Dated: November 29, 2020
- By Megha Bhatia
For the last couple of weeks, Amazon-Future retail arbitration has been in the headlines. By way of background, on October 9, Amazon launched arbitration proceedings before the Singapore International Arbitration Centre (SIAC) against Future Retail, arguing that a deal between Amazon and Future Coupons was broken by the arrangement between the Future Group and Reliance Industries Ltd., declared in late August 2020.
An emergency arbitration order (EA order) in favour of Amazon was issued by emergency arbitrator VK Rajah on October 25. The order forbids entities in the Future Party from entering into the share seal arrangement or other agreement with Reliance and other limited parties referred to in the non-compete contract agreed between Amazon and Future Coupons.
As predicted, whether and how Amazon will impose this order in India is the talk of the world. In the last month, much has been written on this subject, which is welcome given the relative absence of EA jurisprudence and the enforceability of EA orders in India.
The explanation why the enforceability issue is widely debated is that the 1958 New York Convention only involves the acknowledgment and compliance of international arbitral awards but not of foreign-seated arbitral tribunals’ interim/provisional/interlocutory orders, the latter being EA orders. In view of this, the most widely proposed analysis is that a “duplicative approach” is likely to be attempted because EA directives are not enforceable on their own in India under the Arbitration & Conciliation Act, 1996.
This duplicative solution includes filing a motion pursuant to Section 9 of the Act demanding temporary relief (through Amazon in this case), asking the court to effectively duplicate the relief provided by the emergency arbitrator. This approach is deemed to be originating from the decision of Avitel Post Studioz Ltd & Ors. v. HSBC PI Holdings (Mauritius) Ltd.
In this situation, as the petitioner requested, by (somewhat) duplicating it into a court-ordered temporary measure under Section 9 of the Act, the implementation of the EA relief by a foreign-seated tribunal was indirectly achieved.
However, even though a claimant has received a favourable EA from a foreign-seated tribunal and tries to implement it through Section 9 , two considerations must be considered:
(a) Any other application applying the tests controlling a petition under Section 9 on the basis of standards under Indian law will have to be separately reviewed by Indian courts (Raffles Design Int'l India Pvt. Ltd. v. Educomp Professional Education Ltd. & Ors). This is because the courts do not exercise compliance authority and are not allowed, under Section 9, to offer any deference to an EA order and are only in a position to grant temporary security measures.
(b) As it was before the emergency arbitrator, a respondent will be able to re-agitate any objections, formal and factual. Therefore the duplicative method will, if not entirely, make the whole procedure conducted to obtain the EA order obsolete to a large degree.
Delhi High Court
The Delhi High Court reserved orders in the suit filed by Future Retail against Amazon in connection with its contract with Reliance on November 20, after hearing as many as eight senior advocates over the span of five days.
As an ad-interim remedy, Future Retail (FRL) requested the Court’s orders to prohibit Amazon from intervening with Reliance on the execution under the lawful deal.
Senior Advocate Harish Salve for FRL
Senior Advocate Abhishek Manu Singhvi for Reliance
Senior Advocate Mukul Rohatgi ran for the promoters and FCPL was represented by Senior Advocate Vikram Nankani. In terms of the FRL Share Holders Arrangement(SHA), FCPL asserted that it agreed to the agreement with Reliance. The promoters have also argued that Amazon has no right to intervene with the sale and that it is appropriate to ignore the Emergency Award.
Senior Advocate Darius Khambata for FRL
No Emergency Arbitration is accepted in Section I of the Arbitration and Conciliation Act, 1996.
Reliance, FCPL and the Biyanis backed FRL’s claims.
Senior Advocate Gopal Subramaniam’s arguments on behalf of Amazon
For Amazon, Senior Advocates Amit Sibal and Rajiv Nayar have appeared. They also argued that it is important to allow the arbitration proceedings under the SIAC to follow their course.
Meanwhile the Competition Commission of India (CCI) approved the acquisition by Reliance Retail Ventures Limited and Reliance Retail and Fashion Lifestyle Limited of the retail, wholesale, logistics, and warehousing businesses of the Future Group.