SIAC rules for Amazon in Future case, awards ₹23.7 crore damages

Amazon wins arbitration against Future Group at SIAC, but tribunal awards a fraction of claimed damages citing FRL's declining value and Covid-related business loss

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The Singapore International Arbitration Centre (SIAC) has awarded ₹23.7 crore in damages, besides arbitration and litigation costs, to Amazon in its long-running dispute with the Kishore Biyani-led Future Group.

 

The three-member bench of the tribunal held that Future Group had breached the terms of its contract with Amazon by entering into a transaction with Reliance. It also told 11 promoters and parties of the Future Group, including Kishore Biyani, to pay the amount along with interest from March 9, 2022 till now.

 

The dispute pertains to a decision by the Future Group to sell its Big Bazaar retail business to Reliance Retail, a subsidiary of Reliance Industries.

 

Amazon had in 2022 argued before the Supreme Court of India that its ₹1,400-crore investment in the Future Group does not allow the latter to sell its assets to certain companies, which includes Reliance.

 

Amazon had, however, sought ₹1,436 crore damages, citing Future Retail Limited's (FRL) “deteriorating value.”

 

SIAC ruled that Amazon was entitled to damages due to promoters' breaches of the Future Coupons Private Limited (FCPL) shareholders agreement, but rejected ₹1,436 crore damages sought by Amazon. 

 

The tribunal reasoned that though all contractual obligations were fulfilled by Amazon, it would not have recovered its entire investment due to FRL'S deteriorating business value.

 

The tribunal said awarding Amazon damages in full would unfairly shield it from commercial loss it was bound to incur due to the Covid-19 pandemic and the deteriorating value of FRL.

 

Amazon was awarded ₹77.3 crore and Singapore dollars 68,550 as litigation cost.

 

In August 2020, Future Group, facing financial distress and debts of around ₹22,000 crore decided to sell its wholesale, logistics, and warehousing business to Reliance Industries for ₹24,713 crore. Amazon objected to this citing violation of their contractual obligations.

 

Amazon then started arbitration proceedings against Future Group in October 2020, obtaining an emergency arbitration award pausing the Future-Reliance deal.

 

Amazon and Future Group both took the matter to the Delhi High Court, Supreme Court of India, and the National Company Law Appellate Tribunal to resolve the issue.

 

The Competition Commission of India (CCI) had also imposed a fine of ₹200 crore on Amazon for non-disclosure of information on combinations under the Competition Act 2002.

 

Amazon had then moved the Supreme Court against the CCI ruling suspending approval for the ecommerce giant's 2019 deal investment in Future Group on January 10, 2023.