Court of Arbitration (New South Wales)

The Court of Arbitration was the first court in New South Wales, Australia, which dealt exclusively with industrial relations disputes in the early twentieth century. Justice Lance Wright claims that it perhaps was the first court of its type in the world.^[1] 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.^[2] 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.^[3] 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.