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Assignment of Arbitration Rights in Labor Disputes: Legal Implications and Practical Considerations

Assignment of Arbitration Rights in Labor Disputes: Legal Implications and Practical Considerations

The question of whether union solicitors may delegate their authority to arbitrate or appeal to specific complainants in disciplinary arbitration is covered in the article. It implies that in some circumstances, the union could provide the grievant the right to continue the arbitration, saving time and money by giving the grievant a chance to present their case in court. Additionally, the union would be able to steer clear of a possible duty of fair representation lawsuit. Since assigning the right to arbitrate or the right to appeal an arbitration ruling would not always be appropriate, the article does not imply that every arbitration or appeal may be allocated to specific grievants. Nonetheless, it is recommended that unions give this matter careful thought, particularly in some instances where assignment is not in the union's best interests. The essay further highlights the lack of scholarly discourse about the crucial matter of unions' ability to transfer their arbitral or appeal rights to a specific grievant. The legal systems adopted the commercial practice, which called for "the objectification of the promise" made in the underlying contract, and the freedom of contract expanded to include the assignment of contracts. It emphasizes how crucial it is to take into account the legal ramifications of granting rights to specific grievances in disciplinary arbitration, since doing so may result in needless litigation and animosity between the parties.

A key component of arbitration agreements is the assignment of contractual rights, which are frequently observed in standard commercial transactions including mergers and acquisitions, factoring contracts, and credit security contracts. Depending on the jurisdiction, an agreement between the assignor and the assignee is necessary for a legitimate assignment. Certain legal systems, like French and German law, do not need the assignment. Nonetheless, courts have ruled in situations involving the public sector that unions are not allowed to assign. According to the Swiss Code of Obligations, an assignment can only be accepted in writing. Legal and equitable assignments are distinguished by English law; legal assignments call for a formal agreement and specific notification to the opposing party, the obligor. Notice to the obligor is not required for the legitimacy of the assignment; instead, the assignor and assignee's permission is sufficient. Arbitration agreements are greatly impacted by the assignment of contractual rights, especially when it comes to regular commercial dealings. Parties must seek provisions in collective bargaining agreements that prevent labour arbitration assignments or the right of arbitration appeals.

In international business practices, the assignment of contractual rights to arbitration agreements is an important matter, especially when the assignment of rights is involved. This article discusses the right to fair representation, one's legal standing under a CBA, and the possibility of assigning rights to labour arbitration. Courts that have examined the question of assignment in the context of labour arbitration have found that the union's position as the only representative of employees gives rise to the obligation of fair representation. Both common law and civil law jurisdictions recognize the principle of automatic transfer, which permits the arbitration agreement to be transferred through the assignment of the primary contract or a related contractual right absent a conflicting clause in the original contract or factual evidence demonstrating the personal nature of the agreement between the original co-contractors. The inquiry, however, also concerns the legislation that applies to the situation and who has the authority—a domestic court or an arbitrator—to make a decision.

To determine whether arbitration agreements will be automatically transferred, it is crucial to classify them as substantive or procedural. If the arbitration agreement qualifies as substantial, the rules regulating the assignment of substantive rights will likewise apply to its transfer. The National Labour Relations Act's policy of allowing one labour organization to collectively represent the interests of all employees within a unit, depriving individuals of the ability to bargain individually or choose a minority union as their representative, gives rise to the duty of fair representation. Arguments for and against arbitration agreements' automatic transfer are made about their autonomy and severability. The arbitration agreement's supporters contend that it exists independently of the primary contract and that it cannot be transferred without the assignee's approval. On the other hand, the counterargument contends that since substantive rights and the ability to suit are inextricably linked, the arbitration agreement is a fundamental component of the rights established under the contract.

Employers and unions may be unaware of the legal implications of the labour arbitration assignment and the right to appeal it, which accounts for their lack of authority in addressing these topics. Nevertheless, the advantages of giving everyone a fair trial and essentially doing away with the duty of fair representation lawsuits against unions and employers outweigh these worries. Arbitration can be assigned in local contracts with arbitration clauses, and parties in a continuous connection can bargain for such terms during collective bargaining discussions. Some people favour the implementation of the lex contractus since it safeguards everyone's expectations. Opponents devise various strategies, such as a progressive and complementary application of the lex contractus and the lex compromissi, or alternate applications of other laws to improve the likelihood of upholding the arbitration agreement. In conclusion, there is a discussion about the autonomy and severability of arbitration agreements. Some contend that only one law should be applied, while others support a progressive and complementary strategy.


[1] ?pek, Mertcan. "Assignment Of Contractual Rights And Its Impact On Arbitration Agreements." Marmara Üniversitesi Hukuk Fakültesi Hukuk Ara?t?rmalar? Dergisi 22.1 (2016): 521-550.

[2] Girsberger, Daniel, and Christian Hausmaninger. "Assignment of rights and agreement to arbitrate." Arbitration International 8.2 (1992): 121-166.

[3] Garnuszek, Anita. "The Law Applicable to the Contractual Assignment of an Arbitration Agreement." Arbitration: The International Journal of Arbitration, Mediation and Dispute Management 82.4 (2016).

  • Labor unions may delegate arbitration rights to specific complainants in disciplinary cases, potentially saving time and avoiding fair representation lawsuits.
  • Assignment of arbitration rights is common in commercial transactions but requires careful consideration in labor disputes due to legal implications.
  • Courts recognize the duty of fair representation in labor arbitration, impacting the transferability of arbitration agreements and the autonomy of contractual rights.

BY : Vaishnavi Rastogi

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