The order by an emergency arbitrator qualifies as an interim order capable of being enforced by an Indian court, Amazon.com NV Investment Holdings today argued before the Supreme Court.
In March, a single judge bench of Justice JR Midha of the Delhi High Court held the Singapore based emergency arbitrator’s order as valid and capable of being enforced.
The emergency arbitrator, constituted under the Singapore International Arbitration Centre Rules, had in October 2020 passed an interim order in favour of Amazon. It had directed Future Retail Ltd. to not proceed with its Rs 27,532-crore transaction with Reliance Retail.
Future Retail appealed against the order of Justice Midha to the division bench of the high court and succeeded in getting a stay, post which the dispute landed in the top court.
Parties Consented To Emergency Arbitration, Amazon Says
As per the arbitration agreement, Future Coupons Pvt. and Amazon had agreed to dispute resolution via arbitration as per the Singapore International Centre Rules. And Indian law was decided as the law which will govern such an arbitration.
Future Retail has argued that this means the SIAC Rules will have to be read in the context of Indian laws. Since the Arbitration and Conciliation Act, 1996, doesn’t recognise the concept of emergency arbitrator, the SIAC Rules with such a provision isn’t valid under Indian law.
Amazon has opposed this position and based its arguments on the principle of party consent under the Arbitration Act.
Arguing for the U.S. e-commerce company, Senior Advocate Gopal Subramanium pointed to Section 17(1) of the Act to say that it includes interim orders of an emergency arbitrator. This provision allows parties to approach the arbitral tribunal to seek any interim relief.
Amazon today told the court that the arbitration process begins once the notice of arbitration is served. In this case, Amazon said, the arbitration began in October 2020 and the emergency arbitrator was a valid arbitral tribunal capable of passing an interim order.
By subjecting themselves to the SIAC Rules, the parties agreed to the concept of the emergency arbitrator. The parties consented that till the time the final tribunal is constituted, the emergency arbitrator will be appointed for emergency purposes, Subramanium said.
The arguments before the bench of Justice RF Nariman and Justice BR Gavai will continue tomorrow.
Future Retail Vs Amazon: Story So Far
Amazon.com NV Investment Holdings LLC has alleged that the Rs 27,513-crore deal between Reliance Retail and Future Group violates its contractual rights.
In 2019, Amazon had invested in Future Group by acquiring a 49% stake in Future Coupons—a promoter entity of Future Retail that holds 9.82% in Future Retail. At the time, Future Coupons and Future Retail had also entered into a shareholders’ agreement.
Subsequently, Future Retail entered into an agreement with Reliance Retail to sell its retail, wholesale, logistics and warehousing assets.
In October last year, the emergency arbitrator granted an interim award in favour of Amazon. It had directed Future Group to put on hold its transaction with Reliance Retail.
In February, the apex court had agreed to hear the matter after the division bench of the Delhi High Court lifted the status quo on Future-Reliance deal.
The division bench order was passed after Future Retail appealed against the single-judge bench‘s interim order of status quo while hearing Amazon’s enforcement application on the emergency arbitrator’s order.