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Negotiating with Pirates: Squeeze Every Penny Out of the Deal

by Victoria Pynchon
February 2009

From Settle It Now Negotiation Blog

Victoria Pynchon

In Hijacked on the High Seas When Somali Pirates Attacked, They Kicked Off 56 Days of Drama Over the Fate of a Ship and 28 Crewmen, The Wall Street Journal details the negotiation strategy and tactics that resulted in the release of the hijacked ship and its crew.

(pirate photo from the cat dirl sez blog)

Excerpt below - "Mr. Christodoulou," the shipping company's negotiator, called himself "Gus."

Mr. Christodoulou made an initial offer, which he declines to reveal. The Somali negotiators -- first a man named Hussein, then another who called himself Abbas -- took the offer to the pirates. They called back the next day with a response.

"Hey Mr. Gus, the Somali gentlemen say the money is very less," Abbas said, according to Mr. Christodoulou. "They need more money."

Mr. Christodoulou didn't budge. The Somalis needed to feel they had squeezed every dollar out of the ship's owners, he had been advised, so he shouldn't increase his offer early.

"We want you to get the money and move onto another project," Mr. Christodoulou recalls saying. "But you have to understand, we have our limitations."

The conversations continued daily through December, with little progress. By the end of the month, the families in India were feeling desperate...

Tom Rozycki, Mr. Christodoulou's public-relations adviser, says he decided a new approach was needed to keep the families hopeful -- and away from the media. Publicity could empower the captors and delay the hostages' release, he believed. It would also be embarrassing for the company, making it even more difficult to face the families.

On Jan. 6, at the Hyatt Regency Hotel near Mumbai's international airport, Mr. Christodoulou met with the families of the crewmen.

Seeing Mr. Sharma's hunger-striking grandmother in the front row, he knelt beside her and held her hand. "Granny, your grandson is going to get out. And we want him to get out and come back to the healthy loving family that he left," he said, according to Mrs. Sharma and Mr. Christodoulou. That night, Mrs. Sharma ate some strawberry ice cream, her son recalls.

By mid-January, the pirates on the Biscaglia were growing frustrated. "They told us they were going to take us off the ship and hide us in the mountains," Mr. Khan, the crewman, says. The pirates gave him and the others a mobile phone to call home. "We all told our families that unless the company gave more money, we would be killed," Mr. Khan says.

Mr. Kapade, the chief engineer, says he realized the pirates were trying to pressure the company by terrifying the crew. When he spoke to his wife on Jan. 14, he lowered his voice and spoke in Hindi. "Pass on to others that we're fine," he whispered.

By then, Mr. Christodoulou says, he thought it was time to raise his offer. He declines to say what he offered, but says it was close to what he thought the Somalis would accept based on the range provided to him by experts: $700,000 to $3 million.

He set about trying to raise the money. He approached his own company's biggest investor, Regent Private Capital LLC, a private-equity firm based in Tulsa, Okla. Lawrence Field, Regent Private Capital's managing director, declined to discuss the conversation with Mr. Christodoulou. "Regent does not negotiate with terrorists or pirates or any kind of criminal," he said on Friday.

That evening, Mr. Christodoulou called Per Gullestrup, the Danish chief executive officer of Clipper A/S, a larger competitor in the chemical-transport industry. The two men hadn't known one another until both had vessels hijacked by Somalis. They had often commiserated.

Mr. Christodoulou told Mr. Gullestrup he was struggling to raise the funds. A few days later, Mr. Gullestrup called back. "We'd be happy to advance the money if that's what it takes," he said. That promise allowed Mr. Christodoulou to secure a loan for the purpose.

Buoyed by that success, Mr. Christodoulou decided to apply some pressure. He raised his offer slightly, he says, and told the negotiator: "You have 24 hours to accept this offer, or we have to retract it."

Over the next 24 hours, the two sides exchanged at least 20 phone calls. "Mr. Gus, this isn't enough money for the Somali gentlemen," the negotiator said several times, according to Mr. Christodoulou.

The next day, Mr. Christodoulou went a little higher, he says. At 12:30 p.m. on Jan. 16, Abbas called back: "The Somalis accept your offer. Thank you very much. It's really been a pleasure to work with you on this project."

Biography


Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all types of business torts and contract disputes.  During her two years of full-time neutral practice, she has co-mediated both mandatory and voluntary settlement conferences with Los Angeles Superior Court Judges Alexander Williams, III and Victoria Chaney.  As a result of her work with Judge Chaney in the Complex Court at Central Civil West, Ms. Pynchon has gained significant experience mediating construction defect litigation.  Ms. Pynchon received her J.D., Order of the Coif, from the U.C. Davis School of Law. 



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