The Romanian Way of Negotiating

One of the questions we are often asked about is how to do business in Romania. Not necessarily on a legal or fiscal point but at a more practical level.

Romania and the Romanian legal system is different from the Common Law, and it is based on the European Code law System. Even though based on the continental system the Romanian legal system is unique and has therefore produced its own unique Romanian way of doing business in Romania.

Romania has though over the last one hundred years had three types of legal systems and philosophy which has bred its own particular way of doing business.

Initially Romania had a legal system which was based on the continental code Law prevalent throughout Europe. This was a well tried and understood system. Then you had a socialist legal system between 1945 and 1990.  In 1990 you had a return to the European Code system. The European Code System in Western Europe had changed in the period from 1945 to 1990 by the expansion of world trade and different business cultures and therefore Romanian lawyers and businessmen were faced with a new reality and way of doing business.

This has produced a schizophrenic type of situation for many Romanian business leaders.  These are the people that Western Investors in Romania now have to deal with.  It is in this type of situation that Romanian lawyers have to deal with every day. The issues that we face matching the attitude of the Romanian Businessmen and the Western Businessmen.  They both come from different economic and business backgrounds and ways of running a company. This can produce a situation where misunderstanding and mistrust can flourish and occur very easily to the detriment of the deal.

One area where this discord often occurs is in the context of a negotiation of a business contract.

International business is in the main a product of balance.  In many western business venture both parties want to achieve the best, not necessarily for themselves but for the business venture. The western based philosophy of checks and balances means that a common ground can be and is often achieved. There is no winner or loser but a successful venture where both win equally.

From our experience in Romania this is not always the case. Since 1990 most businesses have been led or run by businessmen who were brought up in the period 1945 to 1990. The Romanians see a contract negotiation as a case of winning.  They were taught that they were the best and therefore they had to win everything. This means that any negotiation is often not a negotiation,  but more a laying out of a position which is non-negotiable and contracts are to be drawn up on this basis. You have to take it or leave it.

This is a negotiation stance that many international businessmen do not understand, and is a carry-over from the pre 1990 days.  Prior to 1990 a decision was passed down from the boss at the top as to what was to be agreed and no-one could deviate from it.  This meant that any discussions were long and involved as nobody would took a position until the last moment, if even then. The Romanian negotiators did not dare and could not make mistakes. They had been told what to agree and were not allowed the responsibility or flexibility to amend the terms as necessary in the circumstances. Unless you were dealing with a foreigner, then you were dealing with another state company.  If there was a mistake or the contract needed amending there would be no legal ramifications if the contract was totally wrong as you could adjust it internally.

The Romanians saw and often still do see every negotiation as a black and white discussion. They will be and often are inflexible because they do not want to lose a point and lose face. They have to win.

I remember when I first came to Romania a well-known Romanian businessman said to me in all seriousness. Once we have signed the agreement that is when we start negotiating. This results in frustration for both parties. The Romanians because they see the signing of the contract as the beginning of the negotiation and the western business man sees it as the culmination of the discussions. They see no reason for further discussion. They want to get on with the project or business and do not want to spend more hours in discussion and negotiating.  For them time is money.

Having said all the above what is the current position today.  There are a number of negotiating styles in Romania. These styles vary from age group to age group, and indeed from industry to industry.

If you are dealing with a younger breed of entrepreneur in a modern business the chances are that the person you are trying to negotiate with will be more flexible in their decision making process. They will be prepared to concede points in any negotiation for the greater good and they have a desire to get the deal through.

The alternative position will be with a negotiator who will have a fixed view.  His intention is to win at all costs. Even when you walk away from the negotiating table he feels he has won. If you walk away he will feel that he has won and you lost because you did not achieve your objective and you did not change his position.

Our advice in any discussion can only be for you to ascertain as soon as possible what type of person you are negotiating with and what their intentions are. If the old style be prepared for many wasted hours of discussion and in some cases no conclusion at all. If a younger negotiator you maybe pleasantly surprised at the speed of the negotition.

At the end of the day remember what you are trying to achieve.

About Nicholas S Hammond

Nicholas is an English solicitor who has been practising in Romania since 1990. He has been a partner in a number of law firms in Romania as the principal partner. Hammond and Associates trading as Hammond Partnership is the culmination of many years experience.

Leave a Reply

Your email address will not be published. Required fields are marked *