The emergency arbitrator in the Singapore International Arbitration Centre (SIAC) has said that, in the Amazon-Future dispute, the US-based online retailer has an “apparent right” to be present for any restructuring of Future Retail and the Future Group. The sole arbitrator has mentioned in its summary of the interim ruling that the assets of FRL can’t be compromised without Amazon’s consent. This is as per a report in the Economic Times.
TOI (ET) has reviewed the interim order summary by the SIAC arbitrator V K Rajah, who is also the former attorney general of Singapore. This is part of the interim grant given to Amazon, which approached the SIAC saying Future Group has violated its contract by selling retail assets to Mukesh Ambani’s Reliance Industries in a Rs 24,713-crore deal. So far, Future Group has said the interim order is not enforceable in India besides disagreeing with Amazon’s allegations.
“Notwithstanding the claimant’s (Amazon’s) desire to work with them, the respondents (Future Group) decided to enter into a transaction with a contractually prohibited entity to strip FRL of its core assets. This disregarded their obligation to the claimant,” the interim order said. The order was passed on October 25 and is valid for 90 days. The prohibited entity here refers to Reliance Industries. It added that the respondents have given no good legal reason for eecting the sale of FRL’s retail assets behind the claimant’s back.
The order summary also noted the pandemic had caused unforeseeable diiculties as well as substantial losses for Future Retail and it needed fresh capital. “…but even in these conditions, law expects business persons to honour contractual commitments unless they are legally vitiated or modied,” it added.
The Kishore Biyani-led Future Group has said in a regulatory filing that Future Group is not a party to the agreement under which Amazon had invoked legal proceedings against it and that Amazon’s contention, in this case, is “entirely misconceived”. The interim order observations pointed out economic hardship alone is not a legal ground for disregarding legal obligations.
While Biyani and the Jeff Bezos-led Amazon have locked horns in public over this issue, this is also impacting Future Retail’s store networks with many outlets reportedly seeing empty shelves, while vendor payments are also getting impacted along with the salary of some of its staff.
Mukesh Ambani’s Reliance Industries has said it wants to close the deal formally without any delay. It is not a party to any of the court proceedings yet. Legally, the opinion is divided whether this interim ruling can be enforced on its own or a directive from an Indian court is needed. Both Amazon and Future have led caveats against each other in the Delhi high court to get a hearing, in case either of them le a case against each other.
In another development Amazon’s shareholders’ agreement with Future Coupons had barred not just Reliance Industries but tens of companies including Walmart, Google and Zomato from buying into Future Group’s retail assets. The US ecommerce giant had explicitly named 15 global and local arms including Walmart, Alibaba, Softbank, Google, Naspers, eBay, Target, Paytm, Zomato and Swiggy as parties which cannot buy shares or stake in Future Coupons (FCL), a holding company of Future Group, according to Amazon-Future Retail shareholder agreement submitted to the Singapore arbitration court. In addition, anyone engaged in online or offline retail of either food or non-food in India or globally was barred from buying into FCL.