Amazon claims that a clause in the contract between Future Group and Amazon clearly stated that Future Group could not sell any asset within 10 years of the deal with Amazon
Bengaluru/Mumbai: Amazon Inc. has approached the Singapore International Arbitration Centre (SIAC), claiming that Future Group has violated the contract under which the US-based e-commerce major took a stake in its subsidiary, and is asking for the deal with Reliance Industries Ltd to buy the Indian firm’s retail assets to be halted.
SIAC is a non-profit that offers an alternative dispute resolution process arising from cross-border transactions.
Amazon agreed to purchase 49% of one of Future’s unlisted firm Future Coupons last year, with the right to buy into flagship Future Retail Ltd. This right is exercisable between the third and the 10th year after the purchase.
Amazon has also sent a legal notice to Kishore Biyani-led Future Group over its ₹24,700-crore asset sale to Reliance Retail Ventures Ltd, calling it a breach of a 2019 agreement between Amazon and Future, and has written to the stock exchanges and stock market regulator, Mint reported on Wednesday.
“We have initiated steps to enforce our contractual rights. As the matter is sub-judice, we can’t provide details," said an Amazon spokesperson on approaching SIAC.
A person familiar with the development said it was mentioned in the contract between Amazon and Future Group that in case of any dispute regarding breach of agreement , the matter will be taken before the SIAC.
“Since Future Group has not yet responded to the legal notice, as a logical progression of the mutually agreed contract, the case has been moved to SIAC. Amazon's main aim is to ensure enforcement of the contractual obligations, which indirectly will affect the RIL-Future deal since the SIAC may now loop in Indian regulators, which would have to approve the deal. If Future Group does not comply with the contract, SIAC may impose a heavy penalty on Future Group, but that is not Amazon's primary objective," the person above added, requesting anonymity.
A Future Group spokesperson didn’t comment on queries.
Amazon claims that a clause between Future Group and Amazon clearly stated that Future Group could not sell any asset within 10 years of the deal with Amazon. The right of first refusal (RoFR) was on Biyani’s own shares.
With the acquisition of the retail business of Future Group, Reliance Retail has become one of the biggest competitors to Amazon and Walmart Inc.-owned Flipkart in India.
Amazon’s course of action could well derail one of the largest buy-out transactions in the recent past.
Suneera Tandon also contributed to the story.
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