CONCILIATION – ARBITRATION [CON/ARB]: - ‘A HYBRID PROCESS’.

?[PREMIER FOODS (PTY) LTD (NELSPRUIT) v COMMISSION FOR CONCILIATION, MEDIATION AND ARBITRATION and GLEN CORMACK N.O. and MAROPENG STEWARD LEKOKOTLA (case no: JR 2103 / 12) (8 November 2016), before Snyman, AJ].

“The LRA permits councils and the CCMA to arbitrate disputes immediately if conciliation fails. The process of ‘con-arb’ collapses the normal two-phase process of conciliation meeting, followed by arbitration on a later date. This expedited procedure has potential dangers. For one, the same commissioner must necessarily act as both conciliator and arbitrator, meaning that, when acting in the latter capacity, he or she may have been privy to compromising information received when acting in the former capacity. This may render the process subject to review.”

[See Dr John Grogan, ‘Labour Litigation and Dispute Resolution’ Juta, 2014 ed. at 158].

BACKGROUND:

This matter concerns an application by the applicant [the employer] to review and set aside an arbitration award by the second respondent, Commissioner G Cormack, [the commissioner] in terms of which the third respondent’s dismissal [the employee] by the applicant [the employer] was held to be substantively unfair; and the third respondent [the employee] was afforded the relief of reinstatement retrospective to date of dismissal. The application [the review] was brought in terms of Section 145 of the Labour Relations Act (‘the LRA’). 

The review was brought by the employer based on grounds of misconduct committed by the commissioner during the con/arb proceedings. As a consequence of the misconduct, the employer alleged that it was deprived of a fair hearing.

In this matter with con/arb proceedings, the issue of the employee’s dismissal was first conciliated. The parties made opening statements where after conciliation proceedings failed.

When the proceedings resumed, on record, the employer made an application for the recusal of the commissioner. This recusal application was founded on statements the commissioner had made to the applicant’s representative in the course of the settlement discussions in conciliation about the evidence in the case and the applicant’s prospects of success.

The employer contended that these statements made by the commissioner indicated that the commissioner had already made up his mind in the matter, against the Respondent, employer. 

In the review application, the employer has contended that the commissioner had been inextricably involved in a discussion of the evidence the conciliation, and following that he told the employer that continuing with the arbitration would result in them losing.

It was clear from the transcript that the employer had barely started motivating its recusal application when the commissioner intervened, saying: ‘I’m going to interrupt you, I’m not going to recuse myself, I don’t believe you have any grounds to ask me to recuse myself…’   

The employer was thus not allowed by the commissioner to bring a recusal application, and it followed that the employee was never required to answer such.

In his arbitration award, the commissioner did not deal with the recusal application. The commissioner did make mention that he dealt with certain aspects of the case in the conciliation but had not formed an ‘opinion’ as to whether this was the crux of the charges.

The commissioner held that a recusal would lead to a postponement and delay in resolving the dispute, which would be prejudicial to the employee. However, the commissioner recorded that ‘the arbitration then continued by agreement’, as part of the reasoning why he did not recuse himself. 

The transcript of the proceedings showed that the employer never agreed to continue with the proceedings. The employer had just commenced with bringing the application for recusal when the commissioner ‘simply shut it down’.

The employee was not even called on to answer the submissions and claim any prejudice that may result to him if the recusal was upheld. The employer was in fact given no choice by the commissioner other than commencing the arbitration by calling its first witness.

THE LABOUR COURT JUDGMENT:

The Court first addressed the test for review where the issue in contention was misconduct on the part of the commissioner. For the purpose of this summary, it was deemed unnecessary to restate in detail the judgments considered and referred to by the Court.

Suffice it to refer briefly to some of the case law referred to in the judgment. In the judgment of Sidumo and Another v Rustenburg Platinum Mines Ltd and Others, (2007) 28 ILJ 2405 (CC), Navsa AJ held that in light of the constitutional requirement (in s 33 (1) of the Constitution) everyone has the right to administrative action that is lawful, reasonable and procedurally fair, and said that ‘the reasonableness standard should now suffuse s145 of the LRA’.

The example was made that if an arbitrator commits misconduct in the course of conducting the arbitration, it does not matter whether the outcome arrived at is reasonable, as the misconduct it vitiates the proceedings, resulting in the award being set aside.

The dictum in Naraindath v Commission for Conciliation, Mediation and Arbitration and Others’ (2000) 21 ILJ 1151 (LC) at para 27 was held to be relevant, where the Court said:

“…A failure to conduct arbitration proceedings in a fair manner, where that has the effect that one of the parties does not receive a fair hearing of their case, will almost inevitably mean either that the commissioner has committed misconduct in relation to his or her duties as an arbitrator or that the commissioner has committed a gross irregularity in the conduct of the arbitration proceedings. Against the above principles and test, the conduct of the second respondent, as complained of by the applicant, must be considered.”

The Court found that it was entirely inappropriate for the commissioner to derail the recusal application in the manner that he did. He simply did not allow the employer to properly argue and motivate the application. ‘He said, without hearing the argument that he was going to interrupt the applicant and that there were no grounds for his recusal.’

Then, and in the award, the commissioner dealt with the recusal issue and simply stated that he refused recusal because he did not yet decide whether the evidence he discussed with the applicant would be the ‘crux’ of the charges.

Furthermore, that recusal would result in a postponement that will prejudice the employee. The problem, however, was that because the commissioner simply cut the recusal application short before it even started, the employee never argued against the application and thus never claimed such prejudice.

The Court then referred to the locus classicus [leading authority], on the positive law as to recusal applications namely President of the Republic of SA and Others v SA Rugby Football Union and Others 1999 (4) SA 147 (CC) at para 48 the Court said:

“The question is whether a reasonable, objective and informed person would on the correct facts reasonably apprehend that the judge has not or will not bring an impartial mind to bear on the adjudication of the case, that is a mind open to persuasion by the evidence and the submissions of counsel. The reasonableness of the apprehension must be assessed in the light of the oath of office taken by the judges to administer justice without fear or favour; and their ability to carry out that oath by reason of their training and experience. It must be assumed that they can disabuse their minds of any irrelevant personal beliefs or predispositions.

They must take into account the fact that they have a duty to sit in any case in which they are not obliged to recuse themselves. At the same time, it must never be forgotten that an impartial judge is a fundamental prerequisite for a fair trial and a judicial officer should not hesitate to recuse herself or himself if there are reasonable grounds on the part of a litigant for apprehending that the judicial officer, for whatever reasons, was not or will not be impartial.” 

The court found that considering the above test for recusal, it was clear that the commissioner never came close to deciding the issue of his recusal based on the principles referred to above.

In fact, the commissioner did not even allow the issue to be properly ventilated, which in itself can be seen to add to the existence of the requisite apprehension to justify recusal.

The Court found further that for a judicial officer deciding a matter in the course of CCMA dispute resolution proceedings, to say from the very outset of the matter to a litigating party that they would lose, and then in effect prevent the issue from being ventilated when the arbitration starts, would surely satisfy the double-requirement of reasonableness to justify recusal.

Of critical importance was the fact that the commissioner recorded in the award that the employer agreed to continue with the arbitration despite the recusal application when the record shows this is simply not true. [Emphasis added].

The record showed that the commissioner in effect bullied the employer into proceeding with the matter by calling its first witness without further ado. These factors, considered with the undisputed statements made by the employer in the founding affidavit convinced the Court that it was likely that the commissioner did say to the applicant that it would lose if it proceeded with the arbitration, which the commissioner then decided was the case at the end of proceedings.

It was accepted by the Court that in con/arb proceedings there would be a conciliation component and that in conciliation proceedings parties may very well discuss, in the presence of or together with the commissioner, the merits of the matter. [Underlining added].

This is done in the context of what has been called ‘reality testing’ which has been held to be a proper component of conciliation. Reality testing entails the commissioner testing through questioning, what informs the underlying positions adopted by the respective parties, so that the parties understand what their respective disputes in fact are, and then, what the legal consequences would be if these disputes are not amicably resolved. The objective of this approach is thus to educate and inform the parties.

As was stated in Anglo Platinum Ltd v Commission for Conciliation, Mediation and Arbitration and Others (2009) 30 ILJ 2396 (LC) at para 32:

‘The process also assists the parties to conceptually understand and appreciate the assumptions that informed their respective positions and which may have also informed their stances as they go into the negotiation process. Those assumptions may be misplaced and undermine the underlying interest insofar as the resolution of the dispute is concerned. The underlying interests whom parties may fail to address may well be critical to both the resolution of the dispute…’

The process of reality testing cannot include the commissioner becoming involved in discussing the evidence with the parties to the extent of the commissioner giving his or her views as to what the outcome would be if that evidence is presented in the arbitration proceedings.

Further, the commissioner should especially refrain from giving his or her views on the possible evaluation or determination of that evidence. To illustrate the point in its simplest form - the commissioner should refrain from telling a party that it would win or lose, but the commissioner can explain to a party what consequences the party would face if it loses without saying whether this would happen.  

“Even if a commissioner is invited to a party to give advice, such an invitation should be resisted. A commissioner has to be even-handed in dealing with the parties. If she gives advice to one party, she would have to do likewise for the other party. That would create conflicts of interest for the commissioner. A commissioner who puts herself in such a situation would have great difficulty in acting with honesty, integrity and impartiality. Ethically, it is, therefore, untenable.

Giving advice is also counterproductive to the objectives of conciliation. A party who is advised that she has a good case is unlikely to settle. One who is advised that he has a bad case is likely to capitulate, as happened in this case.” [Court quoted Kasipersad v Commission for Conciliation, Mediation and Arbitration and Others (2003) 24 ILJ 178 (LC)].

The Court held further that it was not appropriate for the commissioner to have expressed any sentiments to the employer as to the prospects of success of its case, before arbitration even starts, and then continue with the arbitration and deciding the matter.

By so conducting himself, the commissioner put himself in a position where his impartiality and integrity could clearly properly be called into question. Worse still and when the employer did call it into question, by asking for recusal of the commissioner, it was in effect admonished by the commissioner who prevented the employer from even properly raising its concerns.

The Court then accentuated that the authorities referred to supra related to conciliation proceedings as a “stand-alone process”.

The Court alerted that the con-arb proceedings should be distinguished from the “stand-alone” conciliation proceedings in that the con-arb proceedings have an intrinsic further and significantly important dimension calls for an even more cautionary approach to be entrenched and alive ‘in the mind’ of the commissioner when engaging in the parties with the intention to procure a settlement. [My interpretation].

In the case of “stand-alone” conciliation, a certificate of non-resolution would be issued and whereafter the Applicant would then proceed to arbitration only to be held at a later date before another commissioner.

Although not mentioned by the Court in the judgment, section 136(2) of the LRA makes provision for the possibility that the same commissioner who attempted to resolve the “stand-alone dispute or conciliation” could be appointed as the Arbitrator thereof.

Also of importance is that section 136(3) of the LRA stipulates the process to be followed in the event that a party wished to object to the arbitration, to be conducted by the commissioner who attempted to resolve the dispute through conciliation.

The said party may do so by filing an objection in that regard with the Commission within 7 days after the date on which the commissioner’s certificate was issued, and must satisfy the Commission that a copy of the objection was been served on all the other parties to the dispute.

Suffice it to say that in terms of the provisions of section 136(4) of the LRA when the Commission receives an objection it must appoint another commissioner to resolve the dispute by arbitration.

It should, however, be mentioned that it seldom happens in the normal course of events that the same commissioner who presided over the “stand-alone conciliation process” would be appointed as the Arbitrator of the dispute, however, such eventuality is possible in terms of the aforesaid provisions of the LRA.

In the Premier Foods judgment at [34], the Court pronounced upon the role and the limitations thereof as to the commissioner’s involvement in discussing the merits of the matter in conciliation and emphasised that any such discussions if at all should be as minimal as possible.

The Court envisaged three scenarios where the Presiding Commissioner during con-arb proceedings should desist from the following conduct as is set out hereunder:

(i)  To express any view as to whether anyone of the respective parties’ case has merit;

(ii)  Should not dispense any advice to the parties as to their respective cases;

(iii)  The Presiding Commissioner about to arbitrate the matter should be alive to the fact that the conciliation proceedings are fresh in the mind of the parties when arbitration proceeds immediately the follow conciliation process;

(iv) That under the circumstances supra the perception of impartiality would be strong in mind of a party where the commissioner became unduly involved in the merits in conciliation and expressed views on that party’s prospects of success, immediately during the conciliation part of the con-arb proceedings.

Of importance was that the Court indicated that is alive as to the dynamics of the process of conciliation-arbitration which may lead to “an active involvement” so to speak in the conciliation process. However, the Court found that the commissioner should then “not shy away from this”.

The commissioner should be free to do what any other conciliating commissioner may lawfully and reasonably do, to try and facilitate the settlement.

‘But if this belief of a settlement being achievable is not realised, and the matter is not resolved, that commissioner should then rather recuse himself or herself from later arbitration and simply postpone the matter to be set down before another Arbitrator’.

It was deemed appropriate to quote from the Premier Foods judgment at [35] as stipulated hereunder:

“Expedition is not the be all and end all of all CCMA dispute resolution process, especially if a settlement is viable and given a proper chance to succeed with the appropriate intervention. I am concerned that expeditions of an over-emphasized CCMA dispute resolution process to the expense of all else”.

The Court identified that the commissioner in the case of con-arb proceedings was faced with one of two possible choices where as regards the conciliation component of the con-arbitration, namely:

i)  The first choice, minimal involvement in the conciliation process, and the parties “more or less conciliating on their own” and when no settlement is reached, the commissioner then conducts the arbitration; and

ii)  The second choice is an active engagement by the commissioner with the parties in the settlement discussions, to the extent permitted by law and the process envisaged or approved by the Court.

iii)  This process would include applying “reality testing” and other measures to persuade parties to reach an agreement.

The Court then reiterated that if a settlement was not reached, then the commissioner should rather postpone the matter to be heard by another Arbitrator.

The Court then revisited the conduct by the Presiding Commissioner in the matter before it and reiterated that the commissioner dispensed advice to the employer and told it what he considered its prospects of success to be (being that the employer would lose).

This the Court held as being “simply not appropriate, entirely irregular behaviour and constitutes misconduct on the part of the Commissioner”.

It was found that the Presiding Commissioner could remedy the situation when confronted with the recusal application. The commissioner should have been alive to the concerns of the employer in the manner which he conducted and involved himself in the conciliation proceedings.

The Court found purely from a perspective of conducting himself effectively and responsibly the commissioner should have recused himself, once this concern was raised.

The Court criticized the conduct by the commissioner in that he overemphasized the requirement of expeditious dispute resolution “above all else” to the extent of even not allowing the employer to properly raise the concern, found that by doing so the commissioner committed misconduct in conducting the arbitration proceedings, and this vitiated the entire proceedings rendering it a nullity.

[See: Sasol Infrachem v Sefafe & Others (2015) 36 ILJ 655 (LAC) at par 54] where the Court said:

“To summarise, in cases where it was held that the Presiding Officer ought to have recused himself or herself at the outset, but failed to do so, the entire proceedings before the Arbitrator or Presiding Officer are a nullity…”

It was stated at [41] as regards the supervisory duty of the Labour Court over the arbitration functions of the CCMA the Court reiterated its powers. ‘It is important that irregular practices of CCMA Commissioners be highlighted, with the view that the CCMA should consider policy measures to remedy or discourage the same’.

The purpose should be to ensure that conciliation-arbitration proceedings conducted under the auspices of the CCMA are not only lawful, reasonable and procedurally fair but must be seen to be so.

CONCLUSION

In conclusion, the Court found that the events occurred during the conciliation part of the conciliation-arbitration proceedings and the manner in which the commissioner became involved in the conciliation and the views he expressed, deprived the employer of a lawful, reasonable and procedurally fair hearing in the arbitration that followed.

The situation was exacerbated by the manner in which the commissioner virtually arbitrarily disposed of the concerns raised by the employer in the form of a recusal application, and then recording in his award that the arbitration proceeded by agreement, which was never the case.

This all constituted misconduct by the Commissioner as Arbitrator as contemplated by section 145(2)(a)(i) of the LRA.

The effect of the aforesaid misconduct was that the arbitration award itself had to be vitiated and fell to be set aside.

The Court held that it would be appropriate that the matter is conducted again before the CCMA, de novo, before another commissioner.

Therefore, the matter should be remitted to the CCMA for arbitration de novo before another commissioner.

Finally, in the light that the matter was unopposed, and accordingly no issue of costs arose.

Johann Scheepers

February 8, 2017

* The views and opinions expressed by the writer hereof are not necessarily that of the Commission for Conciliation, Mediation, and Arbitration and constitute that of the writer in his personal capacity

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