Definitive Report - Report No 332, November 2003

Case No 2261 (Greece) - Complaint date: 16-APR-03 - Closed

Allegations: The complainant alleges that Act No. 1876/1990 violates the principle of free and voluntary collective bargaining because it establishes a regime of compulsory arbitration at the initiative of one of the parties to collective bargaining

1. 647. The complaint is contained in a communication from the Federation of Industries of Northern Greece (FING) dated 16 April 2003.
2. 648. The Government replied in a communication dated 22 July 2003.
3. 649. Greece has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), the Right to Organise and Collective Bargaining Convention, 1949 (No. 98), the Workers’ Representatives Convention, 1971 (No. 135), the Labour Relations (Public Service) Convention, 1978 (No. 151), and the Collective Bargaining Convention, 1981 (No. 154).

A. The complainants’ allegations

1. 650. In its communication of 16 April 2003, the Association of Industries of Northern Greece states that it is an employers’ organization consisting of 450 members, mainly enterprises and unions of enterprises, which develop industrial activity in northern Greece. The complainant indicates that it is an independent organization, not affiliated to a national organization of employers.
2. 651. The complainant alleges that Act No. 1876/1990 (the Act) establishes a regime of compulsory arbitration at the initiative of one of the parties to collective bargaining, contrary to Article 6 of Convention No. 154, ratified by Greece. In particular, a private entity denominated Mediation and Arbitration Organization (OMED) has been founded on the basis of article 17 of the Act. According to the complainant, OMED has been authorized to undertake mediation and the settlement of collective disputes, by persons, so?called “arbitrators”, who are linked to it by virtue of contracts for the provision of services according to article 18 of the Act in question. The complainant further states that paragraph 1 of article 17 of the Act grants the Minister of Labour the power to decide upon the establishment of the executive board and the appointment of its chairman as well as his deputy.
3. 652. The complainant states that articles 14 to 16 of the Act have established a system of arbitration for the resolution of collective disputes, according to which one party can unilaterally force the other party to arbitration. In particular, article 14, paragraph 1, provides that if the parties do not reach an agreement through negotiations, they are entitled to have recourse to mediation or arbitration. Article 15 sets out the procedure for mediation. Article 16 enumerates the parties that have the right to unilaterally submit a dispute to arbitration. These are:
   • – the trade unions, if they accept the mediator’s recommendations and the employer rejects them (article 16, paragraph 1(c));
   • – any of the parties, if the other party has objected to having recourse to mediation (article 16, paragraph 1(b));
   • – regarding in particular collective agreements in enterprises, the party that accepts the mediator’s recommendation, which is rejected by the other party (article 16, paragraph 1(d)).
4. 653. The complainant states, moreover, that according to article 16, paragraph 4, if the parties do not agree on the appointment of an arbitrator, the arbitrator is chosen by lot among the OMED arbitrators. According to article 16, paragraph 3, the arbitrator’s decision has the force of a collective agreement and its effect begins the day following the submission of the request for arbitration.
5. 654. The complainant alleges that pursuant to the above provisions, when the employer does not agree to the trade union’s demands, the trade union can resort to mediation. If the employer does not accept the mediator’s decision, then the trade union can force him to arbitration. The arbitrator’s decision is absolutely binding and there is no possibility to challenge it before the public authorities or the courts. The complainant concludes that given that the employer can be forced to binding arbitration in case of disagreement with the trade union or the mediator, the Act establishes a regime of compulsory arbitration.

B. The Government’s reply

1. 655. In a communication dated 22 July 2003, the Government states that Act No. 1876/1990 (the Act) which on the whole ensures and promotes a system of free collective bargaining, is the first of its kind as it constitutes the result of a “social agreement reached by high?level parties” and adopted by the All-Party Government in 1990 with the unanimous consent of all the political parties represented in Parliament. The Act succeeded in providing a comprehensive system of checks and balances. Any partial change in its provisions cannot take place without revising the whole series of collective employment relationships. Its equilibrium must not be disturbed, as the Act has demonstrated its validity in the course of time. For this reason, the Government submits that it would not be advisable to review the Act without the necessary social consent from which it emanated.
2. 656. The Government notes that the issue raised in the complaint concerns the possibility of unilateral recourse to binding arbitration on the basis of article 16, paragraph 1(b), (c) and (d), of the Act. However, the Government emphasizes that arbitration has a secondary role in relation to the right to undertake effective dialogue in good faith, which is safeguarded in article 4, paragraphs 1 and 3, of the Act. This article embodies the fundamental principles of free collective bargaining based on the right and the obligation to bargain collectively and on the principle of dialogue in good faith. Unilateral recourse to arbitration, where and when it is permitted, is considered as an exceptional step either in the case of refusal by one of the parties to participate in dialogue and bargaining or in the case of rejection of the mediator’s proposal. Moreover, unilateral recourse to arbitration constitutes the exception and the general rule is that the parties have recourse to arbitration by mutual consent (article 16, paragraph 18(a), of the Act).
3. 657. The Government emphasizes that the mechanism provided for the resolution of disputes is secondary to the will of the parties, who have the right to create if they wish, other more appropriate mechanisms for the resolution of their disputes by means of a special collective agreement. The Government states that only in the absence of an agreement between the parties for the resolution of collective disputes can the OMED intervene on a supplementary basis by providing the services of mediation and arbitration in order to reinforce collective bargaining (articles 15-17 of the Act). Mediation, and especially arbitration, are established in the spirit and the letter of article 22, paragraph 2, of the 1975 Constitution and do not aim at replacing bargaining, but have a clearly supplementary character in relation to the autonomy of the parties (article 14, paragraph 2, of the Act). For this reason, the parties can at any time, before or after the mediator’s proposal, or the arbitrator’s award, conclude a collective agreement and cancel the mediation-arbitration. Thus, the Government supports that the autonomy of the parties is respected throughout the bargaining procedure, even at the stage of arbitration, which may lead to the conclusion of a collective agreement. Only in exceptional cases does the decision of the arbitrator replace the common will of the parties, after having considered their interests, on the grounds of their proposals and the relevant documentation.
4. 658. The Government states, moreover, that the system established by the Act has succeeded in addressing the imbalance in negotiating power between employers’ and workers’ organizations so that the terms and conditions of employment, especially wages, can be determined and periodically readjusted (in practice every one or two years). The Government states that in the absence of these provisions, in cases where workers’ organizations did not have enough bargaining power to put effective pressure on the employers’ side, a freeze of workers’ remuneration would take place. Thus, the readjustment of remuneration is, in extremis, ensured in principle.
5. 659. The Government states, moreover, that the existing statistics, since the beginning of OMED’s operation, confirm that autonomous collective bargaining by the parties is prominent, while the role of arbitration is supplementary. In particular, only one (1) arbitration award corresponds to seven (7) collective agreements. In practice, the arbitration procedure comes into operation in cases of unsuccessful negotiations, where the existence of an institution destined to remove the impediments is necessary.
6. 660. As far as the judicial review of arbitration awards is concerned, the Government states that the arbitration award, just like collective agreements, constitutes an institution of civil law, through which collective interests disputes are settled. Consequently, the arbitrator does not act as an administrative official and the arbitration award is not an administrative act. As arbitration awards are governed by civil law, they fall under the jurisdiction of the ordinary civil courts. The competence of the courts extends only over procedural questions, lack of jurisdiction and cases of conflict between the content of arbitral awards and superior rules of law (the Constitution and emergency laws). Judicial review does not pertain to the substance of the award, unless there is an obvious and self-evident mistake.
7. 661. The Government stresses that the Legal Council of the State, by a series of decisions, has ruled that the Act and the mediation - arbitration system it establishes is in compliance with the Constitution (article 22, paragraph 2, and article 23). Moreover, by recent decisions of higher civil courts, it has been decided that the Act and in particular the provisions of article 16, paragraph 1, comply with Convention No. 154. Finally, the members of the administrative board of OMED who represent all the social partners, have expressed support for the mediation-arbitration system provided in the Act.

C. The Committee’s conclusions

1. 662. The Committee notes that the present complaint concerns allegations that Act No. 1876/1990 (the Act) violates the principle of free and voluntary collective bargaining because it establishes a regime of compulsory arbitration at the initiative of one of the parties to collective bargaining.
2. 663. The Committee observes that according to article 14 of the Act, in case the parties fail to reach agreement through negotiations, they can request the services of a mediator or have recourse to arbitration. Article 14 provides that the conditions under which recourse to arbitration may take place and the relevant procedures will be determined in special clauses inserted in collective agreements. In the absence of such clauses, they will be determined by common agreement of the parties. It seems that the provisions of the Act apply only in the absence of such agreement. Article 15 of the Act lays down the procedure for mediation which can take place at the initiative of any of the parties. Article 17 concerns the creation of an organization of mediation and arbitration (OMED) which is a private law entity run by an executive board composed, inter alia, of university professors in economics, industrial relations and labour law, and representatives of the national organizations of employers and workers. The convocation of the executive board takes place on the basis of a decision of the Minister of Labour and the president of the board is nominated by the same decision. Article 16 provides that recourse to arbitration can take place, firstly, by common agreement between the parties and, secondly, unilaterally:
   • – at the initiative of one of the parties if the other refuses recourse to mediation (paragraph 1(b));
   • – at the initiative of workers’ organizations, if they accept the proposals of the mediator and the employer rejects them (paragraph 1(c));
   • – in case of collective agreements in enterprises and in organizations of public interest, the right to have recourse to arbitration can be exercised only by the party which accepts the proposals of the mediator that the other party rejects (paragraph 1(d)).
3. 664. The Committee notes that both the Government and the complainant agree that recourse to compulsory arbitration can take place unilaterally by the party which acquiesces to the mediator’s recommendations, which the other party rejects (article 16, paragraph 1, of the Act). The complainant notes in particular that article 16, paragraph 1(c), applies only with regard to employers in order to ensure that they can be forced to arbitration if they reject the mediator’s recommendations. The complainant considers these provisions as a violation of the principle of free and voluntary collective bargaining embodied in Conventions Nos. 98 and 154, ratified by Greece. The Government, on the other hand, places emphasis on the peculiar character of the system established by the Act which, in its view, as confirmed by judicial decisions of the civil courts and the Legal Council of the State, does not amount to a violation of the relevant Conventions. Thus, according to the Government:
   • – the system does not constitute interference in collective bargaining by the public authorities as OMED is a private entity and the social partners are represented in its executive board;
   • – the provisions of the Act are the result of a “social agreement reached by high-level parties” and adopted by the All-Party Government in 1990 with the unanimous consent of all the political parties represented in Parliament;
   • – the Act establishes a comprehensive system of checks and balances which is an essential aspect of harmonious industrial relations in the country;
   • – the parties have the right to create if they wish, other more appropriate mechanisms for the resolution of their disputes by means of a special collective agreement;
   • – arbitration has a secondary character in relation to the will of the parties, who can conclude a collective agreement and cancel the mediation-arbitration at any time before or after the mediator’s proposal or the arbitrator’s award;
   • – unilateral recourse to arbitration is rare while the general rule is that the parties have recourse to arbitration by mutual consent (one arbitration award corresponds to seven collective agreements);
   • – the system aims to address the imbalance in negotiating power between employers’ and workers’ organizations and to avoid deadlock in negotiations over the terms and conditions of employment, especially wages.
4. 665. The Committee recalls that the imposition of a compulsory arbitration procedure if the parties do not reach agreement on a draft collective agreement raises problems in relation to the application of Convention No. 98. Recourse to compulsory arbitration in cases where the parties do not reach agreement through collective bargaining is permissible only in the context of essential services in the strict sense of the term (i.e. services the interruption of which would endanger the life, personal safety or health of the whole or part of the population) [see Digest of decisions and principles of the Freedom of Association Committee, paras. 860-861].
5. 666. The Committee notes, however, that article 14 of Act No. 1876/1990 allows the parties to create, if they wish, other more appropriate mechanisms for the resolution of their disputes by means of a special collective agreement. Moreover, according to the statistics provided by the Government, recourse to compulsory arbitration is an exceptional measure, and even in such cases the parties retain the right to conclude a collective agreement and cancel the mediation-arbitration at any time before or after the mediator’s proposal or the arbitrator’s award. Finally, the Committee takes note of the context in which the Act was adopted, in particular, by a unanimous decision of all the parties in Parliament with the support of the national employers’ and workers’ organizations which are represented in the Executive Board of OMED.
6. 667. While taking into account that the factors mentioned above attenuate the compulsory nature of the arbitrage regime established by Act No. 1876/1990, the Committee considers that there is still room for improvement in the application of the principle of free and voluntary collective bargaining and Conventions Nos. 98 and 154 ratified by Greece. The Committee therefore suggests that the Government initiates consultations with the most representative organizations of employers and workers with a view to considering measures to ensure that compulsory arbitration is only possible in essential services in the strict sense of the term.

The Committee's recommendations

1. 668. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendation:
   • The Committee suggests that the Government initiates consultations with the most representative organizations of employers and workers with a view to considering measures to ensure that compulsory arbitration is only possible in essential services in the strict sense of the term.