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BANG CONSTRUCTION LIMITED AND KAZAKHSTAN RAILWAY

DEVELOPMENT COMPANY
NEGOTIATION ANALYSIS
STRATEGIC STRONG POINTS
BANG Construction Limited (“BANG”)
Penalty clause: In providing for a daily fee higher than actual losses, BANG could obtain a
favourable interpretation that the Liquidated Damages Clause is a penalty clause.
Contributory mistake: Despite BANG’s mistakes, the negligent acts of KRDC in failing to ensure
the diversion of the River Nura is reason enough for the liability to be distributed more evenly.
Kazakhstan Railway Development Company (“KRDC”)
Liquidated damages clause: KRDC will be capable of using a liquidated damages clause to drive the
discussions despite a potentially unfavourable interpretation by a tribunal.
Public relations: KRDC can cause a negative impact on BANG’s reputation which could endanger
future contracts including building of the Qatar stadium in 2022.
STRATEGIC WEAK POINTS
BANG
Contributory negligence: BANG is aware that it was equally at fault for the failing to build market-
standard flood defences. This means that BANG may not be able to get the kind of damages it
expects from KRDC.
Need to continue project: Though shocked by KRDC’s response to a mutual mistake, BANG must
continue with the project because its global reputation is at stake.
KRDC
Completion of project: The project is run on external funding and debt that needs to be paid off.
Thus, KRDC will not have time to find an alternate constructor.
Negligence: KRDC would be aware of their liability for not acquiring the requisite permission for
diversion of the river Nura.
NEEDS AND INTERESTS
BANG
Future of the project: BANG is eager to ensure the present dispute does not affect the completion
of this project and wish to continue a healthy professional relationship with KRDC
Avoid financial burdens: BANG is interested in ensuring that they are compensated for the real
losses sustained by them in order to repay outstanding liabilities and resume work.
KRDC
Completion of the project: KRDC is likely to need the project completed as soon as possible due to
accountability to creditors and contributors.

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Mitigate financial responsibility: KRDC is likely to try to minimize their financial liability in the
events due to inability to incur immediate additional expense through public finding loans and
bonds
BEST ALTERNATIVE TO NEGOTIATED AGREEMENT (BATNA)
BANG
Should the negotiations fail, the best alternative for BANG would be to seek KRDC’s consent to
resolve issues through arbitration in a favourable jurisdiction for the LD Clause.
KRDC
Should the negotiations fail, the best alternative for KRDC would be to ask one of the other two
construction companies which proceeded to the tender process with BANG.
WORST ALTERNATIVE TO NEGOTIATED AGREEMENT (WATNA)
BANG
Should the negotiations fail and KRDC go public about the contractual issues, BANG may face
reputation damage and stretch the limits to procure future tenders.
KRDC
Should the negotiations fail, the worst alternative for KRDC would be to pay BANG the full
amount due as instalments and let it continue as per the tender or suffer breach of contract
damages.
OBJECTIVES AND GOALS
BANG
Relationship: To ensure that the present dispute does not affect present and future work prospects
with KRDC and discuss the possibility of collaboration with the backing of the Kazakhstan
Government.
Completion of the project: To ensure BANG is allowed to continue with work on the project without
any further delay.
Withholding of money: To ensure that the money required to complete the project, which KRDC is
already in possession of, is not withheld any longer so as to mitigate losses and continue the
project.
KRDC
Completion of the project: KRDC is likely to negotiate for the speedy completion of the project with
certain restrictions on financial liability.
Mitigation of losses: As the KRDC does not stand to gain from withholding finances, they would be
okay with letting out the withheld amount but bargain on the repayment of the remaining
damages caused to BANG.

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