Negotiation

Author:Poornimah Devi Sookun
Pages:51-62
CHAPTER 4
Negotiation
In business, you don’t get what you deserve, you get what you negotiate.46
Chester L Karrass, author and negotiation expert
If lawsuits should always be a last resort, what action can countries take to avoid
them? Loan negotiation is an essential option at every stage during a loan cycle until
all obligations are met and fulfilled. This chapter looks at what is meant by negotia -
tion, and at when and how it can be used to obtain the best possible terms and con-
ditions in a loan agreement with a view to avoiding lawsuits in the long term. It also
provides an introduction to negotiation techniques for the purposes of capacity
building among government officials in HIPC countries.
4.1 When is negotiation possible?
Clearly, negotiating the best terms and conditions before concluding a loan agree-
ment is a preventive measure t hat can avoid costly litigation later on. But negotia-
tion is also possible at later stages for different reasons, such as avoiding the effects
of litigation. For example, Cameroon settled with several litigating creditors through
negotiation, even after lawsuits had already been lodged in court. Negotiation is an
option even during the performance of obligations in the event of any dif ficulties
arising. It is usually when countries do not take any action after they have defaulted
that the creditor opts for litigation. Even in the case of Zambia, Donegal Inter national
Ltd was willing to negotiate the terms of repayment, but Zambia refused.
It is true that in the case of most loans contracted with multilateral and bilateral
creditors there is very little scope for negotiation, as the sovereign state is made to
sign a ‘standard’ loan agreement (see Chapter 2). But even in the case of standard
loan agreements, the Commonwealth Secretariat Legal Debt Clinic seminars empha-
sise that the formulation of the terms and conditions must be negotiated. In cour t,
interpretation is essential. Hence, knowledge of the standard issues to be inserted
in a loan agreement is important. In addition, negotiating techniques help with com-
mercial creditors, especially now that sovereign states are flooded with different
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