Adjudication | Commerce & Accountancy Optional Notes for UPSC PDF Download

Voluntary Arbitration 

• Originally, the Industrial Disputes Act did not include provisions for the voluntary arbitration of industrial disputes. However, in 1956, Section 10-A was introduced to address this gap.
  According to this provision:
  (a) When there is an existing or anticipated industrial dispute,
  (b) If the involved parties agree to submit the dispute for arbitration and file the arbitration agreement with the appropriate Government, requesting a reference to the arbitrator(s) named in the agreement,
• The appropriate Government is obligated to refer the dispute to the specified arbitrator(s). However, such a reference can only occur if the dispute has not already been referred to a labor court or tribunal for adjudication. Before making a reference, the Government must ensure that the individuals making the reference represent the majority of each party involved. In cases where the arbitration agreement specifies an even number of arbitrators, it must also designate an umpire to resolve ties.
• Following the reference, the Government may issue a notification under sub-section (3-A), providing an opportunity for employers and workers not party to the arbitration agreement but concerned in the dispute to present their case before the arbitrator(s). Once such a notification is issued, the arbitration award becomes binding on the employer and all the workers, similar to an award from a labor court (Section 18 (3)).
• While making a reference for arbitration, the Government may simultaneously prohibit the continuation of any strike or lockout related to the dispute existing as of the reference date. According to sub-section (5), the Arbitration Act of 1940 does not apply to arbitrations conducted under Section 10-A of the Industrial Disputes Act.

Powers and Status of arbitrators: judicial review

• O.P. Malhotra discerns a notable distinction between voluntary arbitration under Section 10-A and compulsory adjudication as outlined in Section 10 read in conjunction with Section 11. He observes that voluntary arbitration, as outlined in Section 10-A, is more akin to adjudication than arbitration in practice. Parties are permitted to refer an industrial dispute to the Presiding Officer of a labor court, tribunal, or national tribunal as an arbitrator through a written agreement. Alternatively, they have the freedom to choose any other individual or individuals for arbitration by specifying in the arbitration agreement. Once the reference is made, the nature of this arbitration takes on characteristics more aligned with adjudication.
• Section 11 delineates the procedure to be followed by the arbitrator, which is to be adhered to in a manner similar to adjudicatory authorities such as labor courts, tribunals, or national tribunals involved in adjudication proceedings. This provision also empowers the arbitrator with similar authorities as those vested in adjudicatory authorities. Additionally, the duties of the arbitrator mirror those of the adjudicatory authority as specified in Section 15 of the Act. In essence, Malhotra underscores that the process of voluntary arbitration, as stipulated by Section 10-A, transcends its titular label and closely resembles the procedures and powers associated with compulsory adjudication.
• In India, despite government attempts to establish statutory recognition for voluntary arbitration, its uptake has been limited. Unlike Western countries where it has become a well-established practice, voluntary arbitration has not deeply rooted itself in India. The National Company Law Tribunal (NCL) acknowledges this and identifies several factors contributing to the slow progress of arbitration, including the ready availability of adjudication in negotiation failures, a scarcity of arbitrators who earn the trust of both parties, the absence of recognized unions to unite workers under common agreements, legal obstacles, the lack of appeal against arbitrator awards, the absence of a streamlined procedure for voluntary arbitration, and concerns about costs, especially for workers.
• The NCL anticipates that with the growth of collective bargaining, increased acceptance of representative unions, and improved management attitudes, there may be a clearer path for wider acceptance of voluntary arbitration in the future. To enhance the prospects of this idea, the National Arbitration Promotion Board (NAPB) is recommended to focus on building suitable panels of arbitrators.