Future Group is likely to challenge the interim order passed by the Singapore International Arbitration Centre (SIAC), which directed for its deal with Reliance Retail to be put on hold. Amazon won a favourable ruling in the arbitration case it filed opposing Reliance Retail’s acquisition of Future Group’s retail and wholesale businesses.
In a statement, the Future Group said that Future Retail has received a communication from SIAC on the interim order and is examining the same. Future Retail said that it is not party to the agreement under which Amazon has invoked arbitration proceedings. The Future Group is a party.
In August 2019, Amazon acquired a 49% stake in Future Coupons, an unlisted firm of Future Group. The deal gave Amazon the right to buy a minority or controlling stake in Future Retail, starting three years from the deal, up to 10 years, subject to prevalent FDI norms. Future Coupons holds 7.3% stake in Future Retail. It is pertinent to note that current FDI norms do not allow Amazon to buy a direct stake in Future Retail.
Future Retail further added in a regulatory disclosure on Monday that it has been legally advised that its deal with Reliance ‘cannot be held back in arbitration proceedings initiated under an agreement to which FRL is not a party’.
“As per the advice received by FRL, all relevant agreements are governed by Indian Law and provisions of Indian Arbitration Act for all intents and purposes and this matter raises several fundamental jurisdictional issues which go to the root of the matter,” the company said.
It added that the order will have to be tested under the provisions of Indian Arbitration Act in an appropriate forum. “In any enforcement proceedings, FRL would take appropriate steps to ensure that the proposed transaction will proceed unhindered without any delay,” it added.
Industry sources say that Future Group is likely to decide on the exact course of action on Monday, which will see the battle lines being drawn between Amazon and the country’s largest retailers.
Reliance Retail also said that it has been informed of the interim order and said that it entered into a deal with Future Retail under proper legal advice and the rights and obligations are fully enforceable under Indian Law.
“RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay,” the company said in a statement.
Reliance Retail Ventures announced in August 2020 that it would be buying the retail, wholesale, logistics and warehousing business of Future Group as going concerns on a slump sale basis for a lumpsum aggregate amount of Rs 24,713 crore. This deal would undisputedly make Reliance Retail the largest retailer in the country.
Following this, Amazon sent a legal notice to Future Group at the beginning of October over the deal, saying that it breaches the non-compete agreement with Future Group. It then initiated arbitration proceedings against the company in Singapore. The matter was heard by a single arbitrator VK Rajah, the former Attorney General of Singapore.
On Sunday, the SIAC ruled in favour of Amazon through an interim award asking Future Group to put the deal on hold until it finally decides the matter.