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June 13, 2015

When can a CCMA award be set aside?

In terms of section 145 of the LRA, a party may apply to the Labour Court on the basis of an alleged defect with a commissioner's rulings or awards. The party who alleges such a defect must apply to the Labour Court to set aside the award within six weeks of the award being served.

A defect means:
  • that the commissioner committed misconduct in relation to the duties of the commissioner as arbitrator;
  • that the commissioner committed a gross irregularity in the conduct of the arbitration proceedings;
  • that the commissioner exceeded his powers; and
  • that the award was improperly obtained.
The above criteria refer to misconduct and irregularities, including, but not limited to:
  • Taking into account evidence that was not put before the arbitrator;
  • Refusing to allow valid and relevant evidence to be brought;
  • Ignoring statutory requirements or legal principles;
  • Unduly assisting one or other party with his/her case;
  • Delivering a biased award;
  • Taking a bribe; and
  • Failure to apply his/her mind to the facts in evidence.
It is important to note that the review is not an appeal, and therefore it is not related to the merits of the matter but to the commissioner's conduct. The Applicant must show cause (based on factual and legal grounds) why the decision or proceedings should not be reviewed and corrected or set aside.

The test for the review of arbitration awards involves the court determining whether the decision reached by the arbitrator was one that that a reasonable commissioner could not reach, given the oral evidence led on the material facts in dispute.
Thus, where an arbitrator commits misconduct in relation to his/her duties or there is a gross process-related irregularity in the arbitration, this is not - in and of itself - a sufficient ground to warrant interference by our courts on review. The irregularity must be of such a nature that it renders the decision reached unreasonable in the circumstances.
In terms of recent case law, it is not good enough for employers or employees wishing to review an award based on one of the procedural defects provided for in section 145(2)(a), to only establish the existence of the defect, i.e. misconduct by an arbitrator in relation to his/her duties, a gross irregularity committed by the arbitrator in the conduct of the arbitration proceedings or the arbitrator exceeding his powers.  It is now also necessary to show that the defect caused the ultimate result of the award to be unreasonable. Thus, the two stage test adopted by the LAC in such instances is:
a.     Was there a section 145(2)(a) defect?; and
b.     If so, can the defect be said to be such that resulted in the decision reached being unreasonable (in the sense that it was one that a reasonable arbitrator could not have reached)?

In the absence of these criteria, it will not be possible to successfully prosecute review applications in the Labour Court.

June 09, 2015

Licensing of computer software – warning to software developers.
The Supreme Court of Appeal recently handed down a judgment in the case of Attachmate Corporation v Minister of Water and Environmental Affairs (20 May 2015), providing lessons for those  involved in the licensing of computer software.
Attachmate, a US company, signed a software licence agreement authorising the Department of Water and Environmental Affairs (DWE) to download certain software at a heavily discounted rate, based on 300 computers on which the software was to be installed.
DWE went to town and installed the software on 1000’s more computers. DWE refused to pay Attachmate the regular licence fee on the additional unauthorised copies, and Attachmate sued DWE to pay Attachmate the “applicable licence fee” for unlicensed copies. The court had to decide what compensation Attachmate was entitled to.
The judge found that the installation of the extra, unauthorised software was “not that [DWE] was trying to avoid payment of licence fees, but that its affairs were in such disarray that it could not determine the number of unlicensed copies involved”.
Attachmate couldn’t prove the existence of more than 1564 unlicensed copies. However, what was the applicable licence fee”?
The court found that Attachmate “…only has itself to blame … if it wanted to stipulate for its list price or its standard price or some other penalty in the situation contemplated by clause 11, I can think of nothing which prevented it from doing so.”  The judge concluded that “... Once a licence fee had been determined through negotiation between Attachmate and the licensee involved, I do not think the fee applicable to that licensee can be determined without any reference to the negotiated fee.”
Software companies must thus ensure that if they want the non-compliant licensee to pay a penalty, they must stipulate this in their contracts. Also, allow for audits, to determine the software numbers downloaded.