Amazon Sends Legal Notice On Reliance-Future Deal

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What’s the matter?

Ecommerce giant Amazon has sent a legal notice to Kishore Biyani’s Future Group.
The notice has been sent to Future Coupons, a subsidiary of Future Group.

Last year, Amazon acquired a 49% stake in Future Coupons, a group entity owned by Future Group’s retail business.
The deal gave Amazon a 58% stake in Future Retail

In August this year, Reliance Retail agreed to acquire the retail assets of Future Group in a deal,
Which will see the merger of five listed entities, including Future Retail, into Future Enterprises (FEL).

Amazon claims that as per the contract between the ecommerce major and Future Group,
The latter cannot sell any shares to Reliance or any other competitor.
It has raised objections to Future Coupons not seeking approval from it,
Even when the US company had the first right for any stake sale that Future Retail might initiate.
Amazon claims that a clause between Future Group and Amazon clearly stated that-
Future Group could not sell any asset within 10 years of the deal with Amazon.

Amazon has approached the Singapore International Arbitration Centre (SIAC),
Claiming that Future Group has violated the contract under which the US-based e-commerce major took a stake in its subsidiary.
Thus it is asking for the deal with Reliance Industries Ltd to buy the Indian firm’s retail assets to be halted.
Amazon has also written to the stock exchanges and stock market regulator.

Sources close to the Biyani family said that the legal notice has come as a surprise.
“Everything was discussed with Amazon before signing the deal with Reliance.
There was no objection raised all this while.
It is surprising to get a legal notice more than a month after the Reliance deal was announced.”

The acquisition of the retail business of Future Group has helped Reliance Retail emerge as one of the biggest competitors to Amazon and Flipkart in India.

The legal notice by Amazon could delay the closure of the Future-Reliance deal.
This could be detrimental for the Future group entities, as they have already defaulted on payments more than five times over the last one month.

Q) Which of the following statements regarding Singapore International Arbitration Centre (SIAC) is correct?

SIAC is a global arbitral institution established in 1991.
It is a not-for-profit organisation.
In 2013, SIAC established its first overseas representative office in Mumbai.
1 only
2 & 3 only
1 & 3 only
All of the above