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The Future Group will not be challenging the interim ruling passed by the Singapore International Arbitration Centre’s (SIAC) putting its deal with Reliance on hold, sources aware of the development said. Amazon, on Sunday, won an interim ruling in its favour after it filed a legal case with the SIAC against the sale of Future Group’s retail and wholesale business to Reliance Industries.
Reports on Tuesday suggested that Future Group is likely to approach Delhi High Court against the SIAC verdict. These plans too, have been put on hold, industry sources said.
“The SIAC verdict is not directly enforceable on Future Retail and needs to be ratified by an Indian court, which Amazon will now have to do. So meanwhile, Future Group and Reliance can continue with their deal,” the source said.
However, legal consultations are still on-going on the way forward. The SIAC too, is yet to deliver its final judgement.
Two months after Future Group announced that Reliance Retail will be buying its retail, wholesale and logistics business in a slump sale for Rs 24,713 crore, Amazon filed an arbitration petition in SIAC in the beginning of October objecting to the deal, alleging that the deal breached the terms of its deal with Future Coupons.
In August 2019, Amazon bought 49% stake in Future Group’s unlisted firm Future Coupons, giving it an indirect stake of 3.6% in Future Retail. The deal also stated that three years from the deal (2022 onwards), Amazon has a ‘call option’ to buy a partial or controlling stake in Future Retail, subject to the foreign direct investment (FDI) norms at the time.
Amazon argued that the deal violates the non-compete agreement it signed with Future Group, where it listed around 30 companies including Reliance with whom Future Group cannot enter into a share-sale agreement without its consent. It also argued that its consent wasn’t taken before entering into a deal with Reliance and that it is willing to help Future Group by bringing in investors for its retail business.
The SIAC, in its ruling, reportedly said that Future Group has given no sound legal reasons as to why it went ahead with the Reliance deal behind Amazon’s back, ‘gravely compromising its interests’.
While Future Group argued that Future Retail is likely to go into liquidation if the deal with Reliance doesn’t go through, putting jobs and livelihoods of over 29,000 employees at risk.
To this, SIAC reportedly said in its order that while Future Retail’s future seems unstable without fresh funds, the law expects businesspersons to honour contractual commitments ‘unless they have been legally vitiated or modified’.
Future Group, on its part, said in a statement on Monday that Future Retail is not a party to the arbitration proceedings since Amazon’s deal was signed with Future Coupons.
“Accordingly, this 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,” the statement added.
Reliance too, has said that signed a deal with Future Retail under proper legal advice and that its 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.