Future Retail moves Delhi HC against Amazon ‘misusing’ Singapore arbitraror’s order in Reliance deal

Future Retail, which owns Big Bazaar and other popular retail chains, has filed a suit in the Delhi High Court against Amazon ‘interfering’ with its deal to sell its retail, wholesale, logistics, and warehousing units to Mukesh Ambani’s Reliance in a deal worth Rs 24,713 crore. The suit was filed “in relation to seeking necessary reliefs against Amazon.com NV Investment Holdings LLC (“Amazon”) from interfering with the Transaction by misusing an Interim Order dated 25th October, 2020 issued by an Emergency Arbitrator, appointed by the Singapore International Arbitration Centre (SIAC),” according to a stock exchange filing.

The Singapore International Arbitration Centre (SIAC) had on October 25 restrained the deal through an interim order. Future Retail had sold a 49 per cent stake in Future Coupons last year to Amazon for nearly Rs 2,000 crore. While Future Retail was enabled to put its products on Amazon’s marketplace, as per the deal, it was also agreed that Future Retail’s products would also be part of Amazon’s plan to deliver orders in select cities within two hours of the order placed. The deal gave Amazon a ‘call’ option to acquire all or part of Future Retail’s shareholding in three-10 years of the deal. The agreement with Reliance, as per Amazon, has violated a non-compete clause and a right of first refusal pact that was entered into with the Future Group.

Kishore Biyani-led Future Group’s retail arm in its suit added that the interim order is passed in an arbitration proceeding initiated by Amazon against Future Retail under an agreement wherein it is not a party to it. “The company has inter-alia made all entities parties to the suit which were parties to the arbitration proceedings, this includes the promoters of the Company,” it said noting that the reliefs sought in the suit are only against Amazon.

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Future Retail in a recent regulatory filing had said that an emergency arbitrator has no legal status under Part I of the Indian Arbitration and Conciliation Act 1996. Hence, the proceedings before SIAC are “void and coram non‐judice.”

The deal, if goes through, would give Reliance access to “2,000 Future Group retail stores, covering over 24 million square feet of space in over 400 cities and towns” according to the Future Group website. However, Amazon felt, if the deal is “implemented by completely disregarding the interim (arbitration) award, it will cause irreparable harm and injury to Amazon,” and that Amazon will lose the prospect of becoming the single largest shareholder of the Future Group, which has an “irreplaceable and widespread network” of over 1,500 retail stores, according to the letter sent by Amazon earlier this week to SEBI.