Amazon’s counsel began his arguments by going over the history of the legal dispute and submitted that Future Retail had been a direct beneficiary of Amazon’s investment.
The Supreme Court on Tuesday began hearing arguments on the legal battle between Future Retail and Amazon, Bar and Bench reported. The court is hearing a plea by Amazon against a Delhi High Court order which stayed an earlier order that restrained Future Retail from going ahead with its sale to Reliance.
Why this matters? Both Reliance and Amazon are trying to expand their online and offline retail offerings. Reliance is trying to acquire Future Retail to do this, while Amazon is trying to prevent this deal from happening. The Future vs Amazon legal battle has been going on since October 2020 and the Supreme Court’s verdict could be the final say in who gets their way.
Future vs Amazon: Brief timeline of events
November 2019 – Amazon acquired a 49 percent stake in Future Coupons, a promoter company that owns about 7.3 percent stake in Future Retail.
August 2020 – Reliance announced that it will acquire most of Future Group’s retail, wholesale, and logistics business in a deal worth Rs 24,713 crore. Amazon objected to the Reliance deal in October saying that its agreement with Future Coupons had a non-compete-like pact and right of first refusal against deals with competitors like Reliance Retail.
October 25, 2020 – Amazon obtained an emergency arbitrator’s order against the Future-Reliance deal from a Singapore arbitration tribunal.
November 7, 2020 – Future Retail moved to Delhi High Court against Amazon and the emergency arbitrator’s order, but the court refused to interfere.
March 18, 2021 – A single judge from Delhi High Court upheld the emergency arbitration order obtained in Singapore against Future Group, putting on hold the Future-Reliance deal.
March 22, 2021 – A division bench of the Delhi High Court stayed the March 18 order. Amazon appealed to the Supreme Court against this stay.
A complete timeline of events can be found at the end of the article
What were the arguments made in Supreme Court?
The Supreme Court will continue hearing the case on July 27, but here are the arguments made by Future Retail and Amazon so far:
Submissions by Harish Salve, the senior advocate representing Future Retail Ltd:
- Proceedings before Singapore International Arbitration Centre (SIAC) concluded last week. The tribunal is yet to decide on whether to vacate its emergency order that put the Reliance-Future deal on hold. The tribunal is also yet to decide whether Future Retail can be made a party to the arbitration proceedings, as reported by Bloomberg Quint.
Submissions by Gopal Subramanium, the senior lawyer representing Amazon:
Arguments as reported by Bloomberg Quint:
- The emergency arbitrator who gave the injunction order is an arbitrator under Indian law and that the Arbitration Act has provisions that allow the enforcement of an order by an arbitral tribunal in the same manner as it would a court order. Subramanium also argued that there is nothing in the Arbitration Act that prohibits the appointment of an emergency arbitrator.
- Neither Future Retail, nor Future Coupons or its promoter Kishore Biyani filed an appeal against the emergency arbitrator’s order.
- Future Retail cannot “self-style” or disobey an order as a nullity, there are procedures to follow to set aside an order.
- Amazon’s investment in Future Coupons was made with the understanding that retail assets will continue to rest with Future Retail and Amazon has not consented to the transfer of these assets
Arguments as reported by Economic Times:
- Future Retail was a direct beneficiary of Amazon’s investment because the investment was to strengthen and augment the business of Future Retail
- Future Group founder Kishore Biyani is running the show at both Future Retail and Future Coupons, Subramanium argued, implying that non-signatories can also be made parties under the group entity doctrine. The Future Group has argued that since Amazon’s contract — which gave it a right of first refusal — was with FRL’s promoters, and not with FRL itself, it had no legal standing.
- Subramanium also told the court that Future Group had approached Amazon soliciting further investments into Future Coupons in a bid to help the dwindling Future Retail
Arguments as reported by Financial Times:
- Arbitration Act gives complete freedom to parties to choose the venue of arbitration and the order of the emergency arbitrator is binding on all the parties except the arbitral tribunal.
- By adopting the Singapore International Arbitration Centre’s (SIAC) Rules, all the parties agreed to abide by all the provisions.
- Future Group is “trying to camouflage its weak arguments” by using the word “nullity again and again.”
Future vs Amazon: Complete timeline
August 2019 – Filings revealed that Amazon is looking to acquire a 49% equity stake in Future Coupons — the promoter entity of Future Retail. Future Coupons owns a 7.3 percent stake in Future Retail, which operates 900 stores in India, including 293 Big Bazaar stores. If the deal goes through, Amazon will 3.58% stake in Future Retail.
November 2019 – The Competition Commission of India (CCI) approved Amazon’s proposed acquisition of 49% equity stakes in Future Coupons.
August 2020 – Reliance Industries (RIL) announces it will buy most of Future Group’s retail, wholesale, and logistics business in a deal worth Rs 24,713 crore.
October 7, 2020 – Amazon accuses Future Group of breach of contract and slapped it with a legal notice over the Future Group-Reliance deal. Amazon reportedly had a non-compete-like pact and right of first refusal against deals with competitors like Reliance Retail.
October 25, 2020 – Amazon obtained an injunction order against the Future-Reliance deal from a Singapore arbitration court, but Reliance Group and Future Retail publicly stated that they will proceed with their deal “without any delay.”
November 2, 2020 – Future Group urged stock exchanges to ignore Amazon’s objections to the Reliance deal saying that the emergency stay on the transaction obtained by Amazon from the Singapore International Arbitration Center had no legal force in India.
November 7, 2020 – Future Group moves Delhi Court against Amazon interfering in the acquisition by Reliance.
November 11, 2020 – Amazon accuses Future Group of insider trading, saying that Reliance Retail was improperly informed of the Singapore arbitrator’s order.
November 20, 2020 – Despite Amazon’s protest, the Competition Commission of India approved Reliance Retail’s ₹24,713 crore acquisition of Future Group’s retail, wholesale, logistics, and warehousing businesses.
December 21, 2020 – The Delhi High Court said that while it wouldn’t stop the Future-Reliance deal from happening, the court wouldn’t interfere with regulators making their own assessment of the legality of the deal.
January 20, 2021 – The Securities and Exchange Board of India (SEBI) gave its go-ahead for the Future-Reliance deal.
March 18, 2021 – A single judge from Delhi High Court upheld the emergency arbitration order obtained in Singapore against Future Group, putting on hold the Future-Reliance deal. The judge upheld that the purchase violated an agreement that was signed between Amazon and Future Coupons, an investor company in Future Retail Limited. The court observed that the Future Group had agreed to give Amazon a veto on transactions like the Reliance Retail acquisition, but failed to hold good to that commitment. The high court also ruled that Future Retail must deposit Rs 20 lakh into the PM-CARES fund, and that company executives must respond on why they shouldn’t be jailed.
March 22, 2021 – A division bench of the Delhi High Court stayed the March 18 order. Amazon appeals to the Supreme Court against this stay order.
July 9, 2021 – The Supreme Court moved the hearing to July 20, after the final hearing before the Singapore Arbitration Tribunal, which began on July 12.
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