Future Group, RIL ignore SIAC award

Future Group, RIL ignore SIAC award

The Future Group, led by Indian businessman Kishore Biyani, which was facing pressure from its lenders, entered into an agreement with Reliance Retail Ventures, a subsidiary of Reliance Industries Limited (RIL) to sell its retail, logistics, warehousing and wholesale businesses to RIL on 29 August 2020.

Premium chains of Future Group were a part of this deal, including Big Bazaar, Brand Factory and Foodhall. The global e-commerce giant, Amazon, objected to the sale, stating it had entered into a deal with Future Group when its value was `20 billion (US$271 million) in 2019, consequent to which Amazon had acquired a 49% stake in the company.

As a part of the deal, Future Group placed its products on Amazon and although – Future Group was included to be a part of Amazon’s plan to provide home delivery of goods within two hours of an order to customers, as Future Group has more than 1,500 stores across India – Amazon also held a “call” option to acquire all or part of Future Group’s promoters within three to 10 years of the agreement.

Amazon claimed that the deal between Future Group and RIL violated the non-compete clause, and the right of first refusal pact, entered between Amazon and Future Group, as RIL was included in the list of 30 entities under the contract with whom Future Group was barred to transact. Future Group said that it had not sold any stakes and was merely selling its assets, and so did not stand in violation of any terms of the contract.

Amazon then approached the Singapore International Arbitration Centre (SIAC) to commence an emergency arbitration for resolving the dispute between Amazon and Future Group under the SIAC rules, 2016, and sought to be granted an interim stay on the Future Group-RIL deal until an award is passed under the process of arbitration.

The SIAC held an emergency arbitration, as requested by Amazon, and on 25 October 2020, the emergency arbitrator granted an interim stay on the Future Group-RIL deal.

However, the validity of the emergency award was questioned by Future Group, as in the case of Raffles Design International v Educomp Professional Education, where Delhi High Court had ruled: “The emergency award passed by the arbitral tribunal cannot be enforced under the act and the only method for enforcing the same would be for the petitioner to file a suit.”

On 25 October 2020, RIL released a statement on its intention to execute the deal between Future Group and RIL. Future Group also expressed its disagreement with the emergency award, and intends to move ahead with the deal, despite an award being passed against them.

The dispute digest is compiled by Numen Law Offices, a multi-disciplinary law firm based in New Delhi and Mumbai. The authors can be contacted at support@numenlaw.com. Readers should not act on the basis of this information without seeking professional legal advice.