Negotiation

Introduction

Conceptually, negotiation is a dialogue between at least two parties with common and opposite interests, aiming at reaching an agreement, where mutual beneficial and acceptable outcome is realised (Lewicki et al., 2011). Multiple parties and/or issues situations are complex, due to numerous interacting variables. However, complexity provides opportunities to negotiators to both create and claim value, (referred as integrative negotiation by Fisher, 1991) by defining the structure of the situation, through strategies such as sequential meetings to form coalitions. According to Fisher (1991), integrative negotiation can be achieved by separating the parties from the issues and focus on interests rather than on positions in order to avoid the escalation of conflicts into damaging disputes.

This essay aims to examine the complexity of multiparty negotiations, with specific reference to the failed Conoco negotiation in Ecuador (1986-1991). The rationale of this essay is to analyse how parties’ interests are mapped onto positions and how the resulting interaction between the primary parties emerge. To pursue this investigation, this essay will consider the extent of competitive or cooperative strategies and tactics employed by the parties and the appreciation of different parties' BATNA. Additionally, this essay considers the role of trust and reputation, but also the cultural impact on the overall outcome of the negotiation. Finally, this essay is also an attempt to understand of the presence of a mediator would have either changed the process or the outcome.

Institutional and Historical Context

In 1986, a consortium of foreign oil companies led by Conoco, Inc. entered a risk service contract with the Ecuadorian government to explore the possibility for oil extraction in Block 16 situated in the Yasuni National Park (Riley and Sebenius, 1995). Ecuadorian law precludes oil drilling in national parks leading the government to transfer 600 000 acres of Block 16 to the Huaorani homeland (Korovkin, 2002), as indigenous territories are not protected similarly. By 1991, the consortium discovered a reservoir of 200 million barrels of crude oil, representing potentially 20% of Ecuador’s total reserve.

Traditionally, agreement regarding exploitation of resources can be reached through a “bilateral” negotiation between foreign investor and the host country government.  This essay attempts to examine through the Ecuador case, how alliances formation between non-essential parties can lead to the failure to reach a consensus.

Recognising the eventual challenges for oil extraction in the concerned area due to non-traditional parties, both Conoco and the government aimed to adopt a low impact oil extraction techniques in Block 16. In May 1990, Conoco convened the different parties to discuss the Environmental Management Plan (EMP) draft, in the quest to reach a stakeholder consensus.