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Delhi HC order on Future Group-Amazon dispute

Date: 04 February 2021 Tags: Judiciary & Judgments

Issue

The Delhi High Court held that the order of the emergency arbitrator of Singapore International Arbitration Centre (SIAC) had rightly barred Future Retail and Future Coupon from going ahead with their deal with Reliance Retail and Fashionstyle.

 

Background

The high court also held that the order of the emergency arbitrator was not a nullity as claimed by Future Retail and Reliance Retail and that it was enforceable under Indian laws.

 

Details

  • Amazon’s plea had sought a stay on the deal between Future Retail and Reliance Retail alleging that it would violate the agreement it had with Future Retail.

  • The emergency arbitrator asked Future Retail if it was willing to maintain status quo on their deal with Reliance Retail until the SIAC reached a final conclusion on the matter.

  • Future Retail refused, following which the emergency arbitrator passed an order barring the company from going ahead with the Rs 24,713-crore deal to sell its retail, wholesale, logistics and warehousing units to Reliance Retail.

 

Significance of ruling

  • The Delhi High Court’s order and observation that the emergency arbitrator’s decision to block the deal was not a nullity and it was enforceable in India gives a boost to Amazon’s stand on the issue.

  • Amazon had repeatedly submitted that the deal between Future Retail and Reliance Retail was a violation of an earlier deal that Amazon had signed with the Future Group.

 

Deal with Future group

  • In 2019, Future Retail had signed a Rs 2,000-crore deal for Amazon to acquire 49 percent stake in Future Coupons, the promoter firm of Future Retail.

  • It said the deal also required Future Group to inform Amazon before entering into any sale agreement with third parties.

  • Both Future Retail and Reliance Retail had maintained that the order of the emergency arbitrator was not recognised under Indian laws.

 

Future course

  • The Delhi High Court has for now asked both the parties to not take any further steps until it decides on the plea that it pending before it. 

  • Future has also moved the National Company Law Tribunal (NCLT) seeking approval of its merger with Reliance Retail.