International Negotiations – Knowing the Local Culture
It may seem at least in the field of negotiations for experienced lawyers that negotiating is an almost presumed and inevitable consequence of dispute resolution. However, whilst it may seem or appear straightforward, or simple, many disputes do not settle. Not because of some technical legal deficiency or dispute over law, but simply because there is a lack of understanding of the cultures of the parties to the dispute. This may be as a result of the parties not knowing each other enough or confident enough to negotiate on fair and equal terms.
It is really unfortunate that in international negotiations what is almost undoubtedly one of the main problems is a lack of understanding of the culture of the parties. You may say that it should be quite easy to understand this because the parties may have entered into international agreements before, or if this was their first, would understand through their research and experience of developing relationships across the globe that understanding the local culture was paramount.
Unfortunately, conventional alternative dispute resolution mechanisms and negotiations during mediation and/or arbitration which are prevalent in European or Western countries have adopted a more adversarial and aggressive approach which is often alien to many cultures especially in Asia and/or the Middle East. It is not of course limited exclusively to the Middle East and Asia, but increasingly Latin American countries have also felt the need to adopt a more different approach.
It is often the case that where either in negotiations for joint ventures or transnational agreements there is no conclusion or contract awarded after lengthy and sometimes detailed negotiations, parties often become introspective and do not understand that it may have been their approach which was wrong in the outset. It would also be an oversimplification to state that such negotiations always fail due to a lack of understanding of the party’s respective cultures. But more often than not this is at the root or heart of the problem and not some legal or technical point which normally can be resolved.
In our firm’s experience especially when receiving instructions from clients in China and it involves the possibility of either litigation and some form of mediation or arbitration, they will normally opt for amicable and less formalised negotiations with the defaulting party in order to come to a result.
When asked why they considered this to be a more palatable solution their response varies but generally it seems that they do not wish to upset the delicate balance between the parties and perhaps in future they may wish to continue operating in that country where that party operates and therefore do not want to upset local sensitivities.
If this approach were more widely recognised in European and other jurisdictions it may be that a new way forward in international negotiations may be achieved, but that would mean trying to eliminate many years of aggressive and adversarial training by the lawyers or negotiators who conduct contracts or enter into such negotiations on behalf of the parties.
As an illustration, on the plethora of seminars books, discussions and various so-called aids to the art of negotiation especially in European jurisdictions, you will be hard pressed to find amongst the so-called heavyweights of negotiation, any emphasis on understanding local cultures, and the closest you will find is topics which purport to establish the principle that building trust between the parties is important. Accordingly, this concept, that is the one of trust, seems to override any other considerations in relation to concluding the deal, but there is no emphasis on what trust actually involves in various local cultures.
It may be that in the future given the importance of understanding each other’s commercial as well as political objectives in international negotiations, a better understanding of what the local culture is and how their mindset operates could be away to unlock many deadlocked situations.
Unfortunately, this will involve a radical rethink by many involved in this area because they have been operating under a set template, which involves negotiations being centered round a standard set of documentation which they believe their client’s instructions must be adhered to and cannot be amended changed or modified.
However, the starting point is totally wrong because at the outset the main areas of dispute, as indicated above, are not technical legal issues but those relating to whether or not the party having terms and conditions imposed on it regard this as being too adversarial or too aggressive. Such a culture shock would definitely not be accepted by those operating in this field and unless and until there is more acute awareness of what the mindset of the opposing or other party is, the normal standard way in which these negotiations have been operating will continue without any new ideas or realism.
The guidance that is frequently quoted in certain developed nations is that in order to succeed in negotiations you must not only have confidence but an aggressive attitude which allows you to overplay and coerce your opponent into giving way.
This may be successful in countries which operate under that model, but more and more in the future parties will have to adopt a far more sincere and honest approach to negotiations and they will find that it is not always a power broking exercise but involves a delicate balance between opposing and sometimes conflicting interests, but the goal should not be to defeat the opponent, but to reach a consensus so that long-term commercial relationships can emerge.
Finally, in this brief yet hopefully thought provoking piece on international negotiations; knowing the local cultures, it may be valuable to end on a quotation from the well-respected author and dramatist William Shakespeare who in his play “Much Ado about nothing”, gives his character the line; “let every eye negotiate for itself and trust no agent.”
Perhaps in these few succinct lines Shakespeare gave some insight into what he felt could be important in unlocking the mystery of negotiations. What he may mean is that it is important for a person to understand what he is negotiating directly and not to be influenced by other considerations or factors. Did he mean trust your own instincts and make your own decisions and do not trust anyone who thinks or feels they know best?