Amazon Vs Reliance, Future-RIL Deal Put On Hold – Free PDF Download

What happened?

• A tribunal in Singapore on Sunday (October 25) evening restrained Future Group and Reliance Industries Limited from proceeding with a Rs 24,713-crore deal signed in August,
• For Future Retail to sell its retail, wholesale, logistics and warehousing units to Reliance Retail and Fashionstyle.
• The emergency order by the Singapore International Arbitration Centre (SIAC) came on a plea from global e-commerce giant Amazon.

What was the plea from amazon?

• 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

Claims made by amazon

• 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.

Why did Amazon approach SIAC for arbitration?

• The arbitral institution administering the arbitration, the applicable rules and the seat of arbitration is decided as per the contractual agreement between the parties.
• In this case Amazon and Future Group have under their agreement agreed to refer their disputes to SIAC, with Singapore presumably being the contractual choice for the seat/place of arbitration.
• Why was an emergency award passed to stop the Future-RIL deal?
• Once a dispute is referred to arbitration pursuant to the agreement between the parties, the process of appointment of the arbitral tribunal takes place.
• Typically, in case of a three member tribunal, both the parties appoint one member each to the tribunal, while the third member is jointly appointed by the two nominees or, if they fail to agree, by SIAC.
• This process takes a certain time to complete.
• However, under the rules of SIAC, parties can move SIAC to appoint an emergency arbitrator to get urgent interim relief, even as the process of appointment of the main arbitral tribunal is underway.
• Accordingly, pursuant to Amazon’s request, an Emergency Arbitrator was appointed by SIAC, who after hearing the parties passed the emergency award.

How the award will be enforced?

• Currently under Indian law, there is no express mechanism for enforcement of the orders of the Emergency Arbitrator.
• Typically, the parties voluntarily comply with the Emergency Award.
• However, if the parties don’t comply with the order voluntarily, then the party which has won the emergency award,
• In this case Amazon, can move the High Court in India under Section 9 of the Arbitration & Conciliation Act, 1996, to get similar reliefs as granted by the Emergency Arbitrator.
• In the past, High Courts in India have passed orders which indirectly enforced the reliefs granted by the Emergency Arbitrator.

Can Future Group challenge the award?

• The Future Group cannot challenge the order passed by the Emergency Arbitrator in India.
• It may either apply before the Emergency Arbitrator itself showing cause why the order should be vacated or modified,
• Or await the constitution of the arbitral tribunal and then apply before the main tribunal.

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