In October 2020 Amazon.com Inc had challenged the two conglomerates Future Group and Reliance Industries in the Singapore Arbitration Forum for being involved in a deal that is obligatory to the terms and conditions that Amazon had with the Future Group.
- The deal was signed and contracted in August 2020. The Arbitration panel granted immediate relief to Amazon by holding off the deal between the giant retail businesses in November 2020.
- In 2019, Amazon had invested a 49% stake in the promoter company of the Future Group which is known as the Future Coupons. After this arrangement and dealing, Amazon holds 3.58% in the Future Group, (7.3% stake is held by Future Coupons in the Future Group).
Amazon’s Petition Intervenes the Deal Between Reliance Retail and Future Group
Amazon had stated that Future Group cannot sell their assets to a list of companies especially Reliance Industries and due to this condition: –
- The deal between the billionaire Mukesh Ambani’s Reliance Industries and Kishore Biyani’s Future Group is Invalid.
- Jeff Bezos, the founder of Amazon.com Inc had been clear- cut about the conditions in the legal contract with the Future Group when his company bought the 49% stake at the Future Group’s private undertakings.
- The debt problem of Kishore Biyani’s Future Retail is one of the reasons for the collapse of his business and why he is more than willing to sell the retail segment of his business.
- The Reliance Group has announced the acquisition of Future Group’s retail business for Rs. 24,713 Crore.
The Result of Transaction Between Future Group and Reliance Retail
- If efficacious transaction between Future Group and Reliance Retail takes place then it will give strength to Reliance Retails in the Indian Market.
- To put an end, to the operation of this transaction between the two massive entities, the e-commerce business, Amazon meddled or they could have faced a downfall in the Indian Market.
- Future Groups Retail business is spread all over India with branches up to 1800 which includes, Easy day, FBB (India’s Fashion Hub), Big Bazar, Food Hall, and Central. These retail chains are spread all over India and if Reliance Industries can win the deal, then in a short time Future Group’s retail will be replaced with Reliance Retail and it will be the strongest business.
Amazon Heads to the Singapore Arbitration Forum Over the Breach of Condition
The Singapore International Arbitration Centre (SIAC) decided a ruling and passed the emergency order on the behalf of Amazon.com Incorporation over the Reliance Retail Deal.
- The reason behind the case being filed in the Singapore Arbitration Centre is another condition of Amazon in the contract with the Future Group.
- According to the condition of Amazon, if there is any dispute between them and the Future Group then it will be taken up in the Singapore Arbitration Centre and not in the Indian Court. The international arbitrator, V.K. Rajah decided to adjourn the deal until the final decision over the dispute is set forth.
- The judgment was in the favor of Amazon and the deal is put on hold between the two establishments.
- The lawyers on behalf of Amazon in the court were Alvin Yeo, Amit Sibal, Gopal Subramanium, and Gourab Banerji.
- Even though in India there is no expressed mechanism to abide by the rulings of International Arbitration. The parties to the suit comply with the rulings on their own and follow them.
- This is the reason why: –
- The spokesperson of Amazon has confirmed the relief approved by the arbitration panel and they are expecting the ruling in their favor as well.
- Amazon has appealed to the financial market regulations to abide by the decision of the arbitration court.
- They have urged market regulators such as Stock Exchange Board of India (SEBI) and Competition Commission of India (CCI) not to accept or agree to the Future Group and Reliance Deal.
Reliance Retail Claims of Being Targeted by the International Retail, Amazon
- Despite the interim order, both the retail businesses Reliance and Future Group have denied obeying the emergency order of the International Arbitrator.
- (RRVL) is prepared to implement the deal with the Future Group without any postponement.
- Even after acknowledging the order by the emergency arbitrator in favor of Amazon, the retail firms are not ready to take a step back and want to complete the deal as according to them Amazon has deliberately invoked the arbitration panel.
- Both the entities also believe the order is not enforceable and binding under the Indian Law. The Arbitration and Conciliation Act, 1996 does not support any provision of implementation and execution of the interim order passed by the International Arbitration Forum.
- (RRVL) advised their legal team to be fully prepared to enter into a deal with Future Retail Limited and to follow the rules and regulations of the Indian Judiciary System, to make the transaction a success.
- The Lawyers for the Future Group, Advocate Harish Salve, and objectified Amazon in the court and highlighted how Amazon has fabricated and falsified the case against their clients.
- Both the companies are following the law and order of the Indian Judiciary and according to it, their agreements related to the dealing of resources and business of Future Group are applicable under the Indian Law.
Reliance Retail Ventures Limited (RRVL) has also urged that, “RRVL works with a motive to enforce its rights and complete the transaction as per the terms and conditions of the agreement with Future group without any DELAY”.
Amazon can file a case in High Court under Section 9 of the Arbitration and Conciliation Act and can be granted interim measures for relief. The Future Group is facing a lot of difficulties due to the retail war between Amazon and Reliance.
The Future Group has also filed a caveat in the Delhi High Court, to pertain any action or an order to not to be passed without giving prior notice to the Future Group. The Future Group is struggling to survive and, in their defense, they have stated that if the deal with Reliance Industries does not take place then there are possibilities of their business to be liquidated and their employees would be out of work.