The lawyer for e-commerce giant Amazon on Friday told the Delhi High Court that the submissions by the legal counsel of Future Retail (FRL) are flawed because they overlook the premises of arbitration law. The counsel contended that arbitration is founded on the consent of parties and hence an agreement.
The Delhi High Court is hearing Future Retail's suit related to its deal with Reliance. It was recently halted by an Emergency Arbitrator of the Singapore International Arbitration Centre (SIAC) in favour of Amazon. The arguments from the legal counsels of the companies continued on the fifth day. The matter was heard by Justice Mukta Gupta. The arguments were heard in interim application and the judgment is reserved, according to the information available on law platform Bar & Bench. Parties can file written submissions by Monday, November 23.
Amazon, which was represented by senior advocate Gopal Subramanium on Friday, told the court that the (arbitration) agreement contemplates party autonomy. Parties can choose what are going to be the rules of engagement. The rules of engagement can vary but parties can still choose. “What have the parties chosen here? They have chosen SIAC Rules,” said Subramanium, according to Bar & Bench. “If parties agree to SIAC rules, the implication is that they agree to the entire gamut of the rules,” he said.
He contended that the SIAC rules themselves contemplate an Emergency Arbitrator. That contemplation in the rules by virtue of on provision in law becomes a sacred agreement between the parties. Words of the arbitration agreement will have rules of engagement as part of itself. He said the argument of inherent lack of jurisdiction is thus flawed.
He asked what is the fact needed here for an Emergency Arbitrator? It is consent, agreement. All Arbitrations are founded on consent. When consent exists, Subramanian said, there cannot be an inherent lack of jurisdiction.
He said there is a third principle which was overlooked. It applies to courts and arbitrators. Courts and arbitrators can determine their own jurisdiction. He said, to claim the award is a nullity because there is an inherent lack of jurisdiction is contrary to Part I (Arbitration Act) and the SIAC Rules. To say that emergency arbitration is foreign to Part I is completely misconceived.
In August, Kishore Biyani-headed retail conglomerate Future Group struck a Rs 24,713-crore asset sale deal with Mukesh-Ambani led Reliance Industries Ltd (RIL). Jeff Bezos-led Amazon then sent a legal notice to Future, alleging the retailer’s deal breached an agreement with the American e-commerce giant.
This was because last year, Amazon had bought a 49 per cent stake in one of Future’s unlisted firms Future Coupons Pvt Ltd (FCPL) for Rs 1,430 crore.
Subramanium argued that there was an agreement between the parties which was consciously made. FCPL is a wholesale company dealing with coupons and gift vouchers. It had some relation with FRL.
Asking who was in control of Future, he said the Emergency Arbitrator found that (the) moving spirit is the Biyanis, whether it is FRL, or FCPL.
The rights which were guaranteed to Amazon under the agreement included that it will not sell the assets to a restricted person (Reliance).
Subramanium also referred to Part I of the Arbitration Act and read the definition of "arbitration agreement.” He said an Emergency Arbitrator by consent of parties can be a sole arbitrator. He argued if in an arbitration agreement, the parties agree to an emergency agreement, there is no inherent lack of jurisdiction.
“After having failed there, they (Future) are here,” said Subramanium, according to Bar & Bench. “The suit is filed after the award was rendered.” He said Future consciously appeared before the Emergency Arbitrator.
He said the law contemplates that even an interim order, even by the emergency Arbitrator, will have the efficacy of the court. He said the entire argument of inherent lack of jurisdiction is completely unfounded. To say at Amazon is not interested in sustaining FRL. Subramanium said is contrary to the record. The Emergency Arbitrator after examining all correspondence said that Amazon was interested in finding a solution.
Subramanium said Amazon has invested $6.5 billion all over India. Some comments were made which were misplaced. “What was being argued (was) that it was some greedy entity. We created 900,000 jobs,” said Subramanium, according to Bar & Bench. He also said that the rhetoric should be kept aside on Amazon being called "East India Company."
It was also being projected that FRL is a listed company and it doesn't matter where the money is coming from, is not correct, according to Subramanium. Earlier arguments were made Amazon did not have the capacity to invest anymore and FRL needed to be saved, but Amazon was genuinely finding a solution. “We were the ones attempting to help,” said Subramanium. “We introduced Samara, an investor. A term sheet was offered to solve the problems.”
He said promoters made Amazon believe that they are interested in Samara but it got to know that they have chosen to go with a restricted person (Reliance).
Senior advocate Vikram Nankani for FCPL told the court that there were certain factual corrections and it has challenged the jurisdiction of the emergency Arbitrator.
Future Retail which was represented by senior advocate Harish Salve told the court the award (by Singapore Arbitrator) has no existence in Indian law. He argued that Amazon has no right to control any voting in FRL. Its representations are false and need to be injuncted.
“Today the endeavour of East India Company is against the competition,” said Salve. He said Amazon has an agreement with FCPL. The obligation of the promoter (Biyanis) to Amazon cannot be attributed to the company (FRL).
“For me, FRL has not received a dollar from you (Amazon). I got it from FCPL and it has no objection. You can scream at Biyanis,” said Salve.