Delhi HC issues notice to Future, RIL retail arms on Amazon's plea

The Court issued a notice in the matter and listed it for further hearing on February 12

Jeff Bezos-led Amazon is leading the battle with Kishore Biyani-headed Future Group on multiple fronts related to the retail conglomerate’s $3.4-billion deal with Reliance. The Delhi High Court (HC) on Wednesday served a notice on Future Retail (FRL), Reliance Retail, and the Biyanis, seeking their views on a plea by Amazon against some of the observations by a single judge Bench in a December 21, 2020, interim order.

The court sought FRL’s response on Amazon’s plea challenging the prima-facie observations by a single judge Bench that the e-commerce giant’s attempt to control the Indian company was violative of the Foreign Exchange Management Act and foreign direct investment rules.

A division Bench of Chief Justice D N Patel and Justice Jyoti Singh heard the appeal. They have granted time to FRL, Reliance Retail, and other respondents to file their response to the appeal. The appeal is directed against the December 21, 2020, order passed by a single judge Bench.

Amazon has sought setting aside of the observations since they have a bearing on its case in arbitration proceedings that were initiated before the Singapore International Arbitration Centre (SIAC).

Amazon, which was represented by senior advocate Gopal Subramanium, submitted that after the single judge concluded in favour of the validity of the emergency award (EA), the suit filed by FRL could not have been held to be maintainable. 

He said FRL was heard by an emergency arbitrator who came to the conclusion that FRL was a necessary and proper party to the arbitration, according to the law platform Bar & Bench.

In response, senior advocate Harish Salve, counsel for FRL, said: “We have a serious objection. At least now Amazon is acknowledging that the matter went against it.”

Amazon in its appeal in Delhi HC contended that the single judge passed the impugned order on December 21, 2020, refusing to grant any interim relief to FRL. It said the single judge further correctly upheld the validity of the EA. However, having held that the EA order was valid and after noting that the merits of the EA were not being challenged, the single judge made certain prima-facie observations, which were inconsistent with the findings contained in the EA order. In the appeal, Amazon also said the prima-facie observations contained in the impugned order effectively resulted in allowing FRL to collaterally bypass the EA.

The court has issued notice in the matter and listed it for further hearing on February 12.

In August 2020, Future Group struck a $3.4-billion asset sale deal with Reliance Industries (RIL). Amazon then sent a legal notice to Future, alleging the retailer’s deal breached an agreement with the American e-commerce giant.

In December 2020, the Delhi HC refused to restrain Amazon from interfering in FRL’s deal with Reliance Retail by writing to the statutory authorities. The order was pronounced by a single judge Bench in the suit by FRL after an EA of the SIAC restrained Future Group from taking any steps in furtherance of the transaction with Reliance Retail.

The Delhi HC, prima facie, found that the suit filed by FRL was maintainable, the EA was valid, and that FRL’s resolution approving the transaction with Reliance was also valid. The court opined that it was ‘a matter of trial’ to determine whether Amazon’s case outweighed FRL’s claim and for now, it was for the statutory authorities (or) regulators to come to their own right conclusion.

In other development, the next phase of arbitration proceedings between Amazon and Future Group is expected to begin soon in Singapore. Singaporean barrister Michael Hwang has joined the three-member arbitration tribunal at the SIAC that is looking into the Amazon and Future Group dispute over the latter’s $3.4-billion deal with RIL. The other two members of the tribunal include Albert van den Berg and Jan Paulsson — they were proposed by Amazon and Future, respectively.

Legal expert Gopal Jain, senior advocate, Supreme Court, said under Indian law, when there is an arbitration agreement between the parties, disputes arising under the contract have to be settled through arbitration. 

“If parties have prescribed institutional arbitration, it will be decided under the aegis of that institution,” said Jain, adding, “If a party raises a dispute which is arbitrable, then under Section 8 of the Act, on an application, the court has the power to refer the subject to arbitration and can play a supportive and facultative role. This will be in line with the contractually agreed dispute resolution mechanism.”

K Narasimhan, advocate, Madras HC, said the court agreeing to hear the matter is a positive step for the Indian Arbitration Act itself. 

“The ruling in this matter will play a role in enforcing belief in arbitration as a chosen mode of redress,” said Narasimhan, adding, “In cases like these, the court’s directive for the parties is to go to an arbitrator if that has been agreed as part of the contract.”