January 5: US-based e-commerce giant Amazon.com NV Investment Holdings LLC and Kishore Biyani-founded Future Group are gearing up for the final battle at the Singapore International Arbitration Centre (SIAC) over Future Group’s ₹24,713-crore deal with Asia’s richest man Mukesh Ambani-owned Reliance Industries Ltd. This, as SIAC formed its panel on Tuesday to pass its final judgement on the high-profile arbitration case between Amazon and Future Group.
Two persons directly familiar with Tuesday’s development at SIAC confirmed this, as reported by the Mint.
SIAC, on 25 October, had passed an interim order in favour of Amazon, restraining Future Group from proceeding on the deal.
Amazon has also asked India’s market regulator to restrain Future Group from merging six of its firms, which is a key part of the deal with RIL.
The SIAC arbitration panel is meant to pass the final verdict whether Future Group can go ahead with its mega deal with RIL or not.
“The SIAC Registry has informed parties that the arbitral tribunal has been constituted,” said Alexander Kwiatkowski, Amazon’s spokesperson for Asia Pacific.
Amazon, on 5 October, had filed an arbitration case against Future Group for deciding to forge an alliance with RIL to sell Future Group’s retail, wholesale and logistics business without Amazon’s consent, which was required according to an agreement signed between Future Group and Amazon in August 2019.
“Veteran barrister Michael Hwang has been appointed as the judge for the tribunal in the Amazon-Future case,” said the first person aware of the development, the Mint reported.
There will be two members in the arbitration panel when the case will come up for hearing in the next few weeks, according to the first person.
Albert Jan van den Berg, a founding partner of law firm Hanotiau and Van de Berg and Jan Paulsson, a Swedish arbitration veteran and founding partner of Three Crowns LLP are the two members of the arbitration panel.
“Albert Jan Van Den Berg has been appointed by Amazon, while Paulsson has been shortlisted by the Future Group as the members of the tribunal,” said the first person.
Hwang is a former judicial commissioner of the Supreme Court of Singapore.
SIAC’s final verdict will be key to the RIL-Future deal since the Delhi Court recently judged that Future Group and Amazon should approach competent regulators or authorities and go by their judgement.
While an interim order by SIAC restrained Future Group from taking any step towards the proposed deal with RIL, the SIAC tribunal may dismiss this interim order and judge in favour of Future Group since the Delhi High Court has mentioned in its order that Amazon would be in breach of India’s FDI norms if it intervenes in the deal between Future Retail Ltd. and RIL since Amazon doesn’t own control of FRL and has not taken the government’s approval to control FRL.
India’s FDI norms allow 51% holding by a foreign entity in a multi-brand retail firm such as FRL, but Amazon did not take the government’s permission for acquiring control over FRL. However, the agreement between Amazon and Future Group, which was signed in August 2019, states that Future Group cannot forge an alliance in the retail space with RIL without Amazon’s prior consent.
Amazon and Future Group are entangled in a bitter legal battle that is intensifying fast in the wake of an increased competition among some of the largest retailers in the world to capture a market share in India’s thriving retail and e-commerce space.
And therefore, SIAC’s final ruling will be crucial for Amazon.
A favourable verdict will help Amazon continue to serve its Indian retail customers seamlessly since Future Group will have to keep providing goods ordered by customers on Amazon’s marketplace through digital applications.
A judgement against Amazon will make the e-commerce battle tough for Amazon since it will have to compete with an already-grown Indian retail giant RIL.
In fact to stall the RIL-Future deal Amazon has written five letters to the Securities and Exchange Board of India or Sebi.
In its latest letter on 21 December, Amazon has asked Sebi to stop the amalgamation of Future Group companies, for which both BSE and NSE have given NOCs recently.
The Delhi High Court, on 21 December passed an order, declining Future Group’s plea for an interim injunction to stop Amazon from approaching regulators on the RIL-Future deal.
FRL has argued before the court that SIAC’s ruling is not legally enforceable in India.
Future Retail Ltd. had prayed before Delhi High Court for an interim injunction restraining Amazon from interfering in the RIL-Future deal. The Court has declined to grant this injunction.
“The Delhi High Court has held that the interim award is valid under Indian law…The Delhi High Court has also made it clear that no observations were passed with respect to the merits of the interim award. Consequently, all findings contained in the interim award, including the finding that FRL is a necessary and proper party to the arbitration proceedings, continue to be valid. The arbitration proceedings thus continue, including against FRL,” said the Amazon letter.
On 29 August, RIL signed an agreement with Kishore Biyani’s Future Group to buy out the retail, wholesale, logistics and warehousing businesses from Future Group companies for ₹24,713 crore. Following this, Future Group has approached stock exchanges and Sebi for an approval on a draft scheme of arrangement entailing merger of six Future Group firms into its flagship Future Enterprises Ltd.