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Supreme Court rules in favor of Amazon in Reliance–Future Retail case, upholds Singapore emergency arbitrator’s award

Future Retail and Amazon have been in a legal battle ever since Reliance announced that it will acquire most of Future Group’s retail, wholesale, and logistics business. 

The Supreme Court ruled in favour of Amazon by accepting its appeal against a Delhi High Court order which let the deal between Reliance and Future Retail proceed. The court held that the emergency arbitrator’s award obtained by Amazon in Singapore under the rules of the Singapore International Arbitration Center (SIAC) can be legally enforced in India.

Why it 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 decision is a big win for Amazon. The court’s verdict also provides clarification on whether Section 17 of the Arbitration and Conciliation Act 1996 covers orders issued by emergency arbitrators.

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 2020 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.

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October 25, 2020  Amazon obtained an emergency arbitrator’s award against the Future Retail–Reliance deal from a Singapore arbitration tribunal.

March 18, 2021 – A single judge from Delhi High Court upheld the Singapore emergency arbitrator’s order against Future Group, putting on hold the Future–Reliance deal and attaching the properties of Future Group and its promoters Kishore and Rakesh Biyani.

March 22, 2021 –  A division bench of the Delhi High Court stayed the March 18 order allowing the Future-Reliance deal to proceed. Amazon appealed to the Supreme Court against this stay, and the court began hearing arguments on this appeal on July 21.

A complete timeline of events can be found at the end of the article

What did the Supreme Court say?

According to Bar and Bench, during the course of the proceedings, the court clarified that only two issues would be decided in this appeal:

  1. Whether Section 17(1) of the Arbitration and Conciliation Act, 1996 covers an Emergency Arbitrator’s awards.
  2. Whether the same can be enforced under Section 17(2).

The bench of justices Rohinton Fali Nariman and BR Gavai answered ‘yes’ to both the questions, upholding the March 18 order by a single judge from Delhi High Court.

Senior Advocate Harish Salve, appearing for Future Retail, had argued in the hearings that there is no concept of an emergency arbitrator under Indian law. The arbitrator’s award, which was obtained in October 2020, ordered Reliance and Future Retail to pause proceedings in their planned deal.

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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) approvedAmazon’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.

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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.

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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.

July 21, 2021 – The Supreme Court began hearing arguments from Future Retail and Amazon.

July 23, 2021 – CCI in a letter dated June 4 accused Amazon of concealing facts and making false submissions in 2019 when it sought approval for an investment in Future Coupons.

July 29, 2021 – The Supreme Court reserved its judgement on the issue.

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