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NEGOTIATION

SCENARIO:

HackerStar, Inc. is a small closely-held corporation that develops and markets software for
microcomputers. The six-year-old company was founded by Hacker, a brilliant programmer who
is responsible for the company’s products and became its manager, and Star, a dentist and
computer hobbyist who provided the capital. Hacker and Star are each 50% owners. The
company has done moderately well, but now faces a crisis resulting from a dispute between the
partners over the ownership and disposition of PowerScreen, a new product developed by
Hacker, at least partly on his own time and definitely against Star’s wishes. The company lawyer
has referred Hacker and Star to separate counsel in order to avoid a conflict of interest. The
exercise revolves around the meeting of these lawyers. At issue is the ownership of PowerScreen
and the future of HackerStar, Inc.

MECHANICS

 This negotiation presents the opportunity to use a careful analysis of the interests of the
parties to craft a recommended agreement to solve a realistic business dispute between partners
in a high-tech business.
 The issues divide more or less neatly between the dispute over PowerScreen, and the
question of how to improve the management structure of the company in general (assuming the
dispute is resolved). The former seems more of a distributive problem, the latter a joint problem
to be solved. The question arises as to which should be addressed first.
 The negotiation over PowerScreen can be centered nicely around objective criteria or,
alternatively, addressed in a more positional manner.
 How to reestablish a good working relationship between the disputants is a key question
vital to the long-run success of this negotiation.
 Representatives of Hacker and Star in this negotiation clearly have limited authority. It is
important to explore the question of exactly what the product of the lawyers’ meeting should be.
 Participants may opt to recommend arbitration or some other form of third party
intervention in the event that they, or their clients, cannot resolve the PowerScreen problem. The
question of BATNA should be clearly addressed in advance.
 If a preparation by side session has been used, preparation and group process issues can
usefully be raised when debriefing participants.

MEDIATION
SCENARIO
X and Y are two companies. X is engaged in the business of supplying raw materials. Y enters
into a contract with X for the supply of certain goods. Y defaults in the payment of amounts
claimed by X. X files a winding up petition against Y. Y denies any amounts due and complains
of defects in goods supplied and deficiency of service. X and Y agree to mediation.

What Mediator Can Do


During mediation, both parties through detailed discussions in the presence of a Mediator after
careful scrutiny of all financial statements should have an opportunity to understand their
differences. Y should appreciate the services rendered by X over the past several years, but
sounds unhappy with the quality of the last batch of goods supplied by X. X and Y should
recognise that there were miscommunications between them. Y should explain the temporary
cash flow problems due to business diversification and development. X sees increased
opportunities in Y’s new business expansion. The case should be settled and the end result
should be the renewal of business relations between X and Y.

The Mediator should create a safe environment for joint fact finding. The parties can together
study the transactions and financial statements. The Mediator should continuously keep working
for progress. The Mediator should help both the parties see each other’s perspective, bring in
clarity and probe for more information, think of creative ideas to break impasses and encourage
them to continue to work towards resolution. With better exchange of information and
communication, both parties should be able to recognize the value of finding mutually acceptable
terms and continuing their relationship.

ARBITRATION

Mr. Munnabhai is a young doctor having his M.D. qualifications. He has opened his own
dispensary in Navi Mumbai. Although, 10 months have passed since he opened the dispensary,
he is not happy with the returns. So he intends to join any of the Hospitals and earn some money.
Ultimately, Mumbai Hospital came forward to take him as ‘Duty Doctor’. The terms and
conditions, inter-alia, state that he shall be a full-time doctor i.e. he shall not be practicing as a
doctor anywhere else or doing private practice and after leaving Mumbai Hospital, he shall not
work with any other Hospital establishments for the term of two years in Mumbai city. Dr.
Munnabhai agrees to this condition. . The contract entered into between the parties contained an
Arbitration Clause wherein the parties agreed to submit their disputes for Arbitration to a sole
arbitrator. He signed the contract and started his service in Mumbai Hospital. But, secretly, he
also continued his private practice in Navi Mumbai. With the passage of time, he started showing
all carelessness towards his job in Mumbai Hospital.

One day, because of his careless acts, the authorities of Mumbai Hospital removed him from his
job. Thereafter, Dr. Munnabhai indulged himself in private practice. After one year of his
termination, the authorities of Mumbai Hospital came to know about Dr. Munnabhai’s private
practice and they wanted to enforce the earlier contract of service and also to recover damages to
the tune of 12 months’ salary paid to him at the time of his termination. Conduct Arbitration
Proceedings.