Negotiating Commercial Disputes in India - Arjun Natarajan

 

Declaration: I hereby declare that I am the author of this article and its copyright is vested in me. I confirm that this piece may be uploaded to the website of World Mediation Organization – Daniel Erdmann, for the benefit of mankind. This piece is largely based on a piece that was originally carried by blog.ipleaders.in

Introduction:

There is a lot of reading material on the role of power in negotiation and bargaining power asymmetry between the parties in a negotiation. In this piece, I have consciously not gone into these aspects

In this piece, I intend to very briefly deal with disputes, negotiation in commercial disputes in India, with emphasis on four key barriers to negotiation, especially at a pre-litigation/pre-arbitration stage. In this piece, I also intend to very briefly deal with my experiences in negotiation and focus on preparing for a negotiation and in dealing with some typical negotiators.

On disputes:

For want of a nail the shoe was lost, for want of a shoe the horse was lost, for want of a horse the knight was lost, for want of a knight the battle was lost, for want of a battle the kingdom was lost. So a kingdom was lost—all for want of a nail. Similarly, for want of resolution of differences, a lot is lost! In matters of commerce, nobody wants a loss.

When not resolved, differences become disagreements. When not resolved, disagreements becomes disputes. When not resolved, the scope of the dispute expands and its nature deepens. Differences lie at the root of disputes. Narrowing the scope of a dispute and mitigating its nature in order to attempt its resolution involves resolving disagreements and differences. This entire process involves the following three steps:

(i) acknowledging the existence of differences;

(ii) understanding the differences; and

(iii) appreciating the differences.

When a party to a dispute takes these three steps, then it gets to see as to what the other party wants and not just what it says that it wants.  Once a party knows what the other party wants then the former gets to know why the latter wants it.

What the other party says it wants is its demand or its stand or its position. Demands or stands or positions of both parties cannot be satisfied. When both parties keep aside their demands or stands or positions by acknowledging, understanding and appreciating that they cannot be satisfied, then they get to see the open field of needs and interests which can be satisfied and often satisfied par expectations.

Negotiation in commercial disputes in India:

At times, contracts in India have a clause, which requires the parties to negotiate a settlement of disputes. Even in the absence of such a clause, parties are open to do so.  Negotiation is frequent in disputes where money or property is at stake. As a commercial lawyer, I have seen a strong tendency in the parties to negotiate in disputes, where there is an element of oppression and mismanagement, or, where a takeover is apprehended, or, where reputations are at stake, with or without money or property being at stake. However, such negotiations are faced with four key barriers, especially at a pre-litigation/pre-arbitration stage. Such barriers are as under:

(i) Parties come up with bloated claims and extreme stands.

(ii) Parties are rather outright in not considering their weaknesses and in not considering their opponents’ strengths.

(iii) Parties would not allow concessions, which they would have otherwise allowed, and, parties view concessions offered by opponents, as a sign of weakness and as an ego victory.

(iv) Reputation may either fuel a party to resolve or to fight!

My experiences in negotiation:

Indian rules on advocates’ duty to opponents, mandate that an advocate shall not in any way communicate or negotiate or call for settlement upon the subject matter of controversy with any party represented by an advocate, except through the advocate representing the parties. Whenever I have been instructed by a client to communicate or negotiate or call for settlement upon the subject matter of controversy with its opponent, I have done so through the opponent’s advocate/s, if the opponent is represented by advocate/s. If a client’s opponent is not represented by an advocate, then, on instructions I have often negotiated with the client’s opponent or with its negotiator.

Contrary to popular belief, negotiation calls for serious preparation. The starting point of preparation is to identify those facts which form the substratum of the dispute. Once such facts are identified, it is important to enlist the key issues of the client and its opponent. By key issues, I mean the following:

(i) What does your client want and what does your client’s opponent want?

(ii) What are the strengths and weaknesses of your client’s case and what are the strengths and weaknesses of your client’s opponent’s case?

(iii) What is your client’s possible liability and what is your client’s opponent’s possible liability?

(iv) What is your client’s range of settlement and what is your client’s opponent’s range of settlement?

(v) What does your client lose by not settling and what does your client’s opponent lose by not settling.

Based on my experiences, I have come across parties/negotiators of various types. A brief analysis of the tendencies of parties/negotiators and how I have dealt with them is as under:

(i) If the party and/or its negotiator postpones negotiating, or delays it, or says no to negotiation, then, I assess the party and the negotiator as being emotionally insecure. I make the party, and the negotiator feel safe, and thereby, demonstrate my regard for them. In return, they might develop some regard for me. I enlist their fears and while doing so, I tell them that they are out-of-place, or that they can be dealt with. I tell them my fears too, and I tell them why they are probably real and how they can help me to deal with them. We might end up negotiating.

(ii) If the party and/or its negotiator examines everything so surgically, that they end up wasting time, then, I assess the party and the negotiator as being suspicious. I make the party and the negotiator feel safe, and thereby, demonstrate my regard for them. In return, they might develop some regard for me. I enlist their suspicions/fears, and while doing so, I tell them that they are out-of-place or that they can be dealt with/allayed. I tell them that I have no suspicions/fears, as they are very detail oriented and trustworthy. We might end up negotiating.

(iii) If the party and/or its negotiator wants to show fairness to reach an agreement by making great concessions to keep my client happy, solely to preserve the party’s relationship with my client, then, I examine the nature of the great concessions. If the party or its negotiator has relinquished what they could have got, then I consider them to be diplomats! If a settlement comes so easily, then it carries the seeds of an epic fall when the squeeze of the concessions is felt. I discuss in detail with my client and let the client decide

(iv) If the party and/or its negotiator employs intimidation, then, I consider them to be browbeaters. The easiest way to deal with a bully is to bully him back, harder than his bullying! This could be a deal-maker or a deal-breaker! In the sense that, either the bully would get so badly bullied that he’d become a diplomat (as described above), or he would walk out. I have never dealt with bullies by bullying them back.

I tell them that they are very strong and that it is not a sign of strength to do easy things like intimidating. I tell them that externally they’re being intimidating, but deep within they are very concerned and worried. I enlist their worries/fears/suspicions, and while doing so, I tell them that they are out-of-place or that they can be dealt with/allayed. This gives rise to mutual regard. In this process, we might end up negotiating.

If they intimidate me to the extent that doing anything would result in their walking out and/or my getting beaten up then, I tell them that despite being so weak and fragile, I am tempted to intimidate them but my fear stops me since I know that I do not stand a chance before them, and so, I am being cooperative. I make them believe that I am begging for their cooperation. This works. Show a bully that you cannot bully him and let him know that you’ve been bullied. This gives rise to mutual regard. Once his ego is satiated, he might start negotiating. He might turn out to be a diplomat! (As described above)

(v) If the party and/or its negotiator says things like they won’t accept anything more or less than something, then I consider them to be an extremist. I appreciate their clarity of thought, and I ask them to very systematically justify every bit and piece of their demand. Either they mellow down or, they start justifying. If they mellow down then I tell them that I could have been wrong, and a dialogue might show that they’re right. This gives rise to mutual regard. We might start negotiating. If they start justifying then, after they justify, I tell them that I will consider giving in to some pieces. This gives rise to mutual regard. Giving in to some pieces in all possibility will be to get better pieces! I tell them that they are still to justify the other pieces. In this process, we might end up negotiating.

Conclusion:

While negotiating, parties tend to err by focusing more on what they say they want and what the opponent says it wants, without getting into what they want and the opponent wants.  While negotiating, parties to a difference/disagreement/dispute, must always remember that they are desirous of meeting their needs and interests without sacrificing them on the altar of a difference/disagreement/dispute. A basic understanding of negotiation is important for parties to negotiate well and to meet their needs and interests.

By Arjun Natarajan, Advocate & Visiting Faculty at Indian Institute of Foreign Trade


       © 2006 - 2017  World Mediation Organization - Daniel Erdmann I Contact I  Impressum I Legal