Alternative Dispute Resolution- BAL 976

Negotiation Simulation Exercise

Negotiation Problem

Submitted by:
Tanvi R
1750267
9 BA LLB ‘B’

Submitted to:
Dr. Mallaiah M R
Professor
School of Law, Christ (Deemed to be University)

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 Negotiation Problem

Parties to the Negotiation:

 Party A: Zuber Ltd

Zuber Ltd ("Zuber"), a Bangalore based limited company, has an app-based taxi business,
popular in many Indian cities, including Delhi, where the annual Republic Day and the first
ever Warrior Memorial Week event is set to take place. Zuber is a fast-growing company, last
estimated to be worth Rs. 38 crores. A supply agreement with Nandi Motors Ltd ("Nandi")
has enabled Zuber to develop a market-leading, eco-friendly fleet of cars. The cars use
Nandi’s Carbon-free technology to produce up to 70 per cent less hazardous emissions than
traditional fossil fuel-based cars. Three quarters of Zuber’s taxis comprise these eco-friendly
"Green" cars and the remaining quarter is made up of older, traditional fossil fuel-based cars.
The popularity of Zuber’s eco-friendly fleet has seen it become one of the most successful
taxi companies in Delhi, like many other Indian cities. The environment friendly nature of the
technology provided to Zuber by Nandi Motors has increased the demand of Zuber taxis
among people. Zuber is looking forward to the Republic Day event and the Warrior
Memorial Week in Delhi as a prime opportunity to gain recognition and gain recognition as a
superior taxi service.

 Party B: Nandi Motors Ltd

Nandi Motors is a small Bangalore based private company, which is part owned by private
equity with an estimated market value of around Rs. 12-15 crores. Primarily an automobile
manufacturer, Nandi Motors has a particular focus on manufacturing environmentally-
friendly vehicles. Nandi Motors’ primary business involves selling vehicles and vehicle parts
to taxi and transportation companies which are looking to operate environmentally-friendly
fleets. Most of the materials Nandi Motors use to manufacture its vehicles are designed and
built in-house at the Nandi factory, including Nandi's own, unique carbon-free technology.
The carbon-free vehicles and parts are more expensive than traditional vehicles and parts, but
Nandi Motors have found that clients are happy to pay more for its fantastic green
credentials. Fundamental to Nandi Motors’ range, is a catalytic converter, first developed by
Nandi Motors four years ago, which can effectively reduce the carbon emissions of a range of

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fossil fuel-based vehicles by up to 70 per cent. The revolutionary technology has underpinned
Nandi Motors' success in recent years and was crucial to securing the supply agreement with
Zuber, which is worth an estimated Rs. 4 crores to Nandi Motors over four years. Alongside
manufacturing service, Nandi Motors provide spare parts and repairs to its clients for all
Nandi Motors models they purchase. A potential issue is that Nandi Motors’ repairs team is
significantly smaller than its manufacturing team. It is often overworked and has to operate
under acute time pressures. Further, Nandi Motors has recently been accused of poor
management, with critics claiming that relatively little progress has been made by the
company since it signed the supply agreement with Zuber.

Dispute between the Parties:

The Republic Day event in Delhi is set to take place in a few weeks’ time and Zuber has been
preparing extensively for the event as there will be a significant increase in the need for
transportation and an increased focus on which taxi companies deliver the best service with
many tourists and senior political figures visiting Delhi. Throughout the media build-up, there
has also been a recurring theme of the environment preservation and conservation, which
Zuber believes to bring to it a gateway of commercial opportunities. Further, the Republic
Day event may offer other additional benefits to Zuber as the Warrior Memorial week
Organization Committee is soon to choose an official taxi "sponsor" for the event. Whoever
is picked as the War Memorial Week’s Official Taxi Company will enjoy significant media
exposure, which is predicted to have an enormous impact on the selected company's revenue
and future prospects.

However, on Monday 4 October 2021, the Head of Operations for Zuber is informed by a
senior member of staff that a number of Zuber drivers based in Delhi (among other cities)
have recently reported issues with their carbon-free cars. The outcome of initial tests suggests
that many of the older catalytic converters purchased from Nandi Motors have ceased to
function properly. It is believed that up to 50% of Zuber’s carbon-free cars in Delhi may be
affected (around 250 vehicles). If all of these cars are unfit for operations, this would
effectively remove Zuber’s ability to compete with other taxi companies during the Republic
Day and Warrior Memorial Week event and without most of its "Green" taxis, Zuber can no
longer promote its taxis as more environmentally friendly than its competitors. In addition to
this, Zuber’s taxi operations in other cities may also be affected.

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Zuber CEO Rohit Adani quickly moves to arrange an emergency meeting with Nandi Motors
to try to resolve the issue as soon as possible. At the meeting, Zuber’s Head of Operations
explains the issues they have encountered to the management team at Nandi Motors. Zuber
requests that Nandi Motors repair all affected cars as a matter of extreme urgency – if the
company cannot return to normal service levels by the mid of December 2021, this will have
a material impact on its chances of securing the lucrative sponsorship position as well as
affecting its day-to-day operations over the longer term.

Nandi Motors explained to Zuber that due to the size of its repairs team they simply cannot
repair that many cars in the time period due to the resources they have available. At best,
Nandi Motors claim they could repair half of the affected vehicles before the start of the
Warriors Memorial Week event. The meeting ends on a sour note, with Zuber CEO Rohit
Adani calling a premature end to the meeting, disappointed at the lack of progress.

The commercial arrangement between the parties has developed over the past four years and
they have built a close working relationship. This is reflected in the most recent contractual
agreement between the parties (signed three years ago for a term of four years and which can
be extended at the sole discretion of Nandi Motors by one year) which contained exclusivity
provisions restricting Nandi Motors from selling carbon-free products to any other company
(in any jurisdiction) other than Zuber, although Nandi Motors’ existing commercial
agreements with other companies were allowed to continue. In return, Zuber is obligated to
purchase all their "Green" vehicles from Nandi Motors, and can only use Nandi Motors for
repairs on cars purchased from them.

Currently, Zuber is still obliged to purchase a further 150 vehicles from Nandi Motors under
the contract before it expires, but Zuber can free itself from this obligation if they can show
that there are material defects with the products delivered by Nandi Motors.

According to the supply agreement, Nandi Motors has a duty to repair or replace any product
delivered by it for free if there is any fault complained of within 10 days of purchase of the
product. Most of the faulty cars were purchased from Nandi Motors at the start of the
contract. Therefore, instead of having to repair the vehicles free of charge, Nandi Motors is
able to charge its usual repair costs. The price for a new catalytic converter is set in the
schedule to the agreement at Rs.18,000 (this is Nandi Motors’ normal price and reflects the
cost of the unique and complex manufacturing process). The parties did not agree any
warranties or an indemnity relating to the ongoing emissions performance of the converters.

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A couple of days after their first meeting, the parties re-engage and a meeting is scheduled for
the end of the week between the CEOs and external lawyers of each company. Prior to the
meeting Zuber and Nandi Motors need to consider next steps and potential solutions to the
dispute.