Negotiating Techniques in International

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NEGOTIATING TECHNIQUES IN INTERNATIONAL COMMERCIAL
CONTRACTS
Negotiating Techniques in
International Commercial
Contracts

C. CHATTERJEE
LLM (Cambridge), LLM (London),
PhD ( London), Barrister
First published 2000 by Ashgate Publishing

Reissued 2018 by Routledge

2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
711 ThirdAvenue, New York, NY 10017, USA

Routledge is an imprint ofthe Taylor & Francis Group, an informa business

Copyright © C. Chattei:jee 2000

All rights reserved. No part of this book may be reprinted or reproduced or utilised
in any form or by any electronic, mechanical, or other means, now known or
hereafter invented, including photocopying and recording, or in any information
storage or retrieval system, without permission in writing from the publishers.

Notice:
Product or corporate names may be trademarks or registered trademarks, and are
used only for identification and explanation without intent to infringe.

Publisher's Note
The publisher has gone to great lengths to ensure the quality of this reprint but
points out that some imperfections in the original copies may be apparent.

Disclaimer
The publisher has made every effort to trace copyright holders and welcomes
correspondence from those they have been unable to contact.

A Library of Congress record exists under LC control number: 00130123

ISBN 13: 978-1-138-70492-3 (hbk)

ISBN 13: 978-1-315-20250-1 (ebk)
Contents

Table of Cases viii

Table of International Conventions and Resolutions x

1 Some Basic Concepts Fundamental to Negotiation of

International Commercial Contracts 1
1.1 Introduction 1
1.2 What is Negotiation? 1
1.3 Negotiation and Conflict 2
1.4 What is not Negotiation 3
1.5 The Environment of Negotiation 3
1.6 Interdependence and Negotiation 4
1.7 Professionalism in Negotiation 5
1.8 Conclusions 6

2 Preparation for Negotiation 8

2.1 Introduction 8
2.2 Elements Common to the Preparatory Stages of Negotiation 8
2.3 The Briefing Session 9
2.4 The Stage Prior to Leaving for a Foreign Jurisdiction 11
2.5 Eligibility for Membership of a Negotiating Team 12
2.6 Conclusions 12

3 Negotiation of International Commercial Contracts and Risks 14

3.1 Introduction 14
3.2 Feasibility Studies 14
3.3 A Brief Analysis of Some of the Usual Risks Associated with
Private Foreign Investments 16
3.4 The Primary Causes of High Incidence of Expropriation of
Foreign Assets 40
3.5 Downward Trend in Taking of Foreign Assets 41
3.6 Conclusions 42

v
vi Negotiating Techniques in International Commercial Contracts

4 Negotiation of International Sales Contracts 46

4.1 Introduction 46
4.2 The Goods 46
4.3 Time of Delivery 47
4.4 Place of Delivery 48
4.5 The Payment Contract 48
4.6 A Brief Discussion of the Most Popular Types of Countertrade 52
4.7 Some Important Points to be Considered in Relation to
Countertrade 55
4.8 Carriage of Goods (Transportation) Contract 56
4.9 Replacement and Service 56
4.10 Negotiation for the Sale of Second-hand/Used Products 57
4.11 Conclusions 57

5 Negotiation of Transfer of Technology Contracts 58

5.1 Introduction 58
5.2 The Important Elements of a Contract for the Transfer of
Technology 59
5.3 Contents of the Contract 60
5.4 Conclusions 68

6 Project Finance 70
6.1 Introduction 70
6.2 Risks 72
6.3 Third Party Undertakings 73
6.4 Security for Payment 76
6.5 Inter-Lender Arrangements 80
6.6 Some General Issues that Should be Considered in Accepting
a Property as Security 80
6.7 Registration of Securities 82
6.8 Some Important Legal Issues Pertaining to Project Finance 84
6.9 Conclusions 92

7 Negotiation of Syndicated Loan Agreements 96

7.1 Introduction 96
7.2 The Initiation of a Syndication 96
7.3 The Negotiation Process 97
7.4 Organisation of Syndicated Loans 99
7.5 The Lead Manager 100
 Contents vii

7.6 The Agent 101

7.7 Offer and Acceptance of a Syndicated Loan 103
7.8 Some of the Most Important Clauses that are Included in
Syndicated Loan Agreements 104
7.9 Conclusions 108

8 Negotiation of International Construction Contracts 109

8.1 Introduction 109
8.2 Preparation for Negotiation of an International Construction
Contract 110
8.3 How Should an Employer Select a Construction Contractor? 111
8.4 Is There any Standard Form of International Construction
Contract? 113
8.5 Some of the Most Important Clauses in International
Construction Contracts 113
8.6 Conclusions 130

9 Negotiation of Petroleum Contracts 132

9.1 Introduction 132
9.2 The Principal Features of State Contracts 136
9.3 Principal Contractual Terms in a Petroleum Agreement 138
9.4 Some General Comments on International Petroleum
Contracts 142
9.5 Conclusions 144

10 The Role of the Lawyer in Negotiating International

Commercial Contracts: Some Comments 146
10.1 Introduction 146
10.2 Jurisdictional Issues and Governing Law 148
10.3 Conclusions 149

Bibliography 150
Index 152
Table of Cases

AGIP and the Popular Republic of the Congo, 21 International Legal Materials (1982)
726.
Alcom Ltd. v. Republic of Colombia [1984] 2 All ER 6.
Asian Agricultural Products Ltd. and the Republic of Sri Lanka, 30 International
Legal Materials (1991) 580.
Bacus Sri v. Sercio Nacional Del Trigo [1957] 1 QB 438.
Banco Creditor Agricol De Cartago, Barke v. Bancomer 762 F.2d.222 (2d Cir. 1985).
B .P. Exploration Co. (Libya) Ltd. v. Government of the Libyan Arab Republic (1979)
53 International Law Reports 297.
Birch Shipping Co. v. Republic of Tanzania, 507 F Supp. 311 (Ddc) 1980.
Callejo v. Bancomer 764 F.2d. (5th Cir. 1985).
Chile v. France (The Guano Case) UN Report, Vol. Xv, at 77.
Compania Mercantil Agrentina v. United States Shipping Board (1914) 131 Lt 388.
Eastern Timber Corporation v. Republic of Liberia, 659 F. Supp. 606 (DDC 1987).
Edward Owen Engineering Ltd. v. Barclays Bank International [1978] 1 All ER 976.
Factory at Charzow (Germany v. Poland) (1928) PCIJ, Series A, No. 17.
Government of the State of Kuwait and the American Independent Oil Co. (Aminoil),
ICSID Arbitration, 21 International Legal Materials (1982) 976.
Gulf Bank v. Mitsubishi [1994] 2 LLR 149.
Hungarian PR. v. Onori, 23 International Law Reports (1956) 203.
I Congress Del Partido [1981] 3 WLR 329.
Kleihs v. Republic of Austria, Ann, Digest (1948).
Krajina v. Tass Agency [1949] 2 All ER 274.
Liberia Eastern Timber Corporation v. Republic of Liberia, 659 F. Supp. 606 (DDC
1987).
Luther v. Sagor [1921] 3 KB 532.
Mobil Oil Iran Inc. and others v. Government of the Islamic Republic of Iran and
National Iranian Oil Co., 86 International Law Reports (1991) 231.
National Oil Corporation (Libya) and the Libyan Sun Oil Co. (U.S.), 29 International
Legal Materials (1990) 605.
Nuclear Tests Cases, ICJ Reports (1974) 253.
In Re Oil Spill by Amico Cadiz off the Coast of France, 16 March 1978.
The Schooner Exchange v. Mcfadden (1812) 7 Cranch 116.
SEDCO Inc. v. Iranian Oil Co. and the Islamic Republic of Iran, Iran-US Claims
Tribunal, Awards of 24 October 1985, 27 March 1986 and 2 July 1987, 84
International Law Reports (1991) 484.

Vlll
 Table of Cases ix

Storelli v. Governer Delia Republic Francesse, Ann. Digest 2 (1923^4).

Sultan of Jahore v. Abubakar [1952] A.C. 318.
Texaco Overseas Petroleum Co. and California Asiatic Oil Co. v. the Government of
the Libyan Republic (1979) 53 International Law Reports 389.
Trail Smelter Arbitration (1941) 3 RIAA 1905.
Trendtex Trading Corporation v. Central Bank of Nigeria [1977] QB 529.
Table of International
Conventions and Resolutions

Brussels Convention on the Liability of Operators of Nuclear Ships, 1962.

Convention Establishing the Multilateral Investment Guarantee Agency, 1985.
Convention for the Prevention of Marine Pollution by Dumping from Ships and
Aircraft, 1972.
Convention for the Prevention of Marine Pollution by Dumping of Wastes and Other
Matter, 1972.
Convention for the Prevention of Marine Pollution from Land-based Sources, 1974.
Convention for the Protection of Birds Useful to Agriculture, 1902.
Convention for the Protection of the Ozone Layer, 1985.
Convention on Civil Liability for Oil Pollution Damage Resulting from Exploration
and Exploitation of Seabed Mineral Resources, 1977.
Convention on the Control of Transboundary Movements of Hazardous Wastes and
their Disposal, 1989.
Convention on the International Liability for Damage Caused by Space Objects, 1972.
Convention on the Regulation of Antarctic Mineral Resource Activities, 1988.
European Convention of State Immunity, 1972.
ILA Helsinki Rules on the Uses of the Waters of International Rivers, 1966.
International Convention on Civil Liability for Oil Production Damage, 1969.
International Convention on the Establishment of an International Fund for
Compensation for Oil Pollution Damage, 1971.
International Convention for the Prevention of Pollution from Ships (MARPOL) 1973.
London Convention for the Prevention of the Pollution of the Sea by Oil, 1954.
London Convention Relative to the Preservation of Fauna and Flora in the Natural
State, 1933.
Off-shore Pollution Liability Agreement, 1974.
Paris Convention on Third Party Liability in the Field of Nuclear Energy, 1960.
Peace Treaty with Italy, 1947, UNTS, Vol. 49, 126.
Principles Concerning Transfrontier Pollution (OECD), 1974.
Tanker Owners' Voluntary Agreement Concerning Liability for Oil Production
(TOVALOP) 1969.
The Rio Declaration, 1992.The World Charter for Nature, 1982.
UN Code of Conduct on Transnational Corporations, 1992.
UN Convention on Long-range Transboundary Air Pollution, 1982.

x
 Table of International Conventions and Resolutions xi

UN General Assembly Resolution entitled 'The Charter of Economic Rights and

Duties of States', 1974.
UN General Assembly Resolution on Permanent Sovereignty over Natural Resources,
1962.
Vienna Convention on Civil Liability for Nuclear Damage, 1962.
Vienna Convention on Succession of States in Respect of Treaties, 1978.
Warsaw Convention for the Unification of Certain Rules Relating to International
Carriage by Air, 1929.
1 Some Basic Concepts
Fundamental to Negotiation of
International Commercial
Contracts

1.1 Introduction

The negotiation of international commercial contracts requires certain

techniques. The international commercial world seems to proceed on the
presumed belief that businessmen are aware of such techniques and that
experience matters most. It should be pointed out in this context that where a
party enjoys monopoly on a market, the question of negotiating a contract
would not arise, as the stronger party imposes its terms upon the weaker, but
where competitors are available in a market, the technique of negotiating a
contract assumes great importance, which is increasingly the case in the current
international commercial world. Furthermore, there seems to exist a perception *
that the economically weaker world lacks bargaining power; consequently,
the old-fashioned technique based on old-fashioned attitudes is often activated
in negotiating international commercial contracts with such parties.
It is to be emphasised that in the current international commercial world
choices exist, hence the need for learning the technique of negotiating
international commercial contracts, irrespective of the economic and financial
standing of the other party.
In this chapter an attempt is made to explain some of the concepts which
are considered to be fundamental to negotiating an international commercial
contract.

1.2 What is Negotiation?

To negotiate means to 'hold communication or conference for the purpose of

1
2 Negotiating Techniques in International Commercial Contracts

arranging some matter by mutual agreement, to discuss a matter with a view

to some settlement or compromise'.1 To compromise means the settlement of
a dispute by mutual concession.
As the definition indicates, to negotiate is to confer with others, with the
object of reaching a compromise or an agreement. In this process, mutual
concessions may have to be made. In other words, in a negotiation process,
negotiators must not rigidly adhere to their own terms and conditions, as that
will defeat the whole basis for and purpose of negotiation. Lack of flexibility
on the part of a negotiating team would mean that the team wishes to hold the
upper hand and to try to impose its terms and conditions on the other party. It
is to be emphasised that in a negotiating process both parties' position must
be treated as equal, and the terms and conditions that may be reached by
mutual concession, will lead to a contract with a high probability of being
performed.

1.3 Negotiation and Conflict

The meaning of the term 'negotiation' has already been explained. 'Conflict'
means an encounter with arms, fight, battle, a prolonged struggle, the clashing
or variance of opposed principles, statements or arguments.2
Based on this meaning, it is possible to maintain that conflict has no place
in negotiation. In fact, the term should not be used to describe the hurdles that
negotiators may experience in negotiating international commercial contracts.
'Differences of opinion' are different from 'conflict'. It is the very purpose of
negotiation to iron out the differences between the parties by mutual
concession. The perception of conflict in a negotiating process is not only
irrelevant but also damaging; it may adversely affect the sense of mutuality in
negotiation. The differences may quickly be resolved if parties come to
negotiation with alternative proposals and strategies. Differences of opinion
should be anticipated, otherwise there would be no need for negotiation.
Differences of opinion arise as each party wants to gain as much as it can
from a deal. The objective of negotiation is to reach a compromise by a process
of narrowing down the differences and eventually agreeing on all issues for
the purpose of concluding the contract.
 Some Basic Concepts 3

1.4 What is not Negotiation

No intention to compromise with the other party is a symptom of a non-

negotiating attitude. The attributes of negotiation are: flexibility, mutuality,
compromise and non-aggressiveness. Absence of these attributes certainly
confirms that there is no basis for negotiation. Negotiation sessions are often
characterised by aggressiveness on the part of a party or domination by it,
giving the impression that the other party must accept the terms of the
domineering party. This is a mistake in that such impression or attitude is not
only against the tenets of international commercial negotiation but also
descriptive of the environment of negotiation, by provoking the other party to
adopt an inflexible attitude, in consequence of which the negotiation process
may break down.
Negotiation of political differences and negotiation of international
commercial contracts are two different processes although both of them aim
at agreements on mutually agreed terms. In international commercial
negotiations there is no room for aggressiveness, domination, nor is there any
room for emotion. International commercial negotiations are for settling
business terms and conditions in relation to a deal which will be incorporated
in a contract. Unlike diplomatic or political negotiations which are concerned
with settlement of disputes or differences, international commercial negotiation
is primarily concerned with determining the terms and conditions on the basis
of which a particular commercial deal will be acted upon; the differences that
may arise are based on the parties' perception of financial gains and losses.
Business on unilateral terms does not require any negotiation. It is
important to emphasise that in a proper contract, two minds must meet, and
negotiation is the process that brings this about.

1.5 The Environment of Negotiation

The environment of negotiation is created by the participants themselves. It

is therefore essential that they do not act in a way that might damage the
environment of negotiation. There are several factors that may contribute to a
congenial environment of negotiation; friendly behaviour without giving any
impression of superiority over the other party; a courteous manner; a flexible
attitude towards the terms of negotiation; eagerness to negotiate rather than
to impose one's own terms on the other; paying full attention to what the
other party says and appreciating their difficulty or situation; respect for the
4 Negotiating Techniques in International Commercial Contracts

host country's culture; ensuring that the foreign negotiators do not offend the
host in any way.
Environment in this context stands for the environment that is created by
the participants themselves and not the environment in the room in which
negotiation takes place. A fully briefed negotiating team contributes to the
environment by averting misunderstanding and confusion. Negotiation is
similar to acting on a stage where success or failure may be assessed almost
instantaneously. It is imperative that one team by its own behaviour does not
antagonise the other team.
The team leaders have a significant role to play in maintaining a congenial
environment for negotiation by settling differences between the teams
amicably.
Cutting off a negotiation process is much easier than continuing with it. A
continuation of the process is possible only if the environment is amicable.
Aggressiveness, an assumption of superiority, misconceived ideas, ruthlessness
or lack of manners simply destroy the environment of negotiation. The
environment of negotiation therefore stands for an atmosphere that will
enhance the process of negotiation, and the onus of creating and maintaining
it is on the members of the teams and their leaders.

1.6 Interdependence and Negotiation

In order to understand the connection between interdependence and

negotiation, one should refer to the definition of * negotiation'. Mutuality is
the cornerstone of negotiation. The assumption of superiority is derogatory to
a negotiation process.
Negotiation should be based on the premises that without a buyer, a seller
is unable to sell his product and vice versa. This point is particularly important
when sellers are mere players on saturated markets. On the other hand, even
in a seller's market, buyers should not be left with the impression of being
dominated.
A good negotiator negotiates for the future also; that is, a negotiation
should not be treated as a one-off affair. An understanding between a buyer
and a seller offers the platform for future business. The issue of interdependence
becomes extremely important when a buyer is required to obtain certain goods
which are not easily available, and for the seller, when not too many buyers
may be available.
 Some Basic Concepts 5

A strong sense of interdependence becomes inevitable in a low market,

whether caused by a general economic depression or by a general downward
trend in the demand for a product.
The sense of interdependence should not lead to any surrender to the other
party, it is best employed to create an atmosphere of friendliness, demonstrating
eagerness to strike a deal, rather than becoming the source of negative attitudes.
When a negotiation fails, both parties lose. Negotiation should not be
regarded merely as a gesture to arrange the conclusion of a contract; the
arrangement must include the strategies and the identification of issues that
will be discussed at negotiation sessions, which must be settled at the pre-
negotiation session. A contract negotiation session is a session at which the
terms must be discussed in a friendly fashion, with an understanding of
interdependence.

1.7 Professionalism in Negotiation

Professionalism in negotiation is not only desirable but also a key to success.

'Professionalism' means 'the qualities or typical features of a profession'.3 A
'profession* means a 'vocation or calling especially one that involves some
branch of advanced learning'.4 The technique of negotiating international
commercial contracts is a technique which ought to be learned thoroughly;
experience in it is not sufficient through understanding of the other party's
goals and objectives, the business environment in the country of the other
party, and even some knowledge of history and geography are essential.
Even where cultural differences between the parties and the language of
negotiation may present certain difficulties, professionalism, which includes
good manners and etiquette and the sense of interdependence may make up
the deficiencies and maintain a friendly environment. There is therefore no
point in becoming unnecessarily informal and/or using unprofessional or bad
language. Manners, etiquette and appropriate language always contribute
towards creating a good impression on the other party.
Members of a team should address the members of the other team correctly,
and must also know the positions they hold. The mandate of each of the
members in both teams must be known to all the members. Nothing must be
mentioned about the cultural differences between the two countries, whether
during or after the negotiation, as it would simply be derogatory to do so.
Negotiation must take a neutral position, and it is an art to know how to
remain neutral.
6 Negotiating Techniques in International Commercial Contracts

Socialising beyond certain limits can also create a bad impression of the
professionalism of a person. A negotiating team should know the culture of a
country and do things in conformity with it during their stay in that country.
Awareness of such factors reflects directly upon professionalism, and each
member of a negotiating team visiting a foreign country should be especially
cognisant of them.
Professionalism in this context stands for two things: (a) professionalism
of the team as a whole; and (by) professionalism of each member of the team.
The leader of a negotiating team has therefore a special duty to make each
member aware of this issue.

1.8 Conclusions

Having discussed the basic elements of negotiation, it would be appropriate

to catalogue a few points in the form of 'do's' and 'don'ts' of negotiation
techniques. This catalogue can never be a complete one. It simply itemises
some of the most important points which a negotiator may find useful to
remember in carrying out a successful negotiation.

Dos

(a) Consider any commercial negotiation in its long-term context.

(b) Prepare each negotiator's brief accurately.
(c) Each member of the negotiating team (negotiator) must know the
background information relating to the proposed negotiation.
(d) Each team must know the requirements of the other team.
(e) Each team must know the socio-economic and legal environment of the
other team.
(f) Must seek to succeed by co-operation.
(g) Must think of joint gains.
(h) Must trade something for something.
(i) Must break the link between winning and intimidation or domination.
(j) Must demonstrate professionalism.
(k) Must maintain a positive rather than a negative attitude.
(1) Must remain amiable in order to maintain a friendly environment of
negotiation,
(m) Must avoid manipulative techniques,
(n) Must be tough when the other team is tough (but remain polite).
 Some Basic Concepts 7

(0) Must remain firm, but not aggressive,

(p) Must ignore all threats by the other party.
(q) If the other party becomes aggressive or unreasonable, speak more quietly
and slowly than they do, but be articulate.

Don yts

(a) be submissive.
(b) be aggressive.
(c) be abusive.
(d) be intimidating.
(e) be domineering.
(0 be vague or ambiguous in respect of the terms and conditions of the
proposed contract,
(g) be impolite,
(h) make personal attacks,
(i) comment adversely on national culture, including national business culture
and history,
(j) socialise unduly,
(k) be rigid in negotiating terms and conditions, and do put forward alternative
terms and conditions.
(1) comment on the political situation in the host country,
(m) be clumsy in dress and/or manners.
(n) make jokes which might offend the host or the guest as the case may be.
(o) use bad language.
(p) wrongly address any member of the team of the other party.
(q) prolong negotiation unnecessarily.
(r) personalise the negotiation process.
(s) defy the authority of the team leader.

Notes

1 The Oxford English Dictionary, Oxford, Clarendon Press (1989), vol. Ill p. 303.
2 Ibid., vol. Ill, p. 713.
3 The Concise Oxford Dictionary, Oxford, Clarendon Press (1990), p. 952.
4 Ibid.
2 Preparation for Negotiation

2.1 Introduction

The better the preparation, the higher are the chances of successfully
conducting a negotiation, leading to the conclusion of a contract. At the
preparation stage, each member of the team must consider his/her part of the
job carefully, discussing between themselves difficult issues, and preparing
strategies and alternative strategies.
Preparation of the subject matter of negotiation varies from project to
.project; nevertheless, there are certain elements which are common to most
preparatory stages of contract negotiation.
The purpose of this chapter is to identify and illustrate some of the most
common elements of negotiation which should receive attention at the pre-
negotiation stage.

2.2 Elements Common to the Preparatory Stages of Negotiation

The preparatory stage cannot be activated unless the basic information about
the proposed contract is at hand. In other words, both parties must have
prepared the basic document in connection with the proposed contract
negotiation.
In so far as the buyer is concerned, sometimes the publicity given by a
prospective seller as to its product may provide the basic information to him.
On the other hand, a buyer may already have some basic idea of what he
wants to buy and can seek a product from a specific manufacturer or seller. In
either case, the prospective buyer must have some background information
which may give him a lead to the negotiation process, there is no point in
going to a foreign jurisdiction without having some basic information on the
product.
The basic information on the product must be examined and analysed by
the prospective buyer to determine whether the product may serve his purpose;
and if not, the extent to which the elements or features of the product may be

8
 Preparation for Negotiation 9

altered and the probable expenses entailed, or whether an alternative product

manufactured by the party may be considered. Where a prospective buyer
knows his requirements, he should clearly state the specifications of the product
in writing, and deliver them to the prospective manufacturer or seller. The
pre-negotiation stage cannot start until the prospective manufacturer or seller
has confirmed (preferably in writing) that he may be able to supply the specific
product. This is an important factor in activating the preparatory stage for
negotiation.
Ideally, through communications the parties should notify each other of
the members of the negotiating team, including their names, positions within
the organisation, in addition to the dates of arrival at and departure from the
manufacturer's or seller's jurisdiction. The language of negotiation should be
settled before departing for the foreign country and a translator taken with the
team, where necessary.
The negotiating team of each party must consist of competent people, and
their competence must be judged by reference to the product a buyer
contemplates buying. In negotiating an engineering product, for example, an
engineer qualified in the appropriate branch of engineering science must be
included in the team, in addition to other relevant persons, namely, marketing
manager, financial executive and a lawyer. The composition of a negotiating
team depends upon the nature of product or service to be negotiated from,
and the financial capacity of the firm; thus, no specific criteria for composing
a negotiating team may be established.
However, each team must have a leader who is also a member of it. The
person chosen as leader of the team need not be an expert, but should be an
all-rounder and a person who commands the respect of the other members of
the team. He/she should be a person who is amiable, good-tempered, reliable
and a problem-solver. He/she should be a person who can diffuse a conflict,
coordinate the activities of the members of his/her team, communicate to the
leader of the other team without feeling strained, and keep the negotiating
process going in a smooth and friendly fashion.

2.3 The Briefing Session

Briefing sessions are to be treated as integral parts of the preparatory stage of

a negotiation. Each member of the team must be briefed on his/her part in the
negotiation by the leader of the team. In other words, the entire matter for
negotiation must be divided into parts for the purpose of allocating duties to
10 Negotiating Techniques in International Commercial Contracts

each member of the team. This will allow each member to learn beforehand
the nature of the role he/she is required to play at the actual negotiating session
and to prepare his/her questions accordingly.
One of the most important reasons for holding pre-negotiation sessions is
to ensure that each member of the team is fully familiar with the role he/she is
required to play at the actual negotiation session(s) and to allow them sufficient
time to familiarise themselves with the specific issues which have been
allocated to them. Members of the team must be advised by the leader to
prepare ancillary questions which may be required to be raised at the actual
negotiation session. This also means that members of the team must be
knowledgeable enough to raise ancillary questions with reference to certain
statements made by the other party during a negotiation process.
It is extremely important that the team leader ensures that each member
of the team is fully familiar with the produce equipment that the organisation
wishes to sell or buy and the details of it, including the alternatives that the
organisation may be prepared to consider. Identification of strategies and
determination of the room for manoeuvre are two important issues that should
be considered at the pre-negotiation stage. Strategies may be clearly identified
provided the organisation possesses a clear idea of its requirements.
Identification of a clear idea as to the requirements of an organisation in
terms of the product which it contemplates buying is one of the most important
functions of the pre-negotiation stage. This argument is equally applicable to
a seller, that is, a seller must also know his product thoroughly, and be ready
with possible alternatives. This is where the team leader is required to take an
important role. In order to identify the requirements of an organisation, he/
she must have had clarification from higher authorities and a mandate as to
the parameters of the negotiation.
It is elementary that briefing sessions should not be held until the team,
including its members, has been approved of by the organisation, and the
leader of the team has received a clear-cut mandate from the organisation.
This point is also important for another reason - in the event of anything
going wrong with the negotiation of the contract, the organisation may attempt
to establish liability on the part of the team, and in particular, the team leader.
Nothing should be done on an oral basis, as the legal consequences may be
far-reaching. Internal memos, however unofficial, are enough to establish the
parameters of a mandate given to a team, including its leader, by the
organisation. A mandate is a crucially important document for the team leader
and the team.
 Preparation for Negotiation 11

The purpose of the pre-negotiation stage is to ensure the following:

(a) that the team leader and the team have the requisite mandate to negotiate
a contract;
(b) that each member of the team has been fully briefed as to his/her role;
(c) that the parameters of the mandate for negotiating a contract are identified;
(d) that the room for manoeuvre, if any, is determined;
(e) that the strategies of negotiation have been clearly identified;
(f) that alternative strategies have been identified and understood by each
member of the team; and
(g) that the limits to negotiation have been identified.

2.4 The Stage Prior to Leaving for a Foreign Jurisdiction

At this stage, a team should familiarise itself with some of the basic aspects
of the country which it is about to visit, such as the country's international
commercial history, its culture and the business environment. A knowledge
of the history of the country is necessary to understand the political and
commercial relationship she has maintained with the country from which the
team comes. A friendly relationship between the two countries should put the
teams at ease, which should help create a friendly environment for the
negotiation; this is a psychological factor, but it has great business impact.
On the other hand, it is an important technique to learn how to revive or
create a business relationship with a country with which in the recent past
political relations have been strained or with which a new relationship is to be
established. This second situation is much trickier than the first, but a negative
or diffident attitude will not help. It is quite possible for a negotiator to re-
establish rapport with a country with which there has been an unfriendly
relationship in the recent past, or with which there has been no business
relationship in the past at all.
A country's commercial history gives a prospective negotiating team a
good account of the nature of the international commerce and business she
has been engaged in, and the kinds of goods and industry in which she has
dealt. It is also worth knowing the country's infrastructure, and such basic
information as the nature of the import-export trade pattern, balance of
payments position, structure of the economy etc. This issue has been detailed
in the next chapter under the heading * feasibility study'.
12 Negotiating Techniques in International Commercial Contracts

A negotiating team should also be familiar with the industrial, economic

and monetary policies of a country, and in particular, her external debt position.
Furthermore, the strengths of the country in the various sectors of the economy
should be identified.
Prior to their leaving for the foreign jurisdiction, the members of the team
should be required to familiarise themselves with the culture of the foreign
jurisdiction, in addition to knowing the legal and economic environment. There
cannot be anything more disastrous than to comment adversely on the host
country. It simply spoils the negotiation process. It is well worth learning a
few simple things about the culture of the foreign country, and trying not to
do anything contrary to that country's culture.

2.5 Eligibility for Membership of a Negotiating Team

A negotiating team must be open-minded, and fully prepared to listen to the

other party's strategies, rather than imposing its own ideas and terms upon
them. Mutuality is the basic key to a successful negotiation. The preparatory
stage must cater for such training and orientation of the members of the
negotiating team. The sense of interdependence must be developed during
this stage too.
In selecting members of the team, attention should be paid by the team
leader to choosing those people who have the tenacity and broad-mindedness
to learn about and the ability to cope with a foreign culture and business
environment. Many people may not possess these qualities. If the other party
has reason to hold superior bargaining power, the team should be made aware
of that, and should prepare its strategies accordingly. In selecting its members,
the team leader should consider very seriously that it is not only the experience
of an employee that matters but also the qualities mentioned above. It is
important to bear in mind that the scenario of international contract negotiations
is constantly changing.

2.6 Conclusions

Preparation for negotiation is more important than the actual stage of

negotiation in that the briefing of members of a team is crucial for successfully
concluding a deal. The preparation stage cannot be successful in the absence
of suitable team members. Two objectives are important at this stage: (a) to
 Preparation for Negotiation 13

make the strategies absolutely clear; and (b) to ensure that every member of
the team has understood them. The loyalty of the members to the leader of the
team must also be ensured. The qualities that a member should posses have
already been identified. It is not a question of satisfying these criteria and
qualities on paper; the genuine feeling that each member can satisfy them is
important. A team leader has thus an enormous responsibility in selecting the
members of his/her team.
3 Negotiation of International
Commercial Contracts and
Risks

3.1 Introduction

In negotiating any international contract the probable risks that might frustrate
its performance must be considered. Risks may relate to the country in which
the contract would be performed or they may relate to the subject matter of
the contract or both. One of the means of determining risks is to develop a
feasibility study, which may be prepared by sellers or investors themselves,
or by experts who are available to prepare such studies.
This chapter deals with two primary matters: (a) feasibility studies; and
(b) the types of risk a party may be required to consider in negotiating an
international contract.

3.2 Feasibility Studies

A feasibility study stands for a study of the practicability of a proposed project.

In order to determine the practicability of a project, information on different
relevant matters is necessary, such as the sources of finance, potential of the
project, availability of materials and equipment, existing manpower and
projected manpower, export potential of the finished product where relevant,
logistics, climatic conditions, the political situation and the foreign debts
accrued by the country.
It is not possible to itemise all the matters which should be considered in
preparing a feasibility study, the development of which depends upon the
nature of the proposed project. The feasibility study for setting up a school,
for example, and that for an international construction contract will be different,
although certain common issues may have to be considered in relation to all
feasibility studies.

14
 Negotiation of International Commercial Contracts and Risks 15

Feasibility studies should be prepared by experts having knowledge and

experience of similar kinds of project. A feasibility study is the blueprint of a
project. The higher the quality of a feasibility study, the better is the prospect
of correctly evaluating a proposed project. A feasibility study will also reveal
the probable risks involved in pursuing a proposed project. Similarly, a
feasibility study will allow an investor to consider the kind of precautionary
measures it ought to take against probable risks.
The usefulness of a feasibility study depends upon the kind of information
it has relied upon. It is therefore very important that the sources of information
relied upon in developing a feasibility study are of a primary nature.
Information on country profiles may be obtained from various sources, such
as government departments and various international and intergovernmental
and non-governmental institutions. Of course, in many countries genuine and
reliable information on various issues may not be available as they do not
have a system of maintaining them. Relevant organisations, international,
intergovernmental with governmental and non-governmental, may provide
some information on almost every country in the world. Lack of information
on a country or a project simply increases the incidence of risks; consequently,
investors sometimes become overcautious about investing in foreign
jurisdictions. Host countries should take the initiative to provide as much
information as possible on a proposed project, when requested by a proposed
investor.
In order to be able to attract foreign investors, host countries should
genuinely attempt to establish the projected export earnings from the proposed
investment, and whether after completion of the programme, the host country
would be able to operate the project with the help of local people, although
arrangements for supervision by the foreign investor may have to be made for
some time.
The country's balance of payments, and balance of trade position, together
with the exchange control regulations where relevance must be taken into
account in preparing a feasibility study. The provision for training of local
people and the opportunities for maintaining a flow of competent people to
operate the project should be clearly identified in a feasibility study.
A feasibility study is not per se a legally binding document, but if a host
country gives a warranty as to the authenticity of the information provided by
her in the preparation of a feasibility study, it will have legal effect; hence the
need for providing correct and genuine information.
Most of the international organisations, such as the International Bank
for Reconstruction and Development or the International Monetary Fund,
16 Negotiating Techniques in International Commercial Contracts

have their own method of developing feasibility studies on programmes on

which loans are sought by their Member States; however in seeking loans
from other sources, such as syndications, the applicant should develop its
own feasibility study so as to provide a comprehensive picture of the project.

3.3 A Brief Analysis of Some of the Usual Risks Associated with

Private Foreign Investments

Risks may be broadly divided into two categories: pre-completion and post-
completion risks. Depending upon the nature of a project, the type and
magnitude of risks vary. The general types of risk which are relevant to most
projects have received attention in this Section.

3.3.1 Political Risks

Political risks constitute a significant part of the entire domain of risks. These
risks may take different forms: instability of a government; passing of new
legislation giving insufficient or no notice to foreign investors or a total change
of the investment policy in a particular sector of the economy; or the taking
(nationalisation/expropriation) of foreign assets in the national interest.
Although such risks are foreseeable, protective measures may not always be
available. In the West however, most of the governments offer insurance
policies against such risks. In the United Kingdom, ECGD (Export Credit
Guarantee Department) policies or in the United States, the policies issued by
OPIC (Overseas Private Investment Corporation), offer financial remedies to
their national investors when they invest abroad, although in most cases, the
total investment is not covered by such policies.
For over a decade, the Multilateral Investment Guarantee Agency (MIGA),
established under the auspices of the World Bank have formed insurance
policies to private foreign investors if they are prepared to invest in the
developing world, provided of course certain conditions are satisfied, but these
policies exclude 'non-discriminatory measures of a general application which
governments normally take for the purpose of regulating economic activity
in their territories', although they may cover risks relating to:

Expropriation and similar measures (including legislative or administrative

action) which will have the effect of depriving the holder of a guarantee of his
ownership or control or a substantial benefit from the investment.
Another random document with
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for having been employed by Mahomet as amanuensis to record his
early revelations, he had proved in some way unfaithful to the trust;
and on the capture of Mecca, was in consequence proscribed from
the amnesty, and only at the intercession of Othmân escaped being
put to death. Possessed of administrative
ability, he had been appointed by Omar to Abu Sarh supersedes Amru in
the government of Upper Egypt. But some Upper 647.
Egypt. a.h. XXVI. a.d.

years after, he fell out with Amru, in whom

was vested the supreme control of the province; and each appealed
to Othmân. Amru was declared to be in fault, and the Caliph
deposed him altogether from the civil charge of Egypt. Amru
objected. ‘To be over the army,’ he said, ‘and not over the revenue,
was but holding the cow’s horns, while another milked her.’ He
repaired angrily to Othmân, who, after some words of bitter
altercation, transferred the entire administration, civil and military,
into the hands of Abu Sarh. The act was unfortunate for the Caliph. It
threw Amru into the ranks of the disaffected party at Medîna; while
the bad repute of ‘the renegade’ Abu Sarh, though he was an able
warrior, gave point to the charges of partiality and nepotism now rife
against Othmân.[444]
Abu Sarh, left thus in sole command,
carried his arms vigorously along the coast Conquest in Northern Africa.
beyond Tripoli and Barca, and threatened a.h. XXVI. a.d. 647.
Carthage and the far west. The Byzantine Governor, Gregory,
reinforced by the Emperor, advanced against him with an army, we
are told, of one hundred and twenty thousand men. Othmân, warned
of the danger, strengthened Abu Sarh by a large contingent of Arab
troops; and with them marched a numerous company of veterans
and ‘Companions,’ including the sons of Abu Bekr, of Abbâs, and of
Zobeir. The field was long and hotly contested; and Abu Sarh, to
stimulate his men, promised the hand of Gregory’s daughter, with a
large dower, to the warrior who should slay her father. The enemy
was at last discomfited with great slaughter, and a citizen of Medîna
gained the lady for his prize. He carried her off on his camel to
Medîna; and the martial verses which he sang by the way are still
preserved.[445] In this campaign, Othmân incurred much odium by
granting Abu Sarh a fifth of the royal share of the booty as personal
prize. The rest was sent as usual to Medîna; and here again Othmân
is blamed for allowing Merwân his cousin to become the purchaser
of the same at an inadequate price.[446]
But it is as the first commander of a
Moslem fleet that Abu Sarh is chiefly Naval operations, forbidden
famous, in which capacity he both added by Omar.
largely to the conquests of Islam, and also by his pre-eminence
contributed anew to the obloquy Cast on his master’s name. Muâvia
had for a long time keenly missed the support of a fleet, and had
sought permission of Omar to embark his soldiery in ships. ‘The isles
of the Levant,’ he wrote, ‘are so close to the Syrian shore, that you
might almost hear the barking of the dogs and the cackling of the
hens: give me leave to attack them.’ But Omar dreaded the sea, and
wrote to consult Amru, who answered thus:—‘The sea is a
boundless expanse, whereon great ships look but tiny specks; there
is nought saving the heavens above and the waters beneath; when
the wind lulls, the sailor’s heart is broken; when tempestuous, his
senses reel. Trust it little, fear it much. Man at sea is an insect
floating on a splinter, now engulfed, now scared to death.’ On receipt
of this alarming account, Omar forbade Muâvia to have anything to
do with ships. ‘The Syrian sea, they tell me, is longer and broader
than the dry land, and is instant with the Lord, night and day, seeking
to swallow it up. How should I trust my people on the bosom of the
cursed infidel? Remember Alâ. Nay, my friend, the safety of my
people is dearer to me than all the treasures of Greece.’
Nothing, therefore, was attempted by
sea in the reign of Omar. But on his death, But undertaken by Othmân.
Muâvia renewed the petition, and, at his
reiterated request, Othmân at last relaxed the ban, on condition that
the service should be voluntary. The first
fleet equipped against Cyprus, in the Cyprus occupied. a.h. XXVIII.
twenty-eighth year of the Hegira, was a.d. 649.
commanded by Abu Cays as admiral; it was joined by Abu Sarh with
a complement of ships manned by Egyptians, and carried a body of
Arab warriors from Alexandria. Cyprus was taken easily, and a great
multitude of captives carried off. The Cypriots agreed to pay the
same revenue as they had done to the Emperor; but, unable as yet
to guarantee their protection, the Caliph remitted the ordinary poll-
tax. Of Abu Cays we are told that he headed fifty expeditions by land
and by sea, but was killed at the last, while engaged in exploring a
Grecian sea-port.[447]
Three years after the fall of Cyprus,
driven now from the harbours of Africa, and Naval victory off Alexandria.
seriously threatened in the Levant, the a.h. XXXI. a.d. 652.
Byzantines gathered a fleet of five or six hundred vessels of war, and
defied the Arabs at sea. Abu Sarh was appointed to take up the
challenge. He manned every available ship in the ports of Egypt and
Africa; and his squadron, though much inferior in weight and
equipment to the enemy’s, was crowded with valiant warriors from
the army. The Byzantine fleet came in sight near Alexandria. The
wind lulled, and both sides lay for a while at anchor. The night was
passed by the Moslems in recitation of the Corân and prayer, while
the Greeks kept up the clangour of their bells. In the morning, a
fierce engagement took place. The Arab ships grappled with their
adversaries, and a hand-to-hand encounter with sword and dagger
ensued. The slaughter was great on both sides; but the Greeks,
unable to withstand the wild onset of the Saracens, broke and
dispersed. Constantine, who had been in command, sailed away to
Syracuse, where the people, infuriated at the defeat, despatched him
in his bath.[448]
In this expedition, the discontent
against Othmân, notwithstanding the Obloquy cast on Othmân in
splendid victory, for the first time found this affair.
open and dangerous expression among some of the leading
Companions. Mohammed son of Abu Bekr, and Mohammed son of
Abu Hodzeifa (afterwards leaders in rebellion), murmured against
the Caliph for appointing Abu Sarh admiral. ‘Othmân hath changed
the ordinances of his predecessors,’ they said, ‘and made captain of
the fleet a man whom the Prophet proscribed, and desired to have
put to death; and such like men also hath he put in chief command at
Kûfa and Bussorah, and elsewhere.’ The clamour reaching the ears
of Abu Sarh, he declared that none of these men should fight in his
line of battle. Excluded thus from the victory, they were the more
incensed. Spite of the threats of Abu Sarh, the inflammatory
language spread, and men began to speak openly and unadvisedly
against Othmân.[449]
The clouds were louring, and the
horizon of the unfortunate Caliph Caliph’s outlook darkens.
darkening all around.
 CHAPTER XXXI.
DOMESTIC EVENTS DURING THE CALIPHATE OF OTHMAN. HIS
GROWING UNPOPULARITY.

Kûfa and Bussorah at this period

exercised an influence on the destinies of Discontent at Kûfa and
Islam hardly less potent than that of the Bussorah.
Court of Medîna itself. The turbulent and factious atmosphere of
these cities became rapidly and dangerously charged with
sentiments of disloyalty and rebellion, and an unwise change of
governors aggravated the evil.
Moghîra did not long enjoy the power to
which the weakness of Omar had raised Sád reinstated in the
government of Kûfa; a.h.
him. He was removed by Othmân shortly XXXIV. a.d. 645,
after his accession; and, to fill the vacancy,
in obedience (as some say) to the dying wish of Omar, Sád, the
conqueror of Medâin, was reinstated in his former office. The issue
was again unfortunate. To provide for his luxurious living, Sád,
shortly after his appointment, took an advance of money from the
chancellor of his treasury, Ibn Masûd; who, by and by, became
importunate for its repayment. A heated altercation ensued, and Sád
swore angrily at Ibn Masûd. The factious city ranged itself, part with
the great warrior, and part with the quondam slave. The quarrel
reached the ears of Othmân, who was much displeased, and
recalled Sád before he had been a year at Kûfa. As successor, the
Caliph appointed Welîd ibn Ocba, a brave
warrior, but suspected of intemperance, but shortly superseded by
and withal a uterine brother of his own. To Welîd ibn Ocba,
make the choice the more unfortunate, Welîd was son of that Ocba
who, when taken prisoner in the battle of Bedr and about to be put to
death, exclaimed in the bitterness of his soul, ‘Who will care for my
little children?’ and was answered by the Prophet, ‘Hell-fire!’ The
words were not forgotten, and faction was careful now to turn them
to the worst account. Nevertheless, Welîd was popular; and as, for
several years, he directed successive campaigns in the east with
gallantry and vigour, he managed thus to divert the restless spirits of
his people from discontent at home. But in the end, the unruly
populace was too strong for him. A murder took place, and sentence
of death was executed at the city gate against three of the culprits.
[450] Their relatives resented the act of
justice, and lay in wait to find ground of who was deposed for
inebriety. a.h. XXX. a.d. 651.
accusation against the governor, whose
habits gave them ready opportunity to attain their object. Charges of
intemperance were repeatedly laid against him, and as often
dismissed by Othmân, because wanting in legal proof. At last his
enemies succeeded in detaching from his hand the signet-ring of
office while he slept (as they said) from the effects of a debauch, and
carried it off in triumph to Medîna. But still worse, it was established
that Welîd had on one occasion conducted the morning prayers in
such a state of inebriation that, having come to the end of the proper
service, he went on, without stopping, to commence another. The
scandal was great; and the majesty of Islam must be vindicated.
Welîd was recalled to Medîna, scourged according to law, and
deposed.[451]
At Bussorah, too, things were going
from bad to worse. Abu Mûsa had now Abu Mûsa deposed at
been many years governor, when the Bussorah. 650.
a.h. XXIX. a.d.

restless citizens became impatient of his

rule. He had been preaching to the pampered soldiery the virtue of
enduring hardness as good soldiers of the faith, and therefore of
going forth on foot to war. When the next expedition was ready to
start, they watched to see whether he would himself set the
example. And as his ample baggage issued forth, winding in a long
string of mules from the approaches to the castle, they set upon him,
crying out, ‘Give us of these beasts to ride upon, and walk thou on
foot, a pattern of the hardness thou preachest unto us.’ Then they
repaired to Medîna, and complained that their governor had drained
the land of its wealth, pampered the Coreish, and tyrannised over
the Arab tribes. Instead of checking with promptitude their petulance
and insubordination, Othmân gave it new life by deposing Abu Mûsa
on these vague complaints, and appointing an obscure citizen whom
they desired, to be their governor. Found unequal to the post, this
man was deposed, and a youthful cousin of the Caliph, Ibn Aámir,
[452] promoted in his room. When tidings of
his nomination reached Bussorah, Abu Ibn Aámir appointed governor.
Mûsa told the people: ‘Now ye shall have a taxgatherer to your
hearts’ content, rich in cousins, aunts, and uncles; he will flood you
with his harpies!’ And so, in truth, it turned out; for he soon filled all
the local offices and the commands in Persia with creatures of his
own. But in other respects he proved an able ruler, and took a
leading part in the struggle now close at hand.
The government of Kûfa, vacated by
the deposition of Welîd, together with the Saîd governor of Kûfa. a.h.
XXX. a.d. 651.
whole province of Mesopotamia, was
conferred by Othmân upon another young and untried kinsman, Saîd
ibn al Aás. His father was killed fighting against the Prophet at Bedr;
and the boy, thus left an orphan, had been brought up by Omar, and
was eventually sent by him to the wars in Syria. Receiving a good
account of his breeding and prowess, Omar summoned him to his
court, and gave him two Arab maidens to wife.[453] This youth, now
promoted to the most critical post in the empire, was not only without
experience in the art of governing, but was vainly inflated with the
pretensions of the Coreish. Accustomed in Syria to the discipline of
Muâvia’s rule, he wrote to Othmân, on reaching Kûfa, that license
reigned there; that noble birth passed for nothing; and that the
Bedouins were away, beyond control, with the bit between their
teeth. His final address as governor was a blustering harangue, in
which he glibly talked of crushing the sedition and arrogance of the
men of Kûfa with a rod of iron.
Countenanced by the Caliph in his vain Discontent gains ground at
career, he fomented discontent by Kûfa.
advancing to invidious distinction the Coreishite nobility, and treating
with contumely the great body of the citizens. ‘One Coreishite
succeedeth another in this government,’ they said;—‘the last no
better than the first. It is but “out of the frying-pan into the fire.”’ The
under-current of faction gained daily in strength and volume. But the
vigorous campaigns of Saîd in northern Persia, for he was an active
soldier, served for a time to occupy men’s minds, and to stay the
open exhibition of the rebellious spirit.
Meanwhile other causes were at work
throughout the empire calculated to Other causes of disaffection.
increase the disaffection; or which, if
unimportant in themselves, were adroitly seized by the Caliph’s
enemies and turned to that purpose.
First may be mentioned the recension
of the Corân. The Moslem warriors had Othmân’s recension of the
Corân. a.h. XXX. a.d. 651.
spread themselves over such vast areas,
and the various columns, as well as converted peoples, were so
widely separated one from the other, that differences arose in the
recitation of the sacred text, as it had been settled in the previous
reign. Bussorah followed the reading of Abu Mûsa; Kûfa was guided
by the authority of Ibn Masûd, their chancellor; and the text of Hims
differed from that in use even at Damascus. Hodzeifa, during his
campaign in Persia, having witnessed the variations in the different
provinces, returned to Kûfa strongly impressed with the gravity of the
evil and the need of a revision. Ibn Masûd was highly incensed with
the slight thus put upon the authority of his text. But Hodzeifa
persisted in his views, and, supported by Saîd, the governor, urged
Othmân to restore the unity of the divine word, ‘before that believers
began to differ in their scripture, even as do the Jews and
Christians.’ The Caliph took the advice of the leading Companions at
Medîna, and, in accordance therewith, called for samples of the
manuscripts in use throughout the empire. He then appointed a
syndicate, from amongst the Coreish, of men whose authority could
be relied upon, to collate these copies with the sacred originals still
in the keeping of Haphsa, the widow of Mahomet. Under their
supervision the variations were reconciled, and an authoritative
exemplar written out, of which duplicates were deposited at Mecca
and Medîna, Kûfa and Damascus. From these exemplars, copies
were multiplied over the empire; all former manuscripts were called
in and committed to the flames; and the standard text was brought
into exclusive use. The uniformity thus secured by the secular arm,
and maintained by the same in every land and every age, is taken by
the simple believer as a proof of divine custodianship. The action of
Othmân was received at the moment, as it deserved, with a very
general consent, excepting at Kûfa. There Ibn Masûd, who prided
himself on his faultless recitation of the oracle, pure as it fell from the
Prophet’s lips, was much displeased; and the charge of sacrilege in
having burned the former copies of the sacred text, was readily
circulated amongst the factious citizens. By and by the charge was
spread abroad, and was taken up with avidity by the enemies of
Othmân; and, ages afterwards, we find it still eagerly urged by the
partisans of the Abbasside dynasty as an unpardonable offence on
the part of the ungodly Caliph. The accusation, thus trumped up for
party purposes, was really without foundation. Indeed, it was scouted
by Aly himself. When, several years after, he proceeded as Caliph to
Kûfa, he found the citizens still blaming his ill-starred predecessor for
the act. ‘Silence!’ he said; ‘Othmân acted as he did with the advice of
the leading men amongst us; and if I had been ruler at the time,
instead of him, I should myself have exactly done the same.’[454]
A great body of the nobility from Mecca
and Medîna about this time transferred Many of the Coreish migrate
their residence to Irâc. These had no right to Irâc.
to share in the endowments of that province, the special privileges of
which, in virtue of their conquest, were reserved for the present
citizens of Kûfa and Bussorah. They were allowed, however, to do so
on selling to Othmân, on behalf of the State, the properties which
they owned in the Hejâz; and the concession appears to have added
a fresh grievance to foment the rising discontent at the extravagant
pretensions of the Coreish.[455]
The story of Abu Dzarr Ghifâry is
singularly illustrative of the times, and his Story of Abu Dzarr Ghifâry,
harsh treatment is ordinarily mentioned as
a serious ground of complaint against the Caliph. He was one of the
earliest converts to the faith; and tradition asserts that he even
anticipated Mahomet himself in some of the observances of Islam.
An ascetic in his habits, he inveighed against the riches and
extravagance of the day—evils which were altogether alien from the
simplicity of Mahomet, and which, rushing in like a flood, were now
demoralising the people. Gorgeous palaces, crowds of slaves,
multitudes of horses, camels, flocks and herds, profusion of costly
garments, sumptuous fare, and splendid equipage, were the fashion,
not only in Syria and Irâc, but had begun to find their way even into
the Hejâz.[456] The protest of Abu Dzarr points to the recoil of the
stricter class of believers against all this luxury and indulgence; and
the manner in which the discontented classes, and the advocates of
communism, were beginning to turn that recoil to their own account,
and to the discredit of the government. Visiting Syria, the spirit of the
ascetic was stirred at the pomps and vanities so rife around him, and
he preached repentance to the inhabitants of Damascus. ‘This gold
and silver of yours,’ he cried, ‘shall one day be heated red-hot in the
fire of hell; and therewith shall ye be seared in your foreheads, sides,
and backs, ye ungodly spendthrifts![457] Wherefore, spend now the
same in alms, leaving yourselves enough but for your daily bread; or
else woe be to you in that day!’ Crowds flocked to hear him, some
trembling under the rebuke; the envious rejoicing at the contempt
poured on the rich and noble; and the people dazzled by the vision
of themselves sharing in the treasures thus denounced. Uneasy at
the disturbance caused by these diatribes in the public mind, Muâvia
resolved to test the spirit of the preacher. He sent him a purse of a
thousand pieces; in the morning, affecting to have made a mistake,
he demanded the return of the gift; but during the night Abu Dzarr
had distributed the whole in charity. Upon this, Muâvia, apprehensive
of the spread of communistic doctrines, despatched the preacher to
Medîna, telling Othmân that he was a sincere but misguided
enthusiast. Before the Caliph, Abu Dzarr persisted in fearlessly
denouncing the great and wealthy, and urged that they should be
forced to disgorge their riches. Othmân condescended to reason
with him. ‘After men have completely fulfilled their legal obligations,’
he asked, ‘what power remaineth with me to compel them to any
further sacrifice?’ and he turned to Káb, the learned Jewish convert,
in corroboration of what he had said. ‘Out
upon thee, thou son of a Jew! What have I banished by Othman to
to do with thee?’ cried Abu Dzarr, and with Rabadza.
651.
a.h. XXX. a.d.

these words smote Káb violently upon the

stomach. Argument being thus of no further use, Othmân banished
the preacher to Rabadza in the desert of Nejd, where two years after
he died in penury. As he felt his end approach, the hermit desired his
daughter to slay a kid, and have it ready for a party of travellers who,
he said, would shortly pass that way to Mecca, and bury him; then,
making her turn his face toward the Kâaba, he quietly breathed his
last. Soon after, the expected party came up, and amongst them Ibn
Masûd from Kûfa, who, weeping over him, bewailed his fate, and
buried him on the spot on which he died. The death of Ibn Masûd
himself, a few days after, added to the pathos of the incident. The
plaintive tale was soon in everyone’s mouth; and the banishment of
the pious ascetic and preacher of righteousness was made much of
by the enemies of the Caliph. The necessity was forgotten; the
obloquy remained.[458]
When he was himself minded to
assume the office of censor and rebuke the Othmân incurs odium by
ungodliness of the day, the unfortunate putting down unlawful
amusements, and by
Caliph fared no better. The laxity of Syria extending the square of the
had reached even to the sacred precincts Kâaba. a.h. XXVI. a.d. 647.
of the Hejâz; and Othmân, on attempting to
check the games and other practices held to be inconsistent with the
profession of Islam, incurred resentment, especially from the gay
youth whose amusements he had thwarted. Gambling and wagering,
indeed, were put down with the approval of all the stricter classes of
society; but there were not wanting many who, displeased with the
Caliph’s interference, joined in the cry of his detractors.[459]
The enlargement of the grand square of
the Kâaba, commenced by Omar, was The Mosque at Medîna
carried on by Othmân during his visits to enlarged and beautified. a.h.
XXXII. a.d. 653.
Mecca at the time of pilgrimage. And here,
too, the ill-fated Caliph met with opposition. The owners of the
houses demolished in the course of the work refused to accept the
compensation offered, and raised a great outcry against it. The
Caliph put them into prison, for, said he, ‘My predecessor did the
same, and ye made no outcry against him.’ But what the firm arm of
Omar could do, and none stir hand or foot against him, it was a very
different thing for the weak and unpopular Othmân to attempt. He
was more successful with the Great Mosque at Medîna, originally
built by Mahomet, and hallowed by the mortal remains of the Prophet
himself and his two Successors. This was now greatly enlarged and
beautified. The supports, made at the first of the trunks of date-trees,
were removed, and the roof made to rest on pillars of hewn stone.
The walls, too, were built up with masonry, richly carved and inlaid
with rare and precious stones. It was a pious work, and none
objected.[460]
Yet another, and a very gratuitous, cause of murmuring arose
from certain changes made by Othmân in the ceremonial of the
annual pilgrimage, which, though in themselves trivial and
unmeaning, excited strong disapprobation at the Caliph’s court. He
pitched tents for shelter during the few
days spent for sacrifice at Minâ, a thing Unwise changes in the pilgrim
which had never been done before; and, to ceremonial.
653.
a.h. XXXII. a.d.

the prayers heretofore recited there and on

Mount Arafat, he added new ones with two more series of
prostrations. The ritual, as established by the Prophet himself, had
been scrupulously followed by his two successors, and a
superstitious reverence attached thereto even in the minutest detail.
When expostulated with on the rash and unhallowed innovation,
Othmân gave no reasonable answer, but simply said it was his will
that it should be so.[461] Aly, Abd al Rahmân, and others were much
offended at these alterations; and the disregard of the sacred
example of the Founder of the faith raised a scandal among the
Companions unfavourable to Othmân.
On the other hand, beyond the
immediate circle of his kinsfolk, Othmân Othmân makes many
made no personal friends. Narrow, selfish, enemies.
indiscreet, and obstinate—more and more so, indeed, with
advancing years—he alienated those who would otherwise have
stood loyally by him; and he made many enemies, who pursued him
with relentless hatred. We have already seen how Mohammed son
of Abu Bekr, and Mohammed son of Abu Hodzeifa, were embittered
against him at the naval victory of Alexandria. And yet no very
special cause can be assigned for their enmity. The first is said to
have been actuated by ‘passion and ambition.’ The other was nearly
related to Othmân, and as an orphan had been kindly brought up by
him; he was now offended at having been passed over for office and
command. Both joined the rebellion which shortly broke out in Egypt,
and were amongst the most dangerous of the Caliph’s enemies. Nor
was it otherwise with the people at large. A factious spirit set in
against the unfortunate prince. The leaven fermented all around; and
every man who had a grievance, real or supposed, hastened to swell
the hostile cry.[462]
To crown the Caliph’s ill-fortune, in the
seventh year of his reign, he lost the He loses the Prophet’s ring.
signet-ring of silver which had been a.h. XXIX. a.d. 650.
engraven for the Prophet, and which had been worn and used
officially both by him and his successors. It was a favourite and
meritorious occupation of Othmân to deepen the old wells, and to
sink new ones, in the neighbourhood of Medîna. He was thus
engaged when, sitting by the well Arîs,[463] and pointing with his
finger in direction to the labourers, the ring dropped and
disappeared. Every effort was made, but in vain, to recover the
priceless relic. The well was emptied of the water and the mud
cleared out, and a great sum was offered; but no trace of the ring
ever appeared. Othmân grieved over the loss. The omen weighed
heavily on his mind; and it was some time before he was prevailed
upon to supply the place of the lost signet by another of like fashion.
[464]

Othmân had married successively two

of the Prophet’s daughters, both of whom Othmân marries Nâila. a.h.
died before their father. Three of his wives XXVIII.
still survived when, in the fifth year of his Caliphate, being then
between seventy and eighty years of age, he took Nâila to wife. Of
her previous history we know little more than that she had once been
a Christian, but, before her marriage with the Caliph, had embraced
Islam. She bore him a daughter; and through all his trials clung
faithfully by her aged lord, to the bitter end. The days were coming
when he needed such a helper by his side.[465]
 CHAPTER XXXII.
DANGEROUS FACTION AT KUFA. GROWING DISAFFECTION.

A.H. XXXII.—XXXIV. A.D. 653–655

Towards the close of Othmân’s reign,

the ferment, which (excepting Syria Seditious elements at work.
perhaps) had long been secretly at work
throughout the empire, began to make its appearance on the
surface. The Arab people at large were everywhere displeased at
the pretensions of the Coreish. The Coreish themselves were ill at
ease, the greater part being jealous of the Omeyyad branch and of
the favourites of the Caliph. And the temptation to revolt was
fostered by the weakness and vacillation of Othmân himself.
Ibn Aámir had been now three years
governor of Bussorah, when Ibn Saba (or, Ibn Sauda preaches sedition
as he is commonly called, Ibn Sauda), a in Egypt. a.h. XXXII. a.d.
653.
Jew from the south of Arabia, appeared on
the scene, and professed the desire to embrace Islam. It soon
appeared that he was steeped in disaffection to the existing
government—a firebrand of sedition; and as such he was expelled
successively from Bussorah, Kûfa, and Syria, but not before he had
given a dangerous impulse to the already discontented classes. At
last, he found a safe retreat in Egypt, and there became the setter
forth of strange and startling doctrines. Mahomet was to come again,
even as the Messiah was expected to come again. Meanwhile, Aly
was his legate. Othmân was a usurper, and his governors a set of
godless tyrants. The people were stirred. Impiety and wrong, they
heard, were rampant everywhere; truth and justice could be restored
no otherwise than by the overthrow of this wicked dynasty. Such was
the preaching which gained daily ground in Egypt; by busy
correspondence it was spread all over the empire, and startled the
minds of men already foreboding evil from the sensible heavings of a
slumbering volcano.[466]
 The breaking out of turbulence was for
the moment repressed at Bussorah by Ibn Émeute at Kûfa. a.h. XXXIII.
Aámir; but at Kûfa, Saîd had neither power a.d. 654.
nor tact to quell the factious elements around him. He offended even
his own party by ostentatiously washing the steps of the pulpit before
he would ascend a spot pretended to have been made unclean by
his drunken predecessor. He was not only unwise enough openly to
foster the arrogant assumptions of the Coreish,but he had the folly to
contemn the claims of the Arab soldiery, to whose swords they owed
the conquest of the lands around them. He was so indiscreet as to
call the beautiful vale of Chaldæa (the Sawâd) ‘the Garden of the
Coreish’—‘as if,’ cried the offended Arabs, ‘without us—our strong
arm and our good lances—they could have ever won this Garden.’
The disaffection, stimulated by a popular leader named Ashtar, and a
knot of factious citizens, found vent at last in an émeute. As the
governor and a company of the people, according to the custom of
the time, sat one day together in free and equal converse, the topic
turned on the bravery of Talha, who had shielded the Prophet in the
day of battle. ‘Ah!’ exclaimed Saîd, with an invidious contrast, ‘he is a
warrior, if ye choose, a real gem amongst your Bedouin counterfeits.
A few more like him, and we should dwell at ease.’ The assembly
was still nettled at this speech, when a youth incautiously gave
expression to the wish, how pleasant it would be if the governor
possessed a certain property which lay invitingly by the river bank
near Kûfa. ‘What!’ shouted the company with one voice, ‘and out of
our Sawâd!’ So saying, and with a torrent of abuse, they leaped
upon the lad and upon his father, who vainly endeavoured to urge
his youth in excuse of his indiscretion, and went near to killing both.
[467]

The factious spirits were emboldened

by the outbreak; and discontent now found The ringleaders are exiled to
Syria.
open and disloyal expression throughout
the kingdom. Saîd, supported by the Coreishite nobility, appealed
against their machinations to Othmân, who ordered that ten of the
ringleaders should be expelled to Syria.[468] There the Caliph hoped
that the powerful rule of his lieutenant and the loyal example of the
Syrians would inspire the malcontents with better feelings. Muâvia
quartered them in the church of St. Mary; and morning and evening,
as he passed by, abused them roundly on their folly in setting up
their crude claims against the indefeasible rights of the Coreish.
Crest-fallen under several weeks of such treatment, they were sent
on to Hims, where the governor, son of the great Khâlid, subjected
them for a month to like indignities. Whenever he rode forth, he
showered invectives on them as barbarous and factious creatures,
who were doing all in their power to undermine the empire. Their
spirit at last was thoroughly broken, and they professed to be
repentant. They were then released; but, ashamed to return to Kûfa,
they remained for the time in Syria, excepting the dangerous
demagogue Ashtar, who made his way secretly to Medîna.
Months passed, and things did not
mend at Kûfa. Most of the leading men, Saîd expelled from Kûfa. a.h.
whose influence could have kept the XXXIV. a.d. 655.
populace in check, were away on military command in Persia; and
the malcontents, in treasonable correspondence with the Egyptian
faction, gained head daily. Disheartened at this, Saîd, in an unlucky
moment, planned a visit to Medîna, there to lay his troubles before
the Caliph. No sooner had he gone than the conspirators came to
the front, and recalled the exiles from Syria. Ashtar, too, was soon
upon the scene. Taking his stand at the door of the Great Mosque of
Kûfa, he stirred up the people, as they assembled for worship,
against Saîd: ‘He had just left that despot,’ he said, ‘at Medîna,
plotting their ruin, counselling the Caliph to cut down their stipends,
even the women’s; and calling the broad fields which they had
conquered The Garden of the Coreish.’ The acting governor, helped
by the better class of citizens, sought in vain to still the rising storm.
He inculcated patience upon them. ‘Patience!’ cried Cacâa, the great
warrior, in scorn; ‘ye might as well roll back the Great River when in
flood as attempt to quell the people’s uproar till they have the thing
they want.’ Yezîd, brother of one of the exiles, then raised a
standard, and called upon all the enemies of the tyrannical governor
to join and bar his return to Kûfa. When Saîd drew near, they
marched out as far as Câdesîya, and sent forward to say that ‘they
did not need him any more.’ Saîd, little expecting such a reception,
said to them, ‘It had sufficed if ye had sent a delegate with your
complaint to the Caliph; but now ye come forth a thousand strong
against a single man!’ They were deaf to his expostulations. The
servant of Saîd, endeavouring to push on, was slain by Ashtar; and
Saîd himself fled back to Medîna, where he found Othmân already
terrified by tidings of the outbreak, and prepared to yield whatever
the insurgents might demand. At their
desire he appointed Abu Mûsa governor in Abu Mûsa appointed in his
place of Saîd. To welcome him the room.
captains in command of the reserves and outlying garrisons came in
from all quarters; and Abu Mûsa received them in the crowded
Mosque of Kûfa. He first exacted from all present the pledge of
loyalty to the Caliph, and then installed himself in office by leading
the prayers of the great assembly.
If, instead of giving way, Othmân had
inflicted on the ringleaders condign Othmân’s fatal mistake.
punishment, he might haply have
succeeded in weathering the storm. It is true that thus he would, in
all likelihood have precipitated rebellion, not only in Kûfa, but also in
Bussorah and Egypt. But, sooner or later, that was inevitable; and in
the struggle, he would now have had a strong support. For here the
contention was between the Coreish and the nobility of Islam on the
one hand, and the Arab tribes and city rabble on the other; and in
this question the leaders of martial renown would all have rallied
round the throne. By his pitiable weakness in yielding to the
insurgents, Othmân not only courted the contempt of all around him,
but lost the opportunity of placing the great controversy about to
convulse the Moslem world, upon its proper issue. It fell, instead, to
the level of a quarrel obscured by personal interests, and embittered
by charges of tyranny and nepotism against himself. The crisis was
now inevitable. Men saw that Othmân lacked the wisdom and the
strength to meet it, and each looked to his own concern. Seditious
letters circulated freely everywhere; and the claims began to be
canvassed of successors to the irresolute and narrow-minded
Caliph, who, it was foreseen, could not long retain the reins of
empire in his grasp.