BackAmazon alerts Sebi to Future-RIL order
Amazon had bought a 49% stake in Future Coupons Pvt. Ltd for ₹1,430 crore in 2019Amazon and Future could be in for a protracted legal tussle if they fail to agree in a week on continuing with the SIAC arbitration
PremiumAmazon.com Inc. has written to the Securities and Exchange Board of India (Sebi) to consider the interim judgement of a Singapore arbitration court barring the Future group’s asset sale to Reliance Retail, two people aware of the matter said. The deal is yet to get approvals from various authorities, including Sebi.
Amazon had bought a 49% stake in Future Coupons Pvt. Ltd for ₹1,430 crore in 2019, on the condition that without its consent, Future and its promoters cannot sell any stake or forge any alliance to 30 retail entities, including Reliance Industries Ltd. On 29 August, Reliance Retail acquired Future’s retail and wholesale assets, prompting Amazon to file an emergency arbitration at the Singapore International Arbitration Centre (Siac). The interim order backed Amazon, restraining Future from going ahead with the ₹24,713 crore sale.
“Technically, since an arbitration is not self-enforceable without the endorsement of a court of law, it will be important that Sebi and other regulators do consider the international arbitral award before clearing the deal, or at least make the deal conditional on the arbitration panel’s clearance or a clearance from a high court or the Supreme Court," one of the two people said on condition of anonymity.
Emails sent to Amazon and Sebi remained unanswered.
“SIAC’s final judgement may take time, and will happen only if Amazon and Future group mutually decide to appoint an arbitration panel and continue with the arbitration proceedings at SIAC. Filing writs in the court, completion of hearings and the court’s judgement may take even more time. Meanwhile, it is important that Sebi or any regulatory authority in India does not give an unconditional green signal to the RIL-Future deal; otherwise the whole arbitration process will become futile. Not only that, in any deal going forward between an Indian and a foreign company, the value of such mutual agreements with non-compete clauses, subjecting agreements to arbitration systems, dispute resolution mechanisms, etc., will become meaningless, which is not desirable for any jurisdiction," the first person added.
Amazon and Future could be in for a protracted legal tussle if they fail to agree in a week on continuing with the SIAC arbitration.
If Future agrees with the interim ruling and pauses the RIL deal, the two entities can mutually decide on the members of the arbitration panel, continue the hearings at SIAC and wait for its judgement. Otherwise, the only option is to approach an Indian court if Future is dissatisfied with the SIAC ruling, or is unwilling to reopen talks with Amazon for bringing in a new investor while calling off the deal with RIL.
Amazon is also exploring which writ jurisdiction to approach in India to enforce the interim arbitration award. It is likely to move this application soon, as the RIL-Future deal is already being scrutinized by the Competition Commission of India (CCI), before it goes to the National Company Law Tribunal (NCLT), said a third person aware of the matter.
“Amazon would need to move fairly quickly and press for a similar interim relief because things are moving on RIL-Future deal even as we speak. Until and unless an Indian court does not issue directions to either RIL or Future on the deal, the arbitration ruling is not enforceable," this person said. The matter would ultimately reach the Supreme Court unless the parties reach a settlement, this person added.
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