New Delhi, October 26, 2020: The Singapore International Arbitration Tribunal on Sunday injuncted Reliance Industries Ltd's acquisition of some Future Group entities for Rs.24,713 crores on a plea for the same by Amazon Inc. Amazon had approached the Tribunal invoking the provision for Interim and Emergency Relief provided for under Rule 30 of the Singapore International Arbitration Centre Rules, 2016.

The Singapore International Arbitration Centre (SIAC) has passed an interim order asking Future Group to put its plans of selling its retail business to Reliance Group on hold and wait for the final judgment on the plea filed by Amazon. Future Group is likely to move Delhi High Court in the next few days challenging the interim order. “Singapore International Arbitration Centre order cannot be enforced in India until ratified by an Indian court,” said a person aware of the development.

The proceedings were presided over by Mr. V.K.Raja, who is also the former Attorney General of Singapore, was appointed as the Emergency Arbitrator to settle the dispute. The Emergency Arbitrator passed an interim award in favour of Amazon, which has injuncted Future Retail and Future Coupons from taking any further steps in respect of the Board Resolution of August 29, 2020 with respect to the transaction with Reliance Industries or its group entities. The Future Group entities have also been injuncted from filing or pursuing any application before any Body or Agency in India with respect to the said Board Resolution.

The award, being interim in nature, was passed as part of private proceedings due to which it has not been made public. Singapore International Arbitration Centre in its order also asked Amazon to submit a proposal within a week, outlining its plans for Future Retail in case the outcome is in its favour. The interim order is valid for 90 days and Singapore International Arbitration Centre will issue its final verdict in this period. No more hearings are expected to take place.

The Respondents are injuncted from taking steps to complete the transaction with entities which are part of the Mukesh Dhirubhai Ambani Group.

Senior Advocate Gopal Subramanium appeared for Amazon and was advised by P&A Law Offices and AZB & Partners.

Senior Advocate Harish Salve appeared for Future Group, and was briefed by Trilegal and Naik & Co.

Breach of Contract

As per Amazon's interpretation of the contract, Future cannot sell any shares to Reliance or any other competitor and that Amazon had the right of first refusal. While the agreement said Amazon has the first right to buy Biyani’s entire holding in Future Retail between three and ten years after the transaction, Future Group was restricted to sell or transfer its assets to third party without the consent of the US company from day one. Amazon claims this this clause was breached.

“In case, Amazon wins the case and decides to exercise its option, it will have to buy promoters’ stake in Future Retail and also trigger an open offer to buy shares from minority shareholders,” said an analyst from a domestic brokerage firm.

In August, Reliance Retail agreed to acquire the retail assets of Future Group in a complex deal which will see the merger of five listed entities, including Future Retail, into Future Enterprises (FEL) that currently houses the group’s retail back-end infrastructure. The retail business will then be transferred to Reliance in a slump sale for nearly Rs 25,000 crore, thus obviating any need for a stake sale. Amazon, like other shareholders of these listed companies, will get shares in FEL, which which will manage consumer goods and insurance business.

SIAC, a non-profit body, provides an alternative method of dispute resolution arising from cross-border transactions involving foreign companies, settling cases privately and confidentially outside the public court system.

Amazon gets interim relief; arbitration panel says Future cannot sell business to Reliance

News Courtesy:PIB | Hindu| DC | LE | LI | LO | IE | LL | PTI |ht | ET | UNI | DNA | FP | Jurist |IndToday|

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