Kishore Biyani-led Future Retail on Monday hinted that it may challenge the arbitration award from the Singapore-based arbitration center before Indian legal forums, to ensure that its Rs 24,713 crore deal proceeds unhindered and without any delay. Amazon.com Inc on Sunday won an interim award against its partner Future Group selling retail business to Reliance Industries Ltd for Rs 24,713 crore after a Singapore-based single-judge arbitration panel put the deal on hold.
Future Retail Ltd (FRL) in a statement on Monday said the company is examining the interim order passed by the Singapore International Arbitration Center (SIAC) in the arbitration proceedings invoked by Amazon under a shareholders’ agreement with the promoters of Future group. FRL, which operates retail chains as Big Bazar and Easy Day said it is not a party to the agreement under which Amazon has invoked arbitration proceedings and the deal cannot be held back through the arbitration process.
”FRL has been legally advised that actions taken by the FRL/its board, which are in full compliance of the relevant agreements and eminently in the interest of all stakeholders cannot be held back in arbitration proceedings initiated under an agreement to which FRL is not a party,” the FRL statement said. 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.
”Accordingly, this order will have to be tested under the provisions of Indian Arbitration Act in an appropriate forum,” said FRL adding ”in any enforcement proceedings, FRL would take appropriate steps to ensure that the proposed transaction will proceed unhindered without any delay”. Passing an interim award in favour of Amazon, V K Rajah asked the Future group to put the deal on hold and said that the deal cannot go through until it finally decides the matter, sources with direct knowledge of the development said.
Amazon, which had agreed to purchase 49 per cent of one of Future’s unlisted firms last year with the right to buy into flagship Future Retail Ltd after a period of three years to 10 years, had dragged Future to arbitration after the indebted Kishore Biyani group firm signed pact to sell retail, wholesale, logistics and warehousing units to Mukesh Ambani’s Reliance. ”We welcome the award of the Emergency Arbitrator. We are grateful for the order which grants all the reliefs that were sought. We remain committed to an expeditious conclusion of the arbitration process,” Amazon spokesperson had said on Saturday.
Amazon believes Future Group violated the contract by entering into the deal with rival Reliance. The deal would have helped Reliance almost double its footprint as India’s largest retailer.
Meanwhile, RIL retail arm Reliance Retail Ventures Limited (RRVL) has said it intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay. ”RRVL has entered into the transaction for acquisition of assets and business of Future Retail Limited 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,” RRVL said.
With the dispute, Amazon is drawing the battle lines with Reliance in the race for India’s estimated USD 1 trillion retail market, where online shopping is gaining ground. It needs the Indian partner to strengthen its foothold after becoming the authorized online sales channel for Future Retail’s stores that sell everything from groceries to cosmetics and apparel. Amazon has slapped a legal notice on Future Group, alleging that the retailer’s Rs 24,713 crore asset sale to Reliance Industries violated an agreement with the e-commerce giant and dragged the Future group firm into arbitration.
Earlier on August 29, 2020, the Future group had announced sale of its retail, wholesale and logistic etc to Reliance Retail Ventures Limited, the retail arm of the Reliance Industries. Amazon, last year, had bought a 49 per cent stake in one of Future’s unlisted firms, Future Coupons Ltd, with the right to buy into flagship Future Retail after a period between three and 10 years. Future Coupons owns a 7.3 per cent stake in Future Retail.
The tussle between Future and Amazon comes at a time when Reliance has been bolstering its position in the country’s retail segment. Reliance Retail Ventures Ltd – run by India’s richest man Mukesh Ambani – has been on a fund-raising spree and since September, it has raised Rs 37,710 crore by selling stake in its retail arm.
RRVL, operates India’s largest, fastest-growing and most profitable retail business spanning supermarkets, consumer electronics chain stores, cash and carry wholesale business, fast-fashion outlets and online grocery store JioMart.
Disclaimer: News18.com is part of Network18 Media & Investment Limited which is owned by Reliance Industries Limited