SIAC ruling in Future group-Reliance retail dealDate: 26 October 2021 Tags: miscellaneous
The stay imposed on the Future Retail-Reliance Retail deal has been sustained, the Singapore International Arbitration Centre (SIAC) has ruled.
Amazon had petitioned that Future Retail and Reliance Retail was a violation of its “contractual rights”.
The Supreme Court of India had also ruled that emergency arbitrator was right in putting an interim hold on the Future Retail-Reliance Retail deal.
The ruling will further delay the possible merger of Future Retail-Reliance Retail in future. It is expected to create another stumbling block.
The SC jurisdiction
The SC had refused to strike down an emergency order of SIAC as the award can be within the Arbitration Act. This would de-congest civil courts.
Amazon’s opposition to the deal
Amazon had signed a deal with the subsidiary of Future Retail, Future Coupons in 2019. Amazon had acquired 49% stake in Future coupons under the deal.
The deal enabled Future Retail to sell its products on Amazon’s e-market. A call option was also included in the deal.
The call clause allowed Amazon the option to acquire all or part of Future Retail’s shareholding in the firm within 3-10 years of the agreement.
The deal with Reliance Retail
Future Retail had signed a deal with Reliance Retail to sell its retail, wholesale, logistics and warehousing units for Rs 24,713 crore.
Amazon objected to the deal citing violation of the “contractual rights” it had with Future Coupons.
Future Retail had argued that it was not selling its stakes in the company but was only selling assets, which was not a violation of its deal with Amazon.
The concept of international arbitration and orders issued by tribunals are usually not recognised by Indian courts. However, business houses respect such orders.