A Way to Ease Labor-Management Strife

THE two-week-old steel strike has brought the question from some laymen: Why not arbitrate? Instead of settling the dispute by force, let industry and union turn the dispute over to an expert, impartial arbitrator who would make a binding decision on the basis of facts.

While such a solution sounds reasonable, most arbitration experts flatly say that it makes little sense. Arbitration is an aid to collective bargaining, not a substitute for it. As Houston Transit Co. President Carl Frazier puts it: "You simply cannot, in effect, turn over the authority for managing the company to a third party who may not be nearly as familiar with the company's problems as you are." Once an agreement is signed, however, arbitration may come into its rightful role, interpreting the fine print, settling the petty grievances that might otherwise erupt into strikes.

As a result, arbitration has grown into one of the most useful lubricants in the U.S. economy, not only facilitating industrial settlements but easing all sorts of disagreements between businessmen. With contracts increasing in number and complexity, and courtrooms increasingly jammed with work, arbitration has become a practical necessity. Not a new idea (the Romans wrote it into the Justinian Code), arbitration got its big impetus in World War II, when the Government, plagued by quickie strikes, insisted on labor-arbitration clauses in all defense-production contracts. Today nine out of ten union agreements provide for arbitration, and hundreds of thousands of organizations and corporations have arbitration clauses in their contracts. Calls for arbitrators from major arbitration sources have increased 13% in the past year alone.

The great fountainhead of arbitration is the nonprofit American Arbitration Association, founded 30 years ago with the help of Charles Evans Hughes, Herbert Hoover and Banker Felix Warburg. With a $500.000 budget, mostly contributed by large corporations, plus modest fees ($25 per day in labor cases, from one-tenth of 1% to 1.5% of the disputed amount in commercial cases), dedicated A.A.A.ers handle about 2,500 disputes a year, 80% of them labor cases, boast that never has an aggrieved party walked out of the hearing room.

As soon as two disputants agree to arbitrate, the A.A.A. sends each a list of experts selected from its 13,000-man master panel, ascertains the man most acceptable to both sides, then sets the hearing. Average elapsed time from appeal to award: 70 days (two hours in one emergency) v. two to three years for a final court decision. A fur dispute that had dragged on for six weeks in a New York court and cost $9,000 in litigation fees ended up with a hung jury. Brought to the A.A.A., it was settled in five days. Cost: $507. Arbitration can also be expensive. Settling the cases of 226 workers discharged for "misconduct" during the 1955 Southern Bell Telephone strike cost an estimated $2,000,000.

One of the greatest advantages of an A.A.A. hearing over a court session is the expertness of the arbitrator. Unlike a judge, who might have to spend weeks acquainting himself with the technical points of an industry, the arbitrator, usually a topnotch man in the field, needs no such briefing, can start right in with the facts in dispute.

Arbitration is elastic. In a case where a Washingtonian charged a builder with 40 violations of a construction contract, the three-man panel of builders went out to the house, climbed over it, matter-of-factly ruled on all 40 complaints.

Sessions are private, informal, with none of the often incompetent, irrelevant and immaterial uproar of learned counsel. The arbitrator will listen to any evidence of any value whatever, including hearsay, which might be barred in a law court. Yet arbitration decisions have as much legal force in the 48 states as court decisions. To upset an award it is necessary to prove the arbitrator guilty of fraud, bias, or exceeding his authority; of the 6% of awards thus challenged, fewer than 1% have been reversed.

But even the most fervent supporters of arbitration are well aware that it is not always feasible. Where facts are so tangled that they cannot easily be interpreted, or in intricate cases involving law or public policy, there is no substitute for the courts. The worst thing that could happen to check the spread of arbitration would be to try to apply it where it is not applicable. e.g., the steel strike. Furthermore, to make labor arbitration compulsory, which some businessmen clamor for, would be to give it the kiss of death. When arbitration was made compulsory in Kansas in the '20s, it flopped; both unions and management fought the law until it was held unconstitutional by the U.S. Supreme Court. But on a voluntary basis, arbitration has been welcomed by both sides as the best way of easing industry's strains and settling many of its problems.

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