Amazon urges Delhi HC to restrain future-reliance deal

OVERVIEW

• US-based e-commerce giant Amazon, on Thursday, filed a petition against the Future Group urging the Delhi High Court to restrain the Future-Reliance deal from progressing.
• In August 2020, Future Retail (FRL) came into agreement with Reliance Industries to sell its retail, wholesale, logistics, and warehousing to the latter after incurring heavy losses due to COVID-19.
• Amazon has objected to this alliance claiming that Future Retail's deal with Reliance would be a violation of ‘non-compete clause' and ‘right of first refusal' pact signed between the e-commerce giant and FRL signed during their agreement in 2019.
• The Securities & Exchange Board of India (SEBI) on January 20 granted approval to the FRL-RIL deal despite numerous pleas of suspension from Amazon. In its letter of approval, SEBI sent a number of guidelines and conditions in accordance to the Composite Scheme of Arrangement, referring to the apprehensions raised by Amazon.
• Earlier in October 2020, Amazon had also approached the Singapore International Arbitration Centre (SIAC) alleging FRL to have breached the contract by entering into an agreement with the rival RIL. The Emergency Arbitrator (EA) appointed by SIAC concluded the arbitration in the favour of Amazon. 

ISSUE BEFORE DELHI HIGH COURT 

• In its petition under sec. 17 (2) of the Arbitration & Conciliation Act, 1996, Amazon claims the EA award passed under the SIAC Rules to be valid under the Indian law, thus seeking enforcement of the award against Future's Rs 24-713-crore deal with Reliance.
• The petition also alleges that the respondents have not made attempts to challenge and have deliberately disobeyed the EA award despite it being binding on them.
• Senior Advocate Gopal Subramanium, representing Amazon, urged the bench to issue an injunction barring FRL and other respondents to suspend the deal with Reliance.
• He also sought to restrain Future Group from disposing off its retail assets or shares held in FRL without prior written consent of Amazon, claiming that the jurisdiction is in the hands of the EA appointed by SIAC, who has already passed the interim orders.
• He also stated that no action has been initiated by any of the respondents to reverse the emergency award, since they chose not to file an appeal.
• Representing Future Retail, Senior Advocate Darius Khambata contended over the maintainability of the petition and pointed out that under sec. 17 of the Arbitration Act, only the final arbitration tribunal's order can be enforced, and not an emergency. He stated that sec. 17 of the Act only recognises the interim order passed by the arbitral tribunal and no other authority. 

CONCLUSION

• After hearing both sides in a detailed hearing, the single-judge bench of Justice J.R. Midha has now posted the issue for further hearing on Friday. 

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