Arbitration And Conciliation
ARBITRATION AND CONCILIATION. The terms "arbitration and conciliation" as employed in this article, are used to describe a group of methods of settling disputes between employers and work-people or among two or more sets of work-people, of which the common feature is the intervention of some outside party not directly affected by the dispute. If the parties agree beforehand to abide by the award of the third party, the mode of settlement is described as "arbitration." If there be no such agreement, but the offices of the mediator are used to promote an amicable arrangement between the parties themselves, the process is described as "conciliation." The third party may be one or more disinterested individuals, or a joint-board representative of the parties or of other bodies or persons.
The process here termed "arbitration" is rarely an arbitration in the strict legal sense of the term (at least in the United Kingdom), because of the defective legal personality of the associations or groups of individuals who are usually parties to labour disputes, and the consequent absence in the great majority of cases of a valid legal "submission" of the difference to arbitration. Whether or not trade unions of employers or workmen in the United Kingdom are capable of entering through their agents into contracts which are legally binding on their members it is fairly certain that the great majority of the agreements actually made by the representatives of employers and workmen to submit a dispute to the decision of a third party are of no legal force except as regards the actual signatories. Broadly speaking, therefore, the provisions of the Arbitration Act 1889, which consolidated the law relating to arbitration in general, would as a rule have no application to the settlement of collective disputes between employers and workmen, even if the act had not been expressly excluded by section 3 of the Conciliation Act of 1896 in the case of disputes to which that act applies. Besides the absence of a legal "submission," labour arbitrations differ from ordinary arbitrations in the fact that the questions referred often (though by no means always) relate to the terms on which future contracts shall be made, whereas the vast majority of ordinary arbitrations relate to questions arising out of existing contracts. The defective "personality" of the parties to labour disputes also prevents the enforcement of an award by legal penalties. Since, however, difficulties of enforcement affect not only settlements arrived at by arbitration, but all agreements between bodies of employers and work-people with regard to the terms of employment, they are most appropriately considered at a later stage of this article.
The term "conciliation" is ordinarily used to cover a large number of methods of settlement, shading off in the one direction into "arbitration" and in the other into ordinary direct negotiation between the parties. In some cases conciliation only differs from arbitration in the absence of a previous agreement to accept the award. The German "Gewerbegerichten," when dealing with labour disputes, communicate a decision to both parties, who must notify their acceptance or otherwise (see below). Some of the state boards in America take similar action. The conciliation boards established under the New Zealand Arbitration Act of 1894 (see below) make recommendations, though either side may decline to accept them and may appeal to the court of arbitration, which in that colony has compulsory powers. Most frequently, however, in Great Britain, the mediating party abstains from pronouncing a definite judgment of his own, but confines himself to friendly suggestions with a view of removing obstacles to an agreement between the parties. On the other hand, it is not easy to define how far the "outside party" must be independent of the parties to the dispute, in order that the method of settlement may be properly described as "conciliation." There is a sense in which a friendly conversation between an employer or his manager and a deputation of aggrieved workmen is rightly described as "conciliation," but such an interview would certainly not be covered by the term as ordinarily used at the present day. Again, when the parties are represented by agents (e.g. the officials of an employers' association and of a trade union) the actual negotiators or some of them may not personally be affected by the particular dispute, and may often exercise some of the functions of the mediator or conciliator in a manner not clearly to be distinguished from the action of an outside party. It seems best, however, to exclude such negotiations from our purview so long as those between whom they are carried on merely act as the authorized agents for the parties affected. In the same way, a meeting arranged ad hoc between delegates of an employers' association and a trade union, for the purpose of arranging differences as to the terms on which the members of the association shall employ members of the union is not usually classed as "conciliation," unless the meeting is held in the presence of an independent chairman or conciliator, or in pursuance of a permanent agreement between the associations laying down the procedure for the settlement of disputes. If, however, the dispute is considered and arranged not by a casual meeting between two committees and deputations appointed ad hoc, but by a permanently organized "joint committee" or board with a constitution, rules of procedure and officers of its own, the process of settlement is by ordinary usage described as "conciliation," even though the board be entirely representative of the persons engaged in the industry. Such joint boards, as will be seen, play a most important part in conciliation at the present day, and they almost always have attached to them some machinery for the ultimate decision by arbitration of questions on which they fail to agree. Another form of conciliation is that in which the mediating board represents a wider group of industries than those affected by the dispute (e.g. the London and other "district" boards referred to below). Moreover, in some of the most important cases of settlement of disputes by conciliation, the mediating party has not been a permanent board but a disinterested individual, e.g. the mayor, county court judge, government official or member of parliament. As will be seen below, the Conciliation Act now provides for the appointment of "conciliators" by the Board of Trade.
Voluntary trade boards, however (i.e. permanent joint boards representing employers and work-people in particular trades), are at once the most firmly established and the most important agencies in Great Britain for the prevention and settlement of labour disputes. Among the earliest of such bodies was the board of arbitration in the Macclesfield silk trade, formed in 1849, in imitation of the French "Conseils de Prud'hommes," but which only lasted four years. The first board, however, which attained any degree of permanent success was that established for the hosiery and glove trade in Nottingham in 1860, through the efforts of A.J. Mundella. In 1864 a board was established in the Wolverhampton building trades, with Rupert Kettle as chairman, and in 1868 boards were formed for the pottery trade, the Leicester hosiery trade and the Nottingham lace trade. In 1869 there was formed one of the most important of the still existing boards, viz. the board of arbitration and conciliation in the manufactured iron and steel trades of the north of England, with which the names of Rupert Kettle, David Dale and others are associated. In 1872 and 1873 joint committees were formed in the Durham and Northumberland coal trades to deal with local questions. The Leicester boot and shoe trade board, the first of an elaborate system of local boards in this trade, was founded in 1875. From about 1870 onwards there was a great movement for the establishment of "sliding scales" in the coal and iron and steel trades, which by regulating wages automatically rendered unnecessary the settlement of general wages by conciliation or arbitration. These sliding scales, however, usually had attached to them joint committees for dealing with disputed questions. A sliding scale arranged by David Dale was attached to the manufactured iron trade board in 1871. A sliding scale for the Cleveland blast furnacemen came into force in 1879. Sliding scales were also adopted in the coal trade in many districts, e.g. South Wales (1875), Durham (1877) and Northumberland (1879). The movement was, however, followed by a reaction, and several of the sliding scales in the coal trade were terminated between 1887 and 1889. In 1902 the last surviving sliding scale in the coal trade, viz. in South Wales, ceased to exist and was replaced by a conciliation board.
The formation on a large scale of conciliation boards in the coal trade to fix the rate of wages dates from the great miners' dispute of 1893, one of the terms of settlement agreed to at the conference held at the foreign office under Lord Rosebery being the formation of a conciliation board covering the districts affected. Northumberland followed in 1894, Durham in 1895, Scotland in 1900 and South Wales in 1903.
In 1907 an important scheme for the formation of conciliation boards for railway companies and their employees was adopted as the result of the action taken by the president of the Board of Trade to prevent a general strike of railway servants in that year. Under this scheme separate boards (sectional and general) were to be formed for the employees of each railway company which adhered to the scheme, with provision for reference in case of a deadlock to an umpire.
The first general district board to be formed was that established in London in 1890, through the London chamber of commerce, as a sequel to the Mansion House committee which mediated in the great London dock strike of 1889. The example was followed by several large towns, but the action taken by the boards in most of these provincial districts has been very limited.
In addition there are two boards composed of representatives of co-operators and trade-unionists for the settlement of disputes arising between co-operative societies and their employees.
Constitution and functions of voluntary conciliation boards
The most typical form of machinery for the settlement of disputes by voluntary conciliation is a joint board consisting of equal numbers of representatives of employers and employed. The members of the board are usually elected by the associations of employers and workmen, though in some cases (e.g. in the manufactured iron trade board) the workmen's representatives are elected not by their trade union but by meetings of workmen employed at the various works. The chairman may be an independent person, or, more usually, a representative of the employers, the vice-chairman being a representative of the workmen. In the arbitration and conciliation boards in the boot and shoe trade, provision is made by which the chair may be occupied by representatives of the employers and workmen in alternate years. An independent chairman usually has a casting vote, which practically makes him an umpire in case of equal voting, but where there is no outside chairman there is often provision for reference of cases on which the board cannot agree to an umpire, who may either be a permanent officer of the board elected for a period of time (as in the case of several of the boards in the boot and shoe trade), or selected ad hoc by the board or appointed by some outside person or body. Thus the choice of the permanent chairman or umpire of the miners' conciliation board, formed in pursuance of the settlement of the coal dispute of 1893 by Lord Rosebery, was left to the speaker of the House of Commons. The nomination of umpires under the Railway Agreement of 1907 was left to the speaker and the master of the rolls. Since the passing of the Conciliation Act, several conciliation boards have provided in their rules for the appointment of umpires by the Board of Trade.
Conciliation boards constituted as described above usually have rules providing that there shall always be equality of voting as between employer and workmen, in spite of the casual absence of individuals on one side or the other. In order to expedite business it is sometimes provided that all questions shall be first considered by a sub-committee, with power to settle them by agreement before coming before the full board. Boards of conciliation and arbitration conforming more or less to the above type exist in the coal, iron and steel, boot and shoe and other industries in the United Kingdom. A somewhat different form of organization has prevailed in the cotton-spinning trade (since the dispute of 1892-1893) and in the engineering trade (since the engineering dispute of 1897-1898). In these important industries there are no permanent boards for the settlement of general questions, but elaborate agreements are in force between the employers' and workmen's organizations which among other things prescribe the mode in which questions at issue shall be dealt with and if possible settled. In the first place, if the question cannot be settled between the employer and his workmen, it is dealt with by the local associations or committees or their officials, and failing a settlement in this manner, is referred to a joint meeting of the executive committees of the two associations. In neither agreement is there any provision for the ultimate decision of unsettled questions by arbitration. The agreement in the cotton trade is known as the "Brooklands Agreement," and a large number of questions have been amicably settled under its provisions. In the building trade, it is very customary for the local "working rules," agreed to mutually by employers and employed in particular districts, to contain "conciliation rules" providing for the reference of disputed questions to a joint committee with or without an ultimate reference to arbitration. Yet another form of voluntary board is the "district board," consisting in most cases of representatives elected in equal numbers by the local chamber of commerce and trades council respectively. In the case, however, of the London Conciliation Board the workmen's representatives are elected, twelve by specially summoned meetings of trade union delegates and two by co-optation. The functions of district boards are to deal with disputes in any trade which may occur within their districts, and of course they can only take action with the consent of both parties to the dispute, in this respect differing from the majority of "trade" boards, which, as a rule, are empowered by the agreement under which they are constituted to deal with questions on the application of either party. Another interesting type of board is that representing two or more groups of workmen and sometimes their employers, with the object of settling "demarcation" disputes between the groups of workmen (i.e. questions as to the limits of the work which each group may claim to perform). Examples of such boards are those representing shipwrights and joiners on the Clyde, Tyne and elsewhere. While the arrangements for voluntary conciliation and arbitration differ in this way in various industries, there is an equally wide variation in the character and range of questions which the boards are empowered to determine. For example, some boards in the coal trade (e.g. the conciliation boards in Northumberland and the so-called "Federated Districts") deal solely with the general rate of wages. Others, e.g. the "joint committee" in Northumberland and Durham, confine their attention solely to local questions not affecting the counties as a whole. The Durham conciliation board deals with any general or county questions. This distinction between "general" and "local" questions corresponds nearly, though not entirely, to the distinction often drawn between questions of the terms of future employment and of the interpretation of existing agreements. Some conciliation boards are unlimited as regards the scope of the questions which they may consider. This was formerly the case with the boards in the boot and shoe trade, but under the "terms of settlement" of the dispute in 1895 drawn up at the Board of Trade, certain classes of questions (e.g. the employment of particular individuals, the adoption of piece-work or time-work, etc.) were wholly or partially withdrawn from their consideration, and any decision of a board contravening the "terms of settlement" is null and void. A special feature in the procedure for conciliation and arbitration in the boot and shoe trade, is the deposit by each party of £1000 with trustees, as a financial guarantee for the performance of agreements and awards. A certain class of conciliation boards, mostly in the Midland metal trades, were attached to "alliances" of employers and employed, having for their object the regulation of production and of prices (e.g. the Bedstead Trade Wages Board). None of these alliances, however, have survived.
Legislation in the United Kingdom
At all events up to the year 1896, the development of arbitration and conciliation as methods of settling labour disputes in the United Kingdom was entirely independent of any legislation. Previously to the Conciliation Act of 1896 several attempts had been made by parliament to promote arbitration and conciliation, but with little or no practical result, and the act of 1896 repealed all previous legislation on the subject, at the same time excluding the operation of the Arbitration Act of 1889 from the settlement of "any difference or dispute to which this act applies." The laws repealed by the Conciliation Act need only a few words of mention. During the 18th century the fixing of wages by magistrates under the Elizabethan legislation gradually decayed, and acts of 1745 and 1757 gave summary jurisdiction to justices of the peace to determine disputes between masters and servants in certain circumstances, although no rate of wages had been fixed that year by the justices of the peace of the shire. These and other laws, relating specially to disputes in the cotton-weaving trade, were consolidated and amended by the Arbitration Act of 1824. This act seems chiefly to have been aimed at disputes relating to piece-work in the textile trades, though applicable to other disputes arising out of a wages contract. It expressly excluded, however, the fixing of a rate of wages or price of labour or workmanship at which the workmen should in future be paid unless with the mutual consent of both master and workmen. The act gave compulsory powers of settling the disputes to which it relates on application of either party to a court of arbitrators representing employers and workmen nominated by a magistrate. The award could be enforced by distress or imprisonment. The act was subsequently amended in detail, and by the "Councils of Conciliation" Act of 1867 power was given to the home secretary to license "equitable councils of conciliation and arbitration" equally representative of masters and workmen, who should thereupon have the powers conferred by the act of 1824. The act contains provisions for the appointment of conciliation committees, and other details which are of little interest seeing that the act was never put into operation. Another amendment of the act of 1824 was made by the Arbitration (Masters and Workmen) Act of 1872, which contemplated the conclusion of agreements between employers and employed, designating some board of arbitration by which disputes included within the scope of the former acts should be determined. A master or workman should be deemed to be bound by an agreement under the act, if he accepted a printed copy of the agreement and did not repudiate it within forty-eight hours. Like the previous legislation, however, the act of 1872 was inoperative. The evidence given before the Royal Commission on Labour (1891-1894) disclosed the existence of a considerable body of opinion in favour of some further action by the state for the prevention or settlement of labour disputes, and some impetus was given to the movement by the settlement through official mediation of several important disputes, e.g. the great coal-miners' dispute of 1893 by a conference presided over by Lord Rosebery, the cab-drivers' dispute of 1894 by the mediation of the home secretary (H.H. Asquith), and the boot and shoe trade dispute of 1895 by a Board of Trade conference under the chairmanship of Sir Courtenay Boyle. In these, and a few other less important cases, the intervention of the Board of Trade or other department took place without any special statutory sanction. The Conciliation Act passed in 1896 was framed with a view to giving express authorization to such action in the future.
This act is of a purely voluntary character. Its most important provisions are those of section 2, empowering the Board of Trade in cases "where a difference exists or is apprehended between any employer, or any class of employers, and workmen, or between different classes of workmen," to take certain steps to promote a settlement of the difference. They may of their own initiative hold an inquiry or endeavour to arrange a meeting between the parties under a chairman mutually agreed on or appointed from the outside, and on the application of either party they may appoint a conciliator or a board of conciliation who shall communicate with the parties and endeavour to bring about a settlement and report their proceedings to the Board of Trade. On the application of both parties the Board of Trade may appoint an arbitrator. In all cases the Board of Trade has discretion as to the action to be taken, and there is no provision either for compelling the parties to accept their mediation or to abide by any agreement effected through their intervention. There are other provisions in the act providing for the registration of voluntary conciliation boards, and for the promotion by the Board of Trade of the formation of such boards in districts and trades in which they are deficient. During the first eleven years after the passage of the act the number of cases arising under section 2 (providing for action by the Board of Trade for the settlement of actual or apprehended disputes) averaged twenty-one per annum, and the number of settlements effected fifteen. In the remaining cases the Board of Trade either refused to entertain the application or failed to effect a settlement, or the disputes were settled between the parties during the negotiations. About three-quarters of the settlements were effected by arbitration and one-quarter by conciliation. A number of voluntary conciliation boards formed or reorganized since the passing of the act provide in their rules for an appeal to the Board of Trade to appoint an umpire in case of a deadlock. At least thirty-six trade boards are known to have already adopted this course. The figures given above show that the Conciliation Act of 1896 has not, like previous legislation, been a dead letter, though the number of actual disputes settled is small compared with the total number annually recorded.
Proposals for compulsion
Arbitration and conciliation in labour disputes as practised in the United Kingdom are entirely voluntary, both as regards the initiation and conduct of the negotiations and the carrying out of the agreement resulting therefrom, In all these respects arbitration, though terminating in what is called a binding award, is on precisely the same legal footing as conciliation, which results in a mutual agreement. Various proposals have been made (and in some cases carried into effect in certain countries) for introducing an element of compulsion into this class of proceeding. There are three stages at which compulsion may conceivably be introduced, (1) The parties may be compelled by law to submit their dispute to some tribunal or board of conciliation; (2) the board of conciliation or arbitration may have power to compel the attendance of witnesses and the production of documents; (3) the parties may be compelled to observe the award of the board of arbitration. The most far-reaching schemes of compulsory arbitration in force in any country are those in force in New Zealand and certain states in Australia. Bills have been introduced into the British House of Commons for clothing voluntary boards of conciliation and arbitration, under certain conditions, with powers to require attendance of witnesses and production of documents, without, however, compelling the parties to submit their disputes to these boards or to abide by their decisions. In the United Kingdom, however, more attention has recently been given to the question of strengthening the sanction for the carrying out of awards and agreements than of compelling the parties to enter into such arrangements. An interesting step towards the solution of the difficulty of enforcement in certain cases is perhaps afforded by the provisions of the terms of settlement of the dispute in the boot and shoe trade drawn up at the Board of Trade in 1895. Under this agreement £1000 was deposited by each party with trustees, who were directed by the trust-deed to pay over to either party, out of the money deposited by the other, any sum which might be awarded as damages by the umpire named in the deed, for the breach of the agreement or of any award made by an arbitration board in consonance with it. Very few claims for damages have been sustained under this agreement. Nevertheless it cannot be doubted that the pecuniary liability of the parties has given stability to the work of the local arbitration boards, and the satisfaction of both sides with the arrangement is shown by the fact that the trust-deed which lapsed in 1900 has been several times renewed by common agreement for successive periods of two years, and is now in force for an indefinite period subject to six months' notice from either side. Theoretically a trust-deed of this kind can only offer a guarantee up to the point at which the original deposit on one side or the other is exhausted, as it is impossible to compel either party to renew the deposit. A proposal was made by the duke of Devonshire and certain of his colleagues on the Royal Commission on Labour for empowering associations of employers and employed to acquire, if they desired it, sufficient legal personality and corporate character to enable them to sue each other or their own members for breach of agreement. This would give the association aggrieved by a breach of award the power of suing the defaulting organization to recover damages out of their corporate funds, while each association could exact penalties from its members for such a breach. For this reason the suggestion has met with a good deal of support by many interested in arbitration and conciliation, but has been steadily opposed by representatives of the trade unions.
The question is not free from difficulties. The object of the change would be to convert what are at present only morally binding understandings into legally enforceable contracts. But apart from the possibility that some of such contracts would be held by the courts to be void as being "in restraint of trade," the tendency might be to give a strict legal interpretation to working agreements which might deprive them of some of their effectiveness for the settlement of the conditions of future contracts between employers and workmen, while possibly deterring associations from entering into such agreements for fear of litigation. Individuals, moreover, could avoid liability by leaving their associations. In practice the cases of repudiation or breach of an award or agreement are not common. In countries like New Zealand, where the parties are compelled to submit their differences to arbitration, some of the above objections do not apply.
Statistics of existing agencies
The following statistics are based on the reports of the Labour department of the Board of Trade. The number of boards of conciliation and arbitration known to be in existence in the United Kingdom is nearly 200, but a good many of these do little or no active work. Only about one-third of these boards deal with actual cases in any one year, the active boards being mainly connected with mining, iron and steel, engineering and shipbuilding, boot and shoe and building trades. During the ten years 1897-1906 the total number of cases considered by these boards averaged about 1500 annually, of which they have settled about half, the remainder having been withdrawn, referred back or otherwise settled. About three-quarters of the cases settled were determined by the boards themselves and only one-quarter by umpires. The great majority of the cases settled were purely local questions. Thus more than half the total were dealt with by the "joint committees" in the Northumberland and Durham coal trades, which confine their action to local questions, such as fixing the "hewing prices" for new seams. The great majority of the cases settled did not actually involve stoppage of work, the most useful work of these permanent boards being the prevention rather than the settlement of strikes and lockouts. A certain number of disputes are settled every year by the mediation or arbitration of disinterested individuals, e.g. the local mayor or county court judge.
Future scope and limits
The extent to which the methods of arbitration and conciliation can be expected to afford a substitute for strikes and lockouts is one on which opinions differ very widely. The difficulties arising from the impossibility of enforcing agreements or awards by legal process have already been discussed. Apart from these, however, it is evident that both methods imply that the parties, especially the work-people, are organized at least to the extent of being capable of negotiating through agents. In some industries (e.g. agriculture or domestic service) this preliminary condition is not satisfied; in others the men's leaders possess little more than consultative powers, and employers may hesitate to deal either directly or through a third party with individuals or committees who have so little authority over those whom they claim to represent. And even where the trade organizations are strong, some employers refuse in any way to recognize the representative character of the men's officials. The question of the "recognition" of trade unions by employers is a frequent cause of disputes (see Strikes and Lock-outs.) It may be observed, however, that it often occurs that in cases in which both employers and employed are organized into associations which are accustomed to deal with each other, one or both parties entertain a strong objection to the intervention of any outside mediator, or to the submission of differences to an arbitrator. Thus the engineering employers in 1897 were opposed to any outside intervention, though ready to negotiate with the delegates chosen by the men. On the other hand, the cotton operatives have more than once opposed the proposal of the employers to refer the rate of wages to arbitration, and throughout the great miners' dispute of 1893 the opposition to arbitration came from the men. Naturally, the party whose organization is the stronger is usually the less inclined to admit outside intervention. But there have also been cases in which employers, who refused to deal directly with trade union officials, have been willing to negotiate with a mediator who was well known to be in communication with these officials, e.g. in the case of the Railway Settlement of 1907.
Apart, however, from the disinclination of one or both parties to allow of any outside intervention, we have to consider how far the nature of the questions in dispute may in any particular case put limits to the applicability of conciliation or arbitration as a method of settlement. Since conciliation is only a general term for the action of a third party in overcoming the obstacles to the conclusion of an agreement by the parties themselves, there is no class of questions which admit of settlement by direct negotiation which may not equally be settled by this method, provided of course that there is an adequate supply of sufficiently skilful mediators. As regards arbitration the case is somewhat different, seeing that in this case the parties agree to be bound by the award of a third party. For the success of arbitration, therefore, it is important that the general principles which should govern the settlement of the particular question at issue should be admitted by both sides. Thus in the manufactured iron trade in the north of England, it has throughout been understood that wages should depend on the prices realized, and the only question which an arbitrator has usually had to decide has been how far the state of prices at the time warranted a particular change of wage. On the other hand, there are many questions on which disputes arise (e.g. the employment of non-union labour, the restriction of piece-work, etc.) on which there is frequently no common agreement as to principles, and an arbitrator may be at a loss to know what considerations he is to take into account in determining his award. Generally speaking, employers are averse from submitting to a third party questions involving discipline and the management of their business, while in some trades workmen have shown themselves opposed to allowing an arbitrator to reduce wages beyond a certain point which they wish to regard as a guaranteed "minimum."
Another objection on the part of some employers and workmen to unrestricted arbitration is its alleged tendency to multiply disputes by providing an easy way of solving them without recourse to strikes or lock-outs, and so diminishing the sense of responsibility in the party advancing the claims. It is also sometimes contended that arbitrators, not being governed in their decisions by a definite code of principles, may tend to "split the difference," so as to satisfy both sides even when the demands on one side or the other are wholly unwarranted. This, it is said, encourages the formulation of demands purposely put high in order to admit of being cut down by an arbitrator. One of the chief practical difficulties in the way of the successful working of permanent boards of conciliation, consisting of equal numbers of employers and employed, with an umpire in case of deadlock, is the difficulty of inducing business men whose time is fully occupied to devote the necessary time to the work of the boards, especially when either side has it in its power to compel recourse to the umpire, and so render the work of the conciliation board fruitless. In spite of all these difficulties the practice of arranging differences by conciliation and arbitration is undoubtedly spreading, and it is to be remembered that even in cases in which theoretically a basis for arbitration can scarcely be said to exist, recourse to that method may often serve a useful purpose in putting an end to a deadlock of which both parties are tired, though neither cares to own itself beaten.
New Zealand. - The New Zealand Industrial Conciliation and Arbitration Act 1894 is important as the first practical attempt of any importance to enforce compulsory arbitration in trade disputes. The original act was amended by several subsequent measures, and the law has been more than once consolidated. The law provides for the incorporation of associations of employers or workmen under the title of industrial unions, and for the creation in each district of a joint conciliation board, elected by these industrial unions, with an impartial chairman elected by the board, to which a dispute may be referred by any party, a strike or lock-out being thenceforth illegal. If the recommendation of the conciliation board is not accepted by either party, the matter goes to a court of arbitration consisting of two persons representing employers and workmen respectively, and a judge of the supreme court. Up to 1901 disputes were ordinarily required to go first to a board of conciliation except by agreement of the parties, but now either party may carry a dispute direct to the arbitration court. The amendment was adopted because it was found in practice that the great majority of cases went ultimately to the arbitration court, and conciliation board proceedings were often mere waste of time. The award of the court is enforceable by legal process, financial penalties up to £500 being recoverable from defaulting associations or individuals. If the property of an association is insufficient to pay the penalty, its members are individually liable up to £10 each. It is the duty of factory inspectors to see that awards are obeyed. The law provides for the extension of awards to related trades, to employers entering the industry hereafter, and in some cases to a whole industry.
The above is only an outline of the principal provisions of this law, under which questions of wages, hours and the relations of employers and workmen generally in New Zealand (q.v.) industries became practically the subject of state regulation. The act must more properly be judged as a measure for the state regulation of industry, but as a method of putting an end to labour disputes its success has only been partial.
Australia. - The laws which are practically operative in Australia with respect to arbitration and conciliation are all based with modifications on the New Zealand system. The first compulsory arbitration act passed in Australia was the New South Wales Act of 1901. The principal points of difference between this and the New Zealand act are that the conciliation procedure is entirely omitted, the New South Wales measure being purely an arbitration act. The arbitration court has greater power over unorganized trades than in New Zealand, and the scope of its awards is greatly enlarged by its power to declare any condition of labour to be common rule of an industry, and thus binding on all existing and future employers and work-people in that industry. In Western Australia laws were passed in 1900 and 1902 which practically adopted the New Zealand legislation with certain modifications in detail.
In 1904 the commonwealth of Australia passed a compulsory arbitration law based mainly on those in force in New Zealand and New South Wales, and applicable to disputes affecting more than one Australian state. The arbitration court is empowered to require any dispute within its cognizance to be referred to it by the state authority proposing to deal with it. There are other Australian laws which, though unrepealed (e.g. the South Australian Act of 1894), are a dead-letter. Generally speaking, the Australasian laws on arbitration and conciliation are more stringent and far-reaching than any others in the world.
Canada. - In 1900 a conciliation act was passed by the Dominion parliament resembling the United Kingdom act in most of its features, and in 1903 the Canadian Railway Labour Disputes Act made special provision for the reference of railway disputes to a conciliation board and (failing settlement) to a court of arbitration.
This act was consolidated with the Conciliation Act 1900 during 1906 in an act respecting conciliation and labour, and in March 1907 the Industrial Disputes Investigation Act became law by which machinery is set up for the constitution of a board, on the application of either side to a dispute in mines and industries connected with public utilities, whenever a strike involving more than ten employees is threatened. The provisions of the act may be extended to other industries and railway companies, and their employees may take action under either the Conciliation and Labour Act or the Industrial Disputes Investigation Act. Under the Investigation Act it is unlawful for any employer to cause a lock-out, or for an employee to go on strike on account of any dispute prior to or during a reference of such dispute to a board constituted under the act, or prior to or during a reference under the provisions concerning railway disputes under the Conciliation and Labour Act. There is nothing, however, in the act to prevent a strike or lock-out taking place after the dispute has been investigated.
France. - The French Conciliation and Arbitration Law of December 1892 provides that either party to a labour dispute may apply to the juge de paix of the canton, who informs the other party of the application. If they concur within three days, a joint committee of conciliation is formed of not more than five representatives of each party, which meets in the presence of the juge de paix, who, however, has no vote. If no agreement results the parties are invited to appoint arbitrators. If such arbitrators are appointed and cannot agree on an umpire, the president of the civil tribunal appoints an umpire. In the case of an actual strike, in the absence of an application from either party it is the duty of the juge de paix to invite the parties to proceed to conciliation or arbitration. The results of the action of the juge de paix and of the conciliation committee are placarded by the mayors of the communes affected. The law leaves the parties entirely free to accept or reject the services of the juge de paix.
During the ten years 1897-1906 the act was put in force in 1809 cases - viz. 916 on application of workmen; 49 of employers; 40 of both sides; and 804 without application. Altogether 616 disputes were settled - 549 by conciliation and 67 by arbitration.
Germany. - In several continental European countries, courts or boards are established by law to settle cases arising out of existing labour contracts; e.g. the French "Conseils de Prud'hommes," the Italian "Probi-Viri," and the German "Gewerbegerichten," - and some of the questions which come before these bodies are such as might be dealt with in England by voluntary boards or joint committees. The majority, however, are disputes between individuals as to wages due, etc., which would be determined in the United Kingdom by a court of summary jurisdiction. It is noteworthy, however, that the German industrial courts (Gewerbegerichten) are empowered under certain conditions to offer their services to mediate between the parties to an ordinary labour dispute. The main law is that of 1890 which was amended in 1901. In the case of a strike or lock-out the court must intervene on application of both parties, and may do so of its own initiative or on the invitation of one side. The conciliation board for this purpose consists under the amending law of 1901 of the president of the court and four or more representatives named by the parties in equal numbers but not concerned in the dispute. Failing appointment by the parties the president appoints them. Failing a settlement at a conference between the parties in the presence of the president and assessors of the court, the court arrives at a decision on the merits of the dispute which is communicated to the parties, who are allowed a certain time within which to notify their acceptance or rejection. The court has no power to compel the observance of its decision, but in certain cases it may fine a witness for non-attendance. In the first five years after the passage of the amending law of 1901 (viz. 1902-1906) there were 1139 applications for the intervention of the industrial courts: 492 agreements were brought about and 107 decisions were pronounced by the courts, of which 64 were accepted by both parties.
Switzerland. - The canton of Geneva enacted a law in 1900 providing for the settlement by negotiation, conciliation or arbitration of the general terms of employment in a trade, subject, however, to special arrangements between employers and workmen in particular cases. The negotiations take place between delegates chosen by the associations of employers and employed, or failing them, by meetings summoned by the council of state on sufficient applications. Failing settlement, the council of state, on application from either party, is to appoint one or more conciliators from its members, and if this fail the central committee of the Prud'hommes, together with the delegates of employers and workmen, is to form a board of arbitration, whose decision is binding. Any collective suspension of work is illegal during the period covered by the award or agreement. Up to the end of 1904 only seven cases occurred of application of the law to industrial differences. In Basel (town) a law providing for voluntary conciliation by means of boards of employers and workmen with an independent chairman appointed ad hoc by the council of state of the canton, has been in force since 1897, but it remained practically unused until 1902. In the period from January 1902 to May 1905, 18 disputes were dealt with and 10 settled under this law. A similar law was adopted in St Gall in 1902. In the three years 1902-1904, 10 disputes were dealt with and 3 settled.
Sweden. - By a law which came into force on the 1st of January 1907, Sweden was divided into seven districts and in each district a conciliator was appointed by the crown. The conciliator must reside within his district and his principal duty is to promote the settlement of disputes between employers and work-people or between members of either class among themselves. He is also on request to advise and otherwise assist employers and work-people in framing agreements affecting the conditions of labour if and so far as agreements are designed to promote good relations between the two classes and to obviate stoppages of work.
United States. - In the United States several states have legislated on the subject of conciliation and arbitration, among the first of such acts being the "Wallace" Act of 1883, in Pennsylvania, which, however, was almost inoperative. Altogether, 24 states have made constitutional or statutory provision for mediation in trade disputes, of which 17 contemplate the formation of permanent state boards. The only state laws which require notice are those of Massachusetts and New York providing for the formation of state boards of arbitration. The Massachusetts board, founded in 1886, consists of one employer, one employed and one independent person chosen by both. The New York board (1886) consists of two representatives of different political parties, and one member of a bona fide trade organization within the state. In both states it is the duty of the board, with or without application from the parties, to proceed to the spot where a labour dispute has occurred, and to endeavour to promote a settlement. The parties may decline its services, but the board is empowered to issue a report, and on application from either side to hold an inquiry and publish its decision, which (in Massachusetts) is binding for six months, unless sixty days' notice to the contrary is given by one side to the other. Several states, including Massachusetts and New York, provide not only for state boards, but also for local boards.
In Massachusetts, during 1906, the state board dealt with 158 disputes. Of these the board was appealed to as arbitrator in 95 cases. Awards were rendered in 80 cases, 12 cases were withdrawn and 3 cases were still pending at the end of the year. In New York the number of cases dealt with is much smaller.
Federal legislation can only touch the question of arbitration and conciliation so far as regards disputes affecting commerce between different states. Thus an act of June 1898 provides that in a dispute involving serious interruption of business on railways engaged in inter-state commerce, the chairman of the Inter-State Commerce Commission and the commissioner of labour shall, on application of either party, endeavour to effect a settlement, or to induce the parties to submit the dispute to arbitration. While an arbitration under the act is pending a strike or lock-out is unlawful.
Authorities. - For the recent development of arbitration and conciliation in the United Kingdom, see the Annual Reports of the Labour Department of the Board of Trade on Strikes and Lock-outs from 1888 onwards. Since 1890 these reports have contained special appendices on the work of arbitration boards. See also the Labour Gazette (the monthly journal of the Labour Department) from 1893 onward, and the Report on Rules of Voluntary Conciliation and Arbitration Boards and Joint Committees. The Reports of the Royal Commission on Labour (1891-1894) contain much valuable information on the subject. For the working of the Conciliation Act see the Reports of the Board of Trade on their proceedings under the Conciliation Act 1896. For the earlier history in the United Kingdom: Crompton, Industrial Conciliation (1876); Price, Industrial Peace (1887). For foreign and colonial developments: the third Abstract of Foreign Labour Statistics (1906), issued by the Board of Trade; Report on Government Industrial Arbitration, by L.W. Hatch (Bulletin of Bureau of Labour of United States Department of Commerce and Labour, September 1905); the report of the French Office du Travail, De la conciliation et de l'arbitrage dans les conflits collectifs entre patrons et ouvriers en France et à l'étranger (1893); the Annual Reports of the same Department on Strikes, Lockouts and Arbitration; the Reports of the Massachusetts and New York State Arbitration Boards, and of the New Zealand Department of Labour; and the Labour Gazette. See also the following general works: N.P. Gilman, Methods of Industrial Peace (Boston, 1904); A.C. Pigou, Principles and Methods of Industrial Peace (1905).
Note - this article incorporates content from Encyclopaedia Britannica, Eleventh Edition, (1910-1911)