I'm pretty sure they know that you understand what to do. The problem is they know you and them won't be able too communicate. And they want to avoid any awkward situations that this could lead too since they would then appear impolite.
Actually what I've found out now is that some groups handle loot a certain way and seem to only want JP speakers so that they can explain it.

I would like to add "Grand Company Seals" to the list of stuff that should have been in the auto-translate ages ago!