For example, in the case of labor collective bargaining, a trade union may demand a wage increase of 7% and the management may offer 3%.
FOA was first suggested in the 1960s by the labor relations scholar Carl Stevens as a strategy for driving parties to agreement.
[2] Chile's Secretary of Labor and Social Security José Piñera pioneered the introduction in a national law utilizing this mechanism.
In fact, Chile's 1979 Labor Reform mandates pendulum arbitration for special collective bargaining cases.
The law created a register of private arbitrators (economists and lawyers with a solid reputation for expertise and fairness), some or all of whom the parties shall agree to select, to decide conclusively the terms of the contract.