.
[22] The arbitration clause in the
present matter does not grant an employee the benefit of such a
procedure. The virtue of conciliation
is in the possibility it
presents for the dispute to be resolved in a less adversarial fashion
by means of a consensus-seeking
process. This has obvious advantages
for the continuation of the employment relationship should
reinstatement prove to be the appropriate
remedy. The conciliation
procedure in the collective agreement has the additional advantage of
being an opportunity to obtain a
quick non-binding award by less
litigious means from a skilled independent mediator, which will allow
the parties to reflect upon
their options on a more informed basis.
The arbitration clause in the contract of employment denies the
employee these benefits
and thus permits less favourable treatment.
[23] Mr.
Pretorius,
who
appeared for the respondents
,
submitted that nothing in clause
13 prevented the parties from opting for conciliation prior to
arbitration. Mr
Kennedy
, for the appellants, countered, with
some justification, that the submission lies somewhat hollow in the
mouth of a party who responded
to the employee’s referral of
the dispute to conciliation with a preliminary objection to
jurisdiction and the review application
ultimately leading to this
appeal.
[24] Moreover, clause 5(3) of the
collective agreement makes it clear that where conciliation fails the
Secretary of the NBC will
be obliged to arrange for arbitration if
any party to the dispute has requested in writing that it be resolved
through arbitration.
The Secretary is further obliged within 14 days
of a proper request for arbitration to arrange for the signing by the
parties of
an arbitration agreement detailing the arbitrator’s
terms of reference. It is incumbent on the Secretary to appoint an
arbitrator
from the panel accredited by the council, to schedule the
time and place for the hearing and if necessary to arrange for
witnesses
to be subpoenaed to attend the hearing. The NBC, it would
seem, will bear the costs of the appointment of the arbitrator, the
arrangement
of the hearing and the subpoenaing of witnesses. The
implication of the provisions dealing with the advisory award in
conciliation
is that the parties normally will bear their own
attorney and client costs in the arbitration, unless the referral is
construed
to be frivolous and vexatious.
[25] In contrast to clause 5(3) of the
collective agreement, clause 13 of the contract of employment, the
arbitration clause, is
silent or at best ambiguous in relation to
these critical aspects of the arbitration process. It places no duty
upon the employer
or any independent third party, on request of the
dismissed employee, to submit the matter to arbitration, to appoint
an arbitrator
or to arrange the hearing. It ambiguously provides
merely that “the dispute will be submitted to arbitration”
by way
of written notice. There is no indication to whom or to what
institution the notice should be submitted or of what rights a
referring
employee might have to compel the process. There is, in
addition, no indication as to the basis for payment of the arbitrator
or
the costs of the process. There is also no bar to the arbitrator
awarding costs against the unsuccessful party notwithstanding the

referral being neither vexatious nor frivolous. In this latter
respect,
section 35(1)
of the
Arbitration Act vests
the arbitrator
with a discretion to award costs where an arbitration agreement is
silent on costs. On these further grounds, the
arbitration clause
must be held invalid in terms of
section 199(2)
of the LRA for
permitting less favourable treatment than that prescribed by the
collective agreement.
[26] Carlbank has stated in the
founding affidavit that it has offered and agreed to pay all costs
associated with private arbitration.
The appellants responded by
pointing out that clause 13 does not contain any provision relating
to the costs of appointing the
arbitrator. In the absence of such
provision it would be within Carlbank’s powers in any
particular matter to refuse to pay
such costs. The approach it has
adopted to the referral to conciliation in this case does not inspire
confidence that it would
not do so.
[27] In the result, the finding of the
NBC’s conciliator, Ms Fourie, that the employee could, on the
face of the contract,
face possible financial difficulties in having
to contribute to the cost of such arbitration, is correct. I am
accordingly unable
to concur with the Labour Court that the employee
was not subjected to less favourable treatment on the facts of this
case. Nor
was the learned judge entirely correct in his
characterisation of the benefit or treatment for the purposes of
section 199(1)(b)
as being not the right to refer a dispute to a
bargaining council, but rather “to have an employment dispute
expeditiously
determined by an independent third party at no costs”.
The rights enjoyed by the employee under the collective agreement
include the right to a facilitated conciliation process and an
arbitration arranged by and paid for by an independent body, with
a
limited risk of incurring an adverse costs award in instances where
the referral was vexatious or frivolous; and then only when
he or she
has been put on notice to that effect by an advisory award. The
arbitration clause in the contract of employment dilutes
those rights
and benefits considerably.
[28] The appellant’s submission
that clause 13 is invalid in terms of
section 199(1)(c)
because it
waives the application of the provisions of the collective agreement
is equally creditable. The Labour Court upheld
the submission of
Carlbank in this regard, namely that a proper interpretation of the
operative clause of the collective agreement
requiring that disputes
“shall be referred to the Council
if required by the Act
”
did not preclude referral to arbitration. As it saw it, since the LRA
does not require or compel a referral to be made to
a council, it
remains open to parties who are bound by the collective agreement to
refer a dismissal dispute to private arbitration,
and there is no
reason why this election may not be exercised on signing a contract
of employment, in anticipation of any dispute
that may arise in the
future. The argument is predicated upon the proposition that the LRA
does not compel parties to refer disputes
to the CCMA, or bargaining
councils. A dismissed employee has an entitlement to refer a dispute
to a council, which he or she may
or may not exercise. Accordingly,
the Labour Court reasoned further, if a party is not compelled to
refer a dispute to a council,
an agreement to refer the dispute to
private arbitration cannot be a waiver of the application of the
provisions of the collective
agreement.
[29] The reasoning of the Labour
Court, supported by the respondents on appeal, in my respectful
opinion, is unsustainable and rests
upon an incorrect interpretation
of the opening sentence of clause 5 of the collective agreement;
which, to repeat it, provides
that:
‘
All
disputes shall, if required by the Act, be referred to Council for
conciliation and arbitration.’
The words “if required by the
Act”, in my view, are a reference to footnote 11 of section
51(3) of the LRA which defines
the subject-matter jurisdiction of
bargaining councils. In terms of the LRA, certain disputes, if and
once an entitlement to refer
is exercised by a party, must be
referred to a council, and not to the CCMA. These are set out in
footnote 11 of section 51(3)
and include,
inter alia,
disputes
about freedom of association; disputes that form the subject matter
of proposed strikes and lock-outs; and disputes about
unfair
dismissals and unfair labour practices. The footnote also mentions
that in terms of the LRA certain disputes may not be
referred to a
council. These include,
inter alia,
disputes about
organisational rights; disputes about agency shops and closed shops
and disputes concerning pickets.
[30] What clause 5 of the collective
agreement means is that all disputes in respect of which the council
has subject-matter jurisdiction
shall be referred to the council for
conciliation and arbitration, if and once a party exercises the
entitlement to refer it, such
being disputes the LRA requires the
council to conciliate and arbitrate. Clause 5 is a
provision
of the collective agreement, which, by the Minister’s extension
of it to non-parties in terms of section 32 of the LRA, has
the
status of subordinate legislation. And section 199(1)(c)
unequivocally provides that a contract of employment may not waive

the application of any provision of the collective agreement. Any
provision in a contract of employment that purports to permit
such a
waiver is invalid in terms of section 199(2). Clause 13 of the
contract of employment purports to waive the application
of clause 5
of the collective agreement which requires disputes over which the
NBC has subject-matter jurisdiction to be referred
to conciliation
and arbitration in accordance with the provisions of the collective
agreement. Clause 13 is accordingly also invalid
for this reason.
[31] Since the arbitration clause in
the contract of employment is invalid, the NBC was entitled to regard
it as
pro non scripta
. Strictly speaking, therefore, there is
no need to consider whether a valid arbitration clause might have
operated to exclude the
jurisdiction of the NBC. There however may be
some benefit in commenting briefly on the point.
[32] Having found that there had been
no unlawful waiver or unfavourable treatment, the Labour Court posed
the question whether
the bargaining council nonetheless retained a
discretion to arbitrate the dispute despite the existence of a valid
arbitration
clause. It concluded that it did not, on two grounds.
Firstly, because there is no provision similar to section 147(6) of
the LRA
applicable to bargaining councils; and secondly, it held, a
bargaining council is a creature of statute with no inherent right of

supervision over private arbitration proceedings or a discretion to
prevent any private arbitration and to tackle the dispute itself.
[33] Section 147(6) of the LRA grants
the CCMA the power to resolve a dispute between parties despite their
having agreed to private
dispute resolution. It provides:
‘
If
at any stage after a dispute has been referred to the Commission, it
becomes apparent that the dispute ought to have been resolved
through
private dispute resolution in terms of a private agreement between
the parties to the dispute, the Commission may -
(a)
refer the dispute to the appropriate person or body for resolution
through private dispute resolution procedures; or
(b)
appoint a commissioner to resolve the dispute in terms of this Act.
Section 147(6) does not apply to any
arbitration conducted under the auspices of a bargaining council by
reason of section 51(8)
which expressly provides that only sections
142A and 143 to 146 are applicable.
[34] The rationale of the provision is
consistent with the general proposition that the effect of an
arbitration agreement is not
to exclude the jurisdiction of the
courts in respect of the subject dispute.
4
Where a party to an arbitration
agreement commences legal proceedings in court, the opposing party
who prefers to rely on the arbitration
agreement may either file a
special plea for the stay of the proceedings at common law, or may
apply for a stay of proceedings
under
section 6
of the
Arbitration
Act. The
party wishing to avoid arbitration bears the onus of
persuading the court to exercise its discretion against staying the
action
and is required to make out a “very strong case”.
5
These principles amount to an
exception to the principle of
pacta
sunt servanda
in that if
compelling reasons exist the court may exercise a discretion to
retain jurisdiction and allow a contracting party to
escape its
obligation under the agreement to submit to arbitration.
[35] The learned judge
a
quo
was evidently alive to
the relevant principles. He was of the opinion that they did not
apply equally to a bargaining council, a
creature of statute and not
a court of law. Mr.
Pretorius
also submitted before us that the very
existence of provisions like
section 6
of the
Arbitration Act and
section 147(6)
of the LRA, which confer the discretion to retain
jurisdiction despite the existence of an arbitration agreement, is a
clear indication
that no such discretion exists at common law. That
is not correct in relation to the courts. The special plea procedure
is a creature
of the common law granting the courts a discretion to
retain jurisdiction.
6
One is unable though to make the same
claim with equal confidence in relation to administrative tribunals
statutorily tasked to
perform quasi-judicial functions. Then again,
seeing as the arbitration clause in this instance is invalid, it is
unnecessary to
make any final pronouncement in relation to the issue.
[36] In the result, the appeal must be
upheld. There is no reason why costs should not follow the result,
which considering the
importance and complexity of the issues should
include the costs of two counsel.
[37] The following orders are made:
i) The appeal is upheld.
ii) The order of the Labour Court is
set aside and is substituted with an order dismissing the first
respondent’s application
for review.
iii) The first respondent is ordered
to pay the costs of appeal, such costs to include the costs
occasioned by the employment of
two counsel.
____________________
JR MURPHY AJA
I agree
__________________
WAGLAY, DJP
I agree
_________________
DAVIS, JA
Appearances:
For the Appellants:
Advocate
P Kennedy SC
with
Advocate H Barnes
Instructed
by: Moodie and Robertson Attorneys
For the First
Respondent: Advocate P.J Pretorius SC
with
Advocate F Venter
Instructed
by: Bowman Gilfillian Inc
1
See
sections 1(d)(ii)
,
3
(a) and
23
of the LRA.
2
No
91 of 1951.
3
Act
42 of 1965.
4
In
Parek v Shah Jehan Cinemas (Pty) Ltd
1980 (1) SA 301
(D) 305
D-H Didcott J said:
‘
An
arbitration agreement does not deprive the Court of its ordinary
jurisdiction over the disputes which it encompasses. All it
does is
to oblige the parties to refer such disputes in the first instance
to arbitration, and to make it a pre-requisite to
an approach to the
Court for a final judgment that this should have happened ….
Arbitration itself is far from an absolute
requirement, despite the
contractual provision for it. If either party takes the arbitrable
dispute straight to Court, and the
other does not protest, the
litigation follows its normal course, without a pause. To check it,
the objector must actively request
a stay of the proceedings. Not
even that interruption is decisive. The Court has a discretion
whether to call a halt for arbitration
or to tackle the disputes
itself. When it chooses the latter, the case is resumed, continued
and completed before
it,
like any other. Throughout, its jurisdiction, though sometimes
latent, thus remains intact.’
5
Metallurgical
and Commercial Consultants (Pty) Ltd v Metal Sales Co (Pty) Ltd
1971
(2)
SA 388
(W) at 391E-H;
and
Universiteit van Stellenboch v JA Louw
1983 (4) SA 321
(A) at 333G - 334B.
6
Van
Heerden v Sentrale Kunsmis Korporasie (Edms) Bpk
1973 (1) SA 17
(A) at 26B