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Amazon (Gopal Subramanium) vs. Reliance/Future Group (Harish Salve): An Inriguing Battle of Market Share & Nerves

All of us are aware of the much talked about announcement of the acquisition of the Kishor Biyani's Future Group Retail Business including Big Bazar by the Mukesh Ambani's Reliance Industries (RIL) for a consideration of Rs. 24,713 crores. 

However, subsequent to the announcement of this Reliance-Future Group deal, a lot of interesting developments, both in domestic front and in international front have taken place, which may not be known to many. So, it will really be worthwhile to know about the subsequent interesting and intriguing developments concerning this deal.

Jeff Bezos' Amazon, Reliance Jio Mart and Walmart Inc's Flipkart are in a battle to gain market share in India, where millions of middle-class customers are newly adopting online purchases of food and groceries due to the Covid-19 pandemic. The booming e-commerce market in the country will be worth $86 billion by 2024, according to research firm Forrester.

Just after the announcement of this Reliance-Future Group deal, Amazon had moved the Singapore International Arbitration Centre (SIAC) arguing that Future Group had breached their contract. Amazon, in 2019, 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 3 and 10 years. Future Coupons owns a 7.3 per cent stake in Future Retail.

On October 25, the SIAC, in an Emergency Arbitrartion (EA) hearing, has passed an interim award in favour of Amazon, with a single-judge bench of V K Rajah, barring Future Retail from taking any step to dispose of or encumber its assets or issuing any securities to secure any funding from a restricted party.

While this interim order of SIAC has put the Reliance-Future Group Merger on hold, the matter will continue to be heard at SIAC before the sole arbitrator, former Attorney General of Singapore, comes to a final decision. The arbitration proceedings could go on for several weeks, before a final order comes on this matter. This could also have an adverse impact on banks who have lent to the Future Retail Group (FRL), on account of their loans to FRL turning into Non-Performing Assets (NPAs), owing to the Singapore Arbitrartion proceedings delaying the said merger.

Persuant to the passing of this Interim Order by SIAC, Amazon has also wrote to the market regulator Sebi and stock exchanges, urging them to take into consideration the Singapore Arbitrator's interim judgement.

On November 1, 2020, the Future Retail Ltd (FRL) made a filing to the exchanges saying that the Singapore arbitrator's interim order against its deal with RIL is "not binding", and any attempt to enforce it will be "resisted".

On November 7,2020, the Future Retail Limited (FRL) has approached the Delhi High Court seeking relief against the said SIAC stay order on ₹24,713 cr-deal with Reliance Industries.

The Future Group firm has contended that Amazon is "misusing" the interim order passed by an emergency arbitrator of the Singapore International Arbitration Centre (SIAC) on 25 October, 2020 and in its Sock Exchange Filing has asserted that:

"Please note that the Company has filed necessary suit in the Hon’ble Delhi High Court on 7th November, 2020 in relation to seeking necessary reliefs against Amazon.com NV Investment Holdings LLC (“Amazon") from interfering with the Transaction by misusing an Interim Order dated 25th October, 2020 issued by an Emergency Arbitrator, appointed by the Singapore International Arbitration Centre (SIAC). The interim Order dated 25th October, 2020 is passed in an arbitration proceeding initiated by Amazon inter-alia against the Company under an Agreement, wherein the Company is not a party to the Agreement."

Questioning the validity of the SIAC's Interim Order dated 25.10.2020, the Future Retail Ltd (FRL) has said that:

"The EA (Emergency Arbitrator) order is not enforceable under the provisions of the Arbitration and Conciliation Act, 1996 and is not binding on FRL. Any attempt on the part of Amazon to enforce the EA Order shall be resisted by FRL to the fullest extent available under Indian law. FRL is also in the process of taking appropriate legal action to protect its rights," the filing said."

FRL has further argued that "an Emergency Arbitrator has no legal status" under Part I of the Indian Arbitration and Conciliation Act 1996 and therefore, the proceedings are "void and Coram non judice".

Sh. Gopal Subramanium, the former Soliciter General of India, is one of the lead legal counsels of Amazon among others and Sh. Harish Salve is representing the Future Retail Group in this matter.

So, it will be interesting to see how this intriguing and fierce battle of market share and nerves between Amazon (Gopal Subramanium) vs. Reliance/Future Group (Harish Salve), will eventually unfolds.