Many disputes arise in a legal relationship, these days the preferred route to resolve a dispute is at a neutral venue, by the pursual of ADR(Alternate Dispute Resolution), the aim is to understand the applicability of international arbitration award in India, through the dispute of Amazon and Future Retail Group. It all began in 2019 when Amazon proposed to buy a 49% stake in Future Coupons. The notice was approved by the Competition Commission of India, that notice mentioned
1) Acquisition of 49% of shares in Future Coupons
2) Transfer of certain shares of Future Retail Limited held by Future Corporate Resources private limited to Future Coupons.
3) Future Corporate had acquired warrants of Future Retail Limited, as a result, Amazon would have a 3.58% stake in Future Retail.
And just before the transactional part, Amazon also acquired the call option, which provided Amazon rights to exercise the option of acquiring all or part of Future Retail and interestingly deal mentioned 30 entities with whom the future retail group could not transact, ironically Future Retail went ahead to transact with one of the companies in the list of those 30 entities, the entity being Reliance Retail. The financial condition of Future Retail was not good, a brick-and-mortar retail store company was facing difficulty to pivot online and the piling losses became the core reasons for Future Retail to sell themselves to a buyer, being Reliance Retail, Future Retail nodded the deal at approximately 25,000 crore INR, selling the entire retail, wholesale, and logistics of Future Group. However, Amazon was on the toes all along and as it was stated in the contract, “in case of any dispute, either of the parties is free to approach Singapore International Arbitration Centre.” (hereinafter SIAC) SIAC promised an emergency award within 14 days of the appointment of the arbitrator.
Future Group pleaded that the contract was exclusive to the two parties Future Coupon and Amazon, Future Retail is not a party to the contract, thus according to Future Retail there was no case, but SIAC declined to exclude them. An Interim Order was passed on 25 October 2020, in favour of Amazon, which barred Future Retail from taking any steps to dispose of its assets. In my opinion, Future Retail did not honour the contract in place as they were the ones who agreed to the conditions in the first place. Nonetheless, coming back to answering the question in point, was the order of SIAC applicable in India? Future Retail, approached the honourable Delhi High Court, arguing that the order passed by the SIAC is passed without jurisdiction as the concept of an emergency arbitration award is alien to Indian Arbitration Act, moreover Future Retail also pleaded to injunct Amazon from writing letters to the Competition Commission of India, and SEBI(Securities and Exchange Board of India), as to the whole basis of their plea and arguments was to stop the enforcement of the order in India, which Amazon was trying to do by writing the authorities.
However, Justice JR Midha, who was presiding the bench of the honourable Delhi High Court, his Lordship declined to grant interim order and concluded that Future Group had wilfully violated the emergency orders. Now it might appear that this case study has concluded, however due to some independent observations made by Justice Midha, which are “the August 2020 board resolution of Future Retail, approving the deal with Reliance was not invalid or void as claimed by Amazon, and that Amazon’s representations to statutory authorities and regulators was “based on incorrect assertions”, It led to further chaos and a division bench, demanding a reversal order, moreover the nod from the division bench, Competition Commission of India, and Securities and Exchange board of India, to move forward with the acquisition of Future Retail Limited, forced Amazon to move to the Supreme Court and what is important to this piece is the observations made by Justice RF Nariman, where in his judgement, made it clear that the application of the award is enforceable in Indian Arbitration Law, as for the simple rationale, that an implementation of any international arbitration award, should not be in conflict with public policy, fundamental policy and the award should not be in the contrary of the interests of India. Moreover, the Supreme Court ruled the following as it,
o Dismissed Future retail limited argument that the “Emergency Arbitrator is not an arbitral tribunal” under the Arbitration and Conciliation Act of 1996.
o It upheld the validity of the emergency award. The judgment laid down that the award is “exactly like an order of an arbitral tribunal” contemplated under Section 17 of the 1996 Act. Hence, an award by the EA was like an order under Section 17(1) (interim measures ordered by an arbitral tribunal) of the Act.
In conclusion, it can be said that the international arbitration awards are applicable in India, as they will serve as a relief for foreign companies who wants to settle a dispute outside India, thus an enabler for the new India, which is welcoming of foreign entities and gives them an impetus to settle a dispute with ease.
