Arbitration is a form of third party intervention in industrial disputes , with a view to reaching a settlement. The parties to collective bargaining will normally have recourse to arbitration as a result of a failure to agree under a disputes procedure. The role of the arbitrator is to hear both sides present their case, and then make a decision, unlike other forms of intervention where the third party tries to assist the disputants to resolve their difference. The essence of arbitration is that where parties agree to arbitration they accept in advance to be bound by the decision. Given the tradition of voluntarism in Irish industrial relations and thus the general lack of legal intervention in collective bargaining, the outcome of arbitration is binding in honour only; in other words, an arbitrator's award cannot be legally enforced by either party, but it would be quite rare for either party to fail to abide by the arbitrator's decision. The arbitrator's decision would normally be expected to fall somewhere between the positions of the two parties in dispute; an exception to this is pendulum arbitration, explained below.
The principal dispute-settlement institutions in Ireland are the Labour Relations Commission and the Labour Court . The Labour Court is not a court of law but is instead a forum in which third-party intervention is provided. The Labour Court does not use the word "arbitration" to describe its investigations, but in practice they may sometimes amount to arbitration. While the parties are not expected to agree in advance to abide by the Court's decision (with the exception of cases brought under section 20 of the Industrial Relations Act 1969 (where trade unions may make a unilateral reference to the Court provided they give an undertaking to abide by the decision)), in practice the parties tend to accept the Court's determination as final. It may be argued that since neither party would agree to go to the Court if they believed that the other did not intend to abide by the decision, in practice the Court's function has become that of arbitrator.
The following types of arbitration exist:
(a) Binding arbitration: This may be part of a disputes procedure , where the parties have stated that in the event of a failure to agree, they will have recourse to arbitration as a means of settling the dispute, and that each party will consider the arbitrator's decision as binding on them. There is no legal sanction attached to this; it is purely a moral sanction.
(b) Compulsory arbitration: This is generally associated with state involvement in dispute settlement. The government may provide (in statute, for example) that in the case of disputes in certain industries - essential services, perhaps - the parties may not have recourse to industrial action but instead must proceed to arbitration.
(c) Pendulum arbitration: This form of arbitration is also known as "flip flop" or "final offer" arbitration (FOA). Here, the discretion of the arbitrator is restricted to choosing between the employer's final offer and the union's final demand: there is no question of "splitting the difference" or choosing any other position. An essential hypothesis underpinning this form of arbitration is that, being an "all or nothing" situation, the parties would try to influence the arbitrator by adopting what might be seen as more realistic positions. Thus pendulum arbitration should eventually render itself unnecessary, since the parties should be brought so close together that they prefer to settle rather than be seen to lose at arbitration. This form of arbitration is most commonly associated with so-called "new-style collective agreements", which tend to involve single union agreements, no-strike agreements and aspects of flexibility . As yet these agreements are not all that common in Ireland, but where they are found they tend to be concentrated in new technology firms and others practising human resource management techniques.
(d) Unilateral arbitration: This is a mechanism which allows one or other party to request arbitration without there being a requirement that the other party must agree. If one party refers the matter to arbitration, the other must participate. In Ireland this is possible under section 20 of the Industrial Relations Act 1969, as discussed above.
(e) Voluntary arbitration: The meaning of this expression is not always clear. It may be used to mean that there is no obligation on the parties to choose arbitration as a means of settling disputes (i.e. recourse to arbitration is not compulsory, either under a disputes procedure or through state intervention). It is also used to refer to provisions in disputes procedures which state that recourse to arbitration may only be had if both parties agree.
See conciliation , mediation .
Please note: the European industrial relations glossaries were compiled between 1991 and 2003 and are not updated. For current material see the European industrial relations dictionary.