New Delhi: Future Retail’s $3.4 billion plan to sell its retail businesses was constrained by an arbitrator’s ruling that placed the transaction on hold, the Supreme Court decided today. The court held an aligning view with the decision of the Singapore arbitration in favour of Amazon. This will act as a major setback for Reliance –Future Retail deal.
Amazon and Future were involved in a court dispute over the purchase, with Amazon accusing Future of breaching pre-existing agreements when it transferred its assets to rival Reliance Industries. Future has vehemently denied any misconduct on their part. The Supreme Court ruled that Singapore’s Emergency Arbitrator (EA) issued a stop-work order in October was valid in India.
Although the word EA is not used in Indian arbitration legislation, a bench of Justices R F Nariman decided that an award of an EA of a foreign nation is applicable in Indian Scenario following the interpretation of the Arbitration Act.
Arbitration is dealt with under the Arbitration and Conciliation Act in India. Under Section 17 (1), the Emergency Arbitrator is applied, and the enforceability of the same is dealt with under Section 17(2).
Future contended that the order was not binding, while Amazon argued that it was. Amazon filed a petition with the Delhi High Court, requesting that the arbitrator’s judgment be upheld. The single judge court issued a stay of proceedings, instructed that Future’s Kishore Biyani’s assets be confiscated, and questioned why he should not be sentenced to three months in prison. The single judge ruling that had essentially halted the sale was delayed in February by a larger Delhi High Court panel. Amazon then went to the Supreme Court for help.
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Amazon contended that the Delhi High Court’s ruling was “illegal” and “arbitrary” and that if the Supreme Court did not interfere, the business, which has invested $6.5 billion in India, would suffer “irreparable loss.” Previously, on February 22, the Supreme Court postponed a final decision by a tribunal investigating Future Group’s $3.4 billion sales of retail assets until the Court heard Amazon’s concerns.
The Supreme Court had reserved its decision in Amazon’s appeal against a Delhi High Court ruling suspending an earlier order mandating the seizure of Future Group firms’ properties on July 29. However, reacting to top court rulings, Future spokesman said that they will appeal with a special leave application in Supreme Court against Delhi Court’s March order.
