Delhi HC orders status quo on $3.4 bn Future Group-Reliance Retail deal

The Delhi High Court on Tuesday asked Future Retail Ltd (FRL) to maintain the status quo with respect to its $3.4 billion (about Rs 24,700 crore) deal with Reliance Retail. The court said it was satisfied that an immediate interim order was required to be passed to protect the rights of Amazon.

The development has come as a temporary relief for Jeff Bezos-led e-commerce giant Amazon, which is battling to thwart the Future group’s asset sale to Reliance.

“Hearing Amazon’s plea, the high court has granted an interim relief to Amazon, directing all authorities and parties to maintain the status quo on the deal,” said Salman Waris, managing partner at technology law firm TechLegis Advocates and Solicitors. “The court’s direction effectively means that the deal will be on hold till a final decision in the matter is reached. This was what Amazon had pleaded.”

Amazon, which holds a stake in Future Coupons Pvt. Ltd. (FCPL), alleges that the Future group violated contracts by agreeing to sell its retail assets to rival Reliance Industries last year. Future denies any wrongdoing.

Amazon sought the implementation of the October 25, 2020, order of the HC, seeking an injunction against the Future group founders and other respondents, and also their detention in civil prison.

Amazon’s plea also sought the enforcement of the emergency award restraining the Future group from going ahead with its deal with Reliance Retail. It also wanted the seizure of Future assets for allegedly violating a Singapore arbitration court’s order to temporarily halt the deal.

According to the Delhi High Court order dated February 2, the court is of the prima facia view that the emergency arbitrator is an arbitrator. “The emergency arbitrator has rightly proceeded against respondent no.2; the order dated 25th October 2020 is not a nullity,” according to the documents, seen by Business Standard. “This court is of the view that the order dated 25th October 2020 is appealable under Section 37 of the Arbitration and Conciliation Act…The detailed reasons shall be given in the reserved order.”

The court said the respondents were directed to file an affidavit to place on record the actions taken by them after 25th October, 2020, and the present status of all those actions, within 10 days. All the authorities concerned, it said, were directed to maintain the status quo with respect to all matters in violation of the order dated 25th October, 2020, and should file the status report within 10 days of the receipt of this order.

Reacting to this, an Amazon spokesperson said, “We have the utmost respect for the Indian legal system and appreciate the interim order of the Hon’ble Delhi High Court to uphold the enforceability of the emergency arbitrator’s order and maintain the status quo.”

Earlier, the court had suggested that Amazon and Future Retail should attempt to resolve their differences amicably and out of the court. The court had suggested that the matter could be referred to two retired Supreme Court judges.

On Tuesday, the counsel representing Future Retail informed the court that it would create tremendous confusion to have talks with Amazon and it did not concede to the suggestion.

Senior Advocate Gopal Subramanium, who appeared for Amazon, told the court that it had initiated arbitration before the Singapore International Arbitration Centre and was willing to enter into a purposive dialogue. However, the counsel for Future Coupons said “a lot of water has flown under the bridge”.

In August 2020, the Future group struck a $3.4-billion asset sale deal with RIL. Amazon then sent a legal notice to Future, alleging the retailer’s deal breached an agreement with the American e-commerce firm. In 2019, Amazon had acquired a 49 per cent stake in Future Coupons, the promoter entity of Future Retail, for about Rs 1,500 crore.