Court of Arbitration (New South Wales)

The Court of Arbitration was the first court in New South Wales, a state of Australia which dealt exclusively with industrial relation disputes in the early twentieth century. Justice Lance Wright claims that it perhaps was the first court of its type in the world. The court was unique at that time as it was the first court of its type to deal with labour relations between employer and employees on a compulsory basis. Previous arbitration measures between employer and employee had been on a voluntary basis or had been based on the criminal justice system through the use of criminal penalties. The conventional economic model is that both employer and employee enjoy equal bargaining power to set wages and conditions. This asserts that both parties are able to agree on a fair market price for the cost of labour free from distortions. However, where employers or employees group together, these outcomes can be distorted particularly in “boom” or “bust” economic conditions. The purpose of the court was to change the manner in which employers and employees negotiated pay and conditions. It was an attempt to reduce the power imbalances between employer groups or employee unions that arose from using collective bargaining, and the resulting use of that market power to influence wages, and also to reduce the threat of lockout or strikes to achieve those ends.

Regulation of employment in the early nineteenth century was simply based on the common law concepts of contract. These concepts provided that an employer and employee were free to bargain as the nature and the terms of employment. Where either party breached the contract, there was recourse to the law in the normal courts of the land. This could prove to be an expensive exercise and a lengthy one as well. It was also possible under various “Master and Servant Acts” for employees who broke employment contracts to be prosecuted for a breach of the criminal law. In this situation, either the employer or employee could be fined or imprisoned . Dr Geoffrey Partington outlines an example in 1858 where German masons who were brought to Australia to work on the Victorian railways, broke their contracts after being persuaded to work for another employer. This was due to a shortage in the supply of experienced masons in Australia. The masons were imprisoned as a result of their breach.

A maritime strike in 1890 led to the introduction in 1892 of the Trades Dispute Conciliation and Arbitration Act 1892 (NSW). This Act provided the first legislated non-common law arbitration scheme for disputes between employers and employees. The new law required the agreement of both employer and employee to engage in conciliation or arbitration. However, a declining labour market meant that employers were not prepared to accept arbitration and Patmore reports that only two of twenty two cases under that law were settled. Unions found the legislation ineffective in getting employers to the bargaining table.

...
Wikipedia