The dispute between Amazon and Future Retail is, apparently, far from over anything soon as the Singapore International Arbitration Centre (SIAC) has rejected Future Retail’s plea to exclude it from the arbitration proceedings involving Amazon and Future Coupons.
This is being seen as a big set back for Future Group which is acquired by Reliance Industries Limited (RIL) in a distress sale recently. RIL agreed to acquire Future Group for a whopping ₹24,713 crore.
Amazon dragged Future Group to arbitration at SIAC for breach of contract. While Future Group tagged the claim baseless, it moved to Delhi High Court for relief against Amazon from interfering in the deal between Reliance and Future Group.
As both the parties are leaving no stone unturned to get a favourable judgment, Future Group got a big sign of relief after Competition Commission of India (CCI) gave a green signal to the deal recently. Future Group presented it as a big win against Amazon which is accused of misusing an interim order passed by a Singapore arbitrator. The celebration, however, was short-lived as SIAC has ordered to proceed the arbitration yesterday.
Amazon Future Retail Dispute
It all started with the pandemic that strike India earlier this year. Due to the nationwide lockdown, the retail giant ran into cash crunch, and soon its stock price crashed by 81% to just Rs 68 from Rs 363 within 2 months.
The avoid a complete collapse Future Retail cut a deal with RIL which is touted as the biggest retail acquisition in India.
Amazon, which bought 49% share in Future Coupons – one of the unlisted companies of Future Group – last year, challenged the deal. The eCommerce behemoth alleged that the investment contract provides Amazon with the first right to buy into the listed flagship FRL after a few years if the government were to undo its bar on foreign ownership of multi-brand retailers. Future Group’s decision to sell its assets to Reliance is in a direct breach of the contract.
Amazon has approached SEBI and SIAC to halt the deal which has irked Future Group.
Amazon has accused Future Group of hiding facts and misleading its investors. The American eCommerce major has also said that the company was ready with the rescue plan for Future Group, but they were kept in dark in regards to the negotiation with Reliance Industries Limited.
Now, as SIAC has formed a view that the arbitration process against Future Group shall proceed and a tribunal would be constituted to deal with the matter, the Reliance-Future Deal could be in the soup, at least for some time.
It would be interesting to see how RIL react to the situation.
