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The Supreme Court today reserved orders in a plea filed by Amazon against the Delhi High Court March 22 order which had stayed a Single Judge's order restraining Future Group from going ahead with the 24,713 crore merger with Reliance Retail.

The judgment was reserved by a division bench of Justice RF Nariman and Justice BR Gavai.

On July 27, 2021, the Top Court had demarcated two issues for adjudication which were,  whether the award delivered by Singapore’s Emergency Arbitrator (EA) which had restrained Future Retail from going ahead with its merger deal with Reliance Retail was valid under Indian Law and if it could be enforced. 

“We will decide whether EA award falls under section 17 (1) (which deals with the interim award by arbitral tribunal) of the Arbitration and Conciliation Act. And if yes, then whether it can be enforced under section 17 (2) (of the Act)," the Division bench said. 

While questioning the validity of the emergency award which restrained Future Group from going ahead with the  Rs 24,713 crore merger deal with Reliance Retail passed by the Emergency Arbitrator, Future Retail had told Supreme Court that the order of emergency arbitrator was an order which carried a brand of invalidity on its forehead.

Senior Counsel for Future Retail Harish Salve while relying on relevant paragraphs of the Delhi High Court judgment in Raffles Design International vs Educomp Professional Education submitted that,

“Order of emergency arbitrator may have some role to play although it cant be enforced per se. Even under our agreement, this was not an arbitral tribunal & even under the SIAC rules this was not an Arbitral Tribunal.”

Assailing the order of Single Judge of Delhi High Court and emphasizing the need of creation of an Arbitral Tribunal, Senior Counsel for Future Retail submitted that an appeal before Justice Midha to consider emergency arbitrator as arbitral tribunal could not be done contextually. 

Senior Counsel KV Viswanathan appearing for Future Retail submitted that the order of the Emergency Arbitrator fell short of judicial character and therefore could not be enforced. 

While justifying the maintainability of the appeal filed against the order of a single judge, Senior Counsel KV Viswanathan submitted that the appeal was maintainable. 

“The Fulcrum of Amazon's argument is that party autonomy gives the EA status of an Arbitral Tribunal but who is the EA? The status of an emergency arbitrator in itself falls short of the law. Parties have given the primacy of an act & for the parties to now approach a tribunal is not justified,” submitted Senior Counsel KV Viswanathan.

In his counter, Senior Counsel for Amazon Gopal Subramanium submitted that the Arbitration and Conciliation Act, 1996 was a “self-contained code”. 

Justifying the fact that the proceedings before the Emergency Arbitrator were akin to proceedings before the Arbitral Tribunal constituted under the relevant provisions of the Arbitration and Conciliation Act, 1996, Senior Counsel submitted that Rule 3.3 of the SIAC Rules was similar to section 21 of the Arbitration and Conciliation Act, 1996.

 

“The arbitral proceedings commenced from Oct 5, 2020. Under the SIAC Rules, an award also includes the award by Emergency Arbitrator & an arbitrator also includes an emergency arbitrator. None of the orders passed by the EA are inconsistent with the provisions of the contract,” Senior Counsel for Amazon submitted.

Senior Counsel also submitted that, “Emergency Arbitrator has all the cappings of an arbitrator under the Arbitration and Conciliation Act, 1996. In terms of clear words u/s 15(4), there cannot be no doubt that EA will be an arbitrator & that his award will be efficacious.”

Amazon on July 19, 2021, told the Top Court that the high court erred in entertaining the Future group's appeal and granting it relief by paving the way for the Rs 24,713 crore merger deal with Reliance Retail.

Background of the Case

In August last year, the Future group had entered into an agreement to sell its retail, wholesale, logistics, and warehousing units to Reliance.

Subsequently, Amazon took FRL into Emergency Arbitration before the Singapore International Arbitration Centre over alleged breach of contract by the Future group. On October 25, 2020, Emergency Arbitrator restrained Future Retail from going ahead with the deal with Reliance Retail.

Litigious Chain

Amazon had first filed a plea before the high court (single judge) for enforcement of the October 25, 2020, EA award by Singapore International Arbitration Centre (SIAC) restraining FRL from going ahead with the deal with Reliance Retail.

On March 18, the Single Judge Bench of Justice JR Midha, Delhi High Court upheld the Emergency Award passed against the Future-Reliance deal, observing that the Future Retail, Future Coupons, Kishore Biyani, and others violated the Emergency Award.

The Court imposed a cost of Rs 20 lakh on Future group, to be deposited with the Prime Minister's Relief Fund for providing COVID vaccination to the Below Poverty Line category - senior citizens of Delhi.

On March 22, 2021 division bench of Hon’ble Chief Justice DN Patel and Justice Jasmeet Singh stayed the order dated March 18, 2021, passed by a Single Judge that had upheld the emergency award.

As an interim measure, Supreme Court Bench of Justice Rohinton Fali Nariman, Justice B.R. Gavai Justice Hrishikesh Roy on April 19, 2021, had stayed the Delhi High Court orders passed by Division Bench of Justice DN Patel & Justice Jasmeet Singh on March 22, 2021, & Single Judge Bench of Justice JR Midha on March 18, 2021.

Case Title: Amazon.Com NV Investment Holdings LLC v. Future Retail & Ors|SLP(C) No. 6113-6114/2021