In AK Investment CJSC v. Kyrgyzstan Mobil Tel Ltd,[4] Lord Collins issued the Privy Council`s opinion summarizing the applicable common law principles[5] to determine whether it was appropriate to award to a foreign defendant for whom the court would not have jurisdiction after the original action against a principal defendant: To bring proceedings: If someone drops an anchor, I will usually release the anchor, tell them why it is too low, and then ask them to try again. I can do this several times before providing my meter. A common mistake is to respond with a counter-offer before the other party`s negotiating anchor is defused. If someone opens with $100 and you want to counter with $50, you must make it clear before presenting your number that $100 is simply unacceptable. Thus, «anchoring bias» is often part of a negotiation strategy. By dropping a strategic «anchor», negotiators are able to shape the negotiations in their favour. An example: experts, such as real estate agents, can also be strongly affected by negotiation anchors, as studies show. Why are anchors so effective? When conditions are uncertain, high anchors draw our attention to the positive qualities of the article or person being discussed (as in the case of a salary negotiation), and low anchors draw attention to mistakes, according to Adam Galinsky, a professor at Columbia Business School. Anchoring bias, as it is also called, is a psychological phenomenon in which people`s appreciation is influenced by numerical examples that may be completely arbitrary or have little or no correlation with real value. In the courtroom, this phenomenon is particularly important when assessing damages.
What exactly is the anchor of the negotiation and how does it work at the negotiating table? Defuse the anchor clearly and energetically: «I`m not trying to play with you, but we`re miles apart in terms of price.» If you don`t defuse the anchor first, suggest that $100 is fine in the trading area. If both parties have a strong idea of the possible settlement area (ZOPA), as in the case of a long-standing relationship between a supplier and an open-book customer, it is unlikely that anchors will have a strong influence. If you think the other party probably knows more about the size of ZOPA than you do, you`ll have a hard time anchoring effectively. Before you drop anchor in such situations, arm yourself with as much information as possible. I guess both sides know their limits and those set from the outside and both want an outcome that makes them feel good. If the anchor is outside the target boundaries, the first step is to move it within range. Once within the acceptable range, the negotiation then expands around common objectives, risks, etc., to strengthen the foundations, and then towards obstacles. Hopefully, both sides will work towards a common outcome at this stage. Terms are usually more important than money, and each party deals with them differently. Understanding the terms allows both parties to get as much of what they want as possible so that both parties can win and live with the result over time.
As with other types of forum shopping, courts in various jurisdictions have taken steps to prevent abuses of the court system by using anchor defendants. However, attempts to do so will always be limited by the strong juxtapositions of the need to ensure that all related claims are heard by a single court to the extent possible. If Person A enters into a negotiation with Person B with the hope of a salary of $80,000 and is initially offered a salary of $30,000, Person A can counter with $55,000 because of the anchor, which is much less than Person A originally hoped. For example, because of anchoring, jurors tend to conclude that the actual harm a plaintiff has suffered is greater if the plaintiff`s lawyer demands larger sums of money. Anchoring with daily damages or damages suffered per day can be particularly effective, as the possible distortive effects in the jury`s compensation decision increase as the number of days the plaintiff is compensated increases. Ask questions about the base of the anchor – for example, «Can you tell me how you found this number?» This can move the negotiations towards a more principles-based approach, using objective criteria to develop a range. Or it can ask the builder to try again, this time with an anchor closer to where you want it to be. In the law, a principal defendant is a person who is made the defendant of a lawsuit primarily in order to transfer jurisdiction to hear the action in a particular court.
As a general rule, the purpose of the main defendant is to allow claims to be brought before a particular court against another defendant (and not the main defendant) for whom the competent court would otherwise have no jurisdiction. [1] Therefore, the use of anchor defendants is often a variant of forum shopping. The use of anchor defendants as a trial strategy is based on two basic principles common to most legal systems. The first is that if a cause of action involves claims against multiple parties, it is appropriate that all of these claims be negotiated together in order to avoid the risk of inconsistent outcomes. The second is that courts in different jurisdictions should strive to avoid simultaneous litigation related to the same claims (this is generally referred to as the lis pendens doctrine), both to avoid the risk of conflicting outcomes and to avoid defendants having to respond to the same claims in different courts. Even if the use of a lead defendant successfully confers jurisdiction to hear a lawsuit against a foreign defendant in a court, the court often has the general discretion to stay the proceedings because it is not the most appropriate court to hear the case (the doctrine of forum non conveniens). Typically, when I have seen parties come up with an initial offer well beyond the acceptable range, it comes from parties that focus on what is desired (negotiation objectives) rather than focusing on relevant data to support their offer. We can usually bring the offer back to hand by reviewing and dissecting the justification for the offer. It takes time and a lot of conversation, but anchoring it to relevant data helps in many cases.
Since many parties are unwilling to «negotiate against themselves,» the relevant data conversation saves face to reach an agreement. In negotiations, the term «anchor» refers to the general tendency to give undue weight to the first value or number applied, and then to insufficiently adjust or counteract the first value, number or «anchor point». A known cognitive bias in negotiation and other contexts, anchoring bias, describes the general tendency to give too much weight to the first number put forward in a discussion, and then adapt inadequately from that starting point or «anchoring.» We even focus on anchor points when we know they are not relevant to the ongoing discussion. If you know a lot about the asset under discussion, you can make an aggressive first offer with confidence and expect your offer to anchor the discussion to your advantage. Research on anchoring bias has shown that negotiators may be able to gain an advantage by making the first offer and anchoring the discussion in their favor. Deciding to make the first offer in general should be based on two factors: your knowledge of the area of a possible agreement or ZOPA – that is, the range of options that should be acceptable to both parties – and your assessment of the other party`s knowledge of ZOPA.
