Home / Companies / News /  HC spikes FRL plea to terminate arbitration

MUMBAI : The Delhi high court on Tuesday rejected Future Group’s plea seeking termination of proceedings at a Singapore arbitral court, paving the way for its former partner Amazon.com Inc. to press ahead with the arbitration on 28 November.

A Delhi high court bench led by Justice C. Hari Shankar said, “I have not expressed any opinion on the merits of the controversy between the parties and that the arbitral proceedings may continue unimpeded and influenced by any observation contained in this judgement".

On 17 November, the Supreme Court observed that it would not allow stalling of arbitration pending before the Singapore International Arbitration Centre (SIAC) between the US e-commerce giant and Future Group, saying the sanctity of such proceedings needed to be maintained.

“In these circumstances, Future will have to arbitrate in Singapore. They, of course, will challenge this order, but unlikely to find any success," said Sameer Jain, managing partner, PSL Advocates and Solicitors.

Amazon has sought damages from Future Group related to its 2019 investment of 1,400 crore in Future Coupons Pvt. Ltd. The US company has argued that Future violated the terms of the deal by deciding to sell assets to Reliance Industries Ltd. The Singapore arbitrator has backed Amazon’s position.

On 28 June, SIAC rejected a Future Group plea seeking termination of arbitration proceedings. SIAC, in its order, held that it would continue with the arbitration proceedings that began in October 2020 after Future Group proposed to sell its retail, wholesale and logistics assets to Reliance industries for 24,713 crore.

Future Group appealed the SIAC ruling in the Delhi high court.

The deal with Reliance, however, collapsed after India’s most valuable company cut the proposed deal value, prompting the debt-laden Future Group’s lenders to reject the offer. Reliance lowered the deal value after taking control of more than 200 Big Bazaar stores, the most prized assets of Future Group.

In the Delhi high court, Future Retail argued that there was no basis for the tribunal to continue with the arbitration since the approval for the agreement based on which Amazon approached SIAC has been suspended by the Competition Commission of India (CCI).

The antitrust regulator suspended its approval of Amazon’s 2019 deal to buy a stake in Future Coupons, saying Amazon suppressed information while seeking clearances for the deal.

Future Group and Amazon were locked in a bitter battle for over a year following a decision by the Indian retailer to sell its assets to a unit of Reliance Industries Ltd.

Amazon opposed the deal on the grounds that its investment of 1,400 crore in Future Coupons, one of the promoters of Future Retail, does not allow Future to sell retail assets to certain companies, including Reliance.

Currently, Adani, Reliance Industries and several other companies have evinced interest in buying the cash-strapped firm under the Insolvency and Bankruptcy Code.

ABOUT THE AUTHOR

Priyanka Gawande

Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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