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Reliance-Future Retail Deal: Amazon Wins in Supreme Court

The Supreme Court's decision that the emergency arbitrator's order is valid in India has put a temporary halt to all transactions in India

Post by on Tuesday, August 10, 2021

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The Supreme Court upheld the enforcement of an emergency arbitrator's order by the Singapore International Arbitration Centre (SIAC) that put the Future Group's agreement with Reliance Industrial Limited on hold on August 6, 2021. After hearing verbal arguments from Future Retail and Amazon, an emergency arbitrator of the SIAC ordered that the former should "not take any action in pursuance of the Board Resolution of August 29."
Future Retail declared in August of last year that it would "sell by way of sale the retail and wholesale company". Reliance Retail, a portion of Mukesh Ambani-owned Reliance Industries, has acquired its supermarket chain Big Bazaar, premium food supply company Foodhall, and fashion and cloth Supermart Brand Factory's retail and wholesale operation. Amazon protested to the deal before it could be implemented, alleging a violation of contract with Future Coupons, the promoter's firm, and Future Retail. Amazon also stated that their agreement with Future Coupon included a "call" option, allowing it to acquire all or part of Future Retail's stake in the company within 3 to 10 years following the agreement's signing.
What are the Future Coupons?
Future Coupons is a Future Retail promoter group business with a 7.3 percent ownership in the company.Following that, Amazon filed an emergency arbitration petition with the SIAC, which stopped Future Retail from proceeding with the transaction.
What has the SC Ruled Now?
The first question before the two-judge panel of Justice Rohinton Fali Nariman and BR Gavai was whether an emergency arbitrator's award falls within the scope of the Arbitration Act.The court noted such an order was an "essential milestone in the age of decongestion of the civil courts" and provided rapid temporary relief to parties in the arbitration, holding that such an award might be made under the Arbitration Act.
What's next for the deal?
The Future Retail-Reliance Retail merger has been put on hold pending a Supreme Court decision. Although Future Retail has been laying the framework for the sale by approaching various regulators and obtaining their approval, the Supreme Court's decision that the emergency arbitrator's order is valid in India has put a temporary halt to all transactions in India. Both parties have already approached the SIAC's permanent bench and are expected to push for a quick settlement.
According to legal experts, if the SIAC finds that the Future Retial-Reliance Retail arrangement is in violation of Future Coupons' agreement with Amazon, the Future-RIL partnership will be effectively terminated.
According to other experts, the ruling will serve as a reminder to the parties to thoroughly study and agree to the arbitration terms and conditions.
(Author is Law Student at Galgotias University & Associate Editor at Lasdes e-Journal. Email: sp69683@gmail.com)

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