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SIAC’s interesting ruling in Future Retail-Reliance Retail deal, is it good news for Amazon?- all you need to know about it

Future Retail- New deals are being made in our country, and new contracts are being signed daily. New acquisitions are being made every day in our country to provide it with the boost it needs to revive and cover the loss suffered last year when the whole country was locked down and there were no economic activities. Moreover, the pandemic led to a pause in public spending and investments, which had now jumped back when economies across the globe started to open up again.

However, we often witness many disputes and feuds between big companies during these deals, which take a considerable time to resolve, directly affecting the economy. In this article, we will be discussing one such ongoing feud in the country. Yes, we are talking about the ongoing legal feud between Amazon and Future Retail. The rivalry has now been going on for a very long time and also involves the Reliance industries. Before knowing what the current scenario is, let us know why there is a legal feud between Amazon and Future Retail in brief.

The feud between Future Retail and Amazonamazon-future dispute: siac tribunal holds it has jurisdiction to decide arbitration

A deal took place between the Future Retail and the Reliance industries under which Future Retail was supposed to sell its supermarket chain Big Bazaar which is very popular across the whole nation, to Reliance. Along with Big Bazaar, the company was supposed to sell its sister chain of retail outlets like Brand Factory, Home Town, Central, and all other Reliance Retail. The reason behind this was simple.

Future Retail said that the company is facing immense pressure from its creditors and lenders, and the company is unable to manage its debt. Further, they said that the lockdown worsened the financial condition of the company. To manage its debt, the company sold its chains by signing a deal with Reliance industries.

However, Biyani’sBiyani’s decision to sell its assets to Reliance industries is a breach of an agreement between Amazon and Future Retail in 2019. However, Amazon, a well-known brand across the nation, showed its refusal to the deal and said the asset sale by Future Retail was not correct. It was taken to the Supreme court, and SIAC and SIAC too took the favor of Amazon, which led to pausing the deal between Future retail and Reliance industries. This was the beginning of the legal feud between Amazon and Future Retail.

Currently, the Singapore International Arbitration Centre has ruled against lifting the interim stay that an emergency arbitrator had placed on the deal between Future retail and Reliance industries in October last year. This ruling against the lifting of interim provides an edge to Amazon over the Future Retail in this legal feud. This feud is claimed to be a violation of the contractual rights of the deal between the two. Amazon has also been getting favored by the Supreme court in this feud as of now.

brand | future retail- the strategies that make india's leading retailer Experts taking an interest in this have claimed that the latest ruling not to lift the interim will act as another obstacle in the deal between Reliance and Future Retail and delay the possible merger between the two as both SIAC and Supreme court favor Amazon as of now. Experts have further claimed that Future Retail has no option but to wait until the final decision is made to go either way according to the plan and has no choice to make. This has had a severe impact on Reliance retail, as they cannot progress until the decision is made.

Going a few months behind, the Supreme court had upheld the enforcement of an order od SIAC emergency arbitrator, which paused the deal between Future Retail and Reliance retail. The decision made by the Apex court held that such as award in the arbitration act as these orders acted as an essential step towards aiding the decongestion of the civil courts. Further, this will help in providing quick interim relief to both parties. However, the only loss this delay is causing is the further wait that Reliance industries will have to do.

But why is Amazon against this deal between Future Retail and Reliance retail?

This opposing of the deal goes back to the year before the pandemic, in 2019, when the giant Amazon signed an agreement with the parent company of Future Retail, known as Future Coupon. The deal was worth Rs 2,000 crore back in 2019, which is enormous. According to the agreement made back in 2019, Amazon had acquired as large as 49% of the assets of Future Coupons.

Further, according to the deal, Future Retail will be able to list its products online on the marketplace of Amazon. Other than this, the agreement also provided the authority to Amazon to avail a call option, which will enable the company to acquire all or some part of Future retails’ ‘ shareholding in the period of 3 to 10 years after the agreement took place between the two.

future retail a “proper party” to ongoing amazon dispute, singapore panel rules - the economic times

Fast forward to August 2020, when Future Retail made a deal with Reliance retail for an amount as huge as 24,713 crores under which it sold its Retail, warehouse, logistics, and wholesale units. However, Amazon claimed that this deal directly violates contractual rights made between Amazon and Future Coupons. On the other hand, Future Retail contended that they have not sold even a single stake of the company and have just sold its assets to Reliance retail. Therefore they have not violated any terms of the contract between Amazon and Future Coupons.

Therefore, Future Retail claimed that the deal that they have made with Reliance retail was not unfair by any means and did not violate any contract or its term. Even after this claim, both the apex court of the nation and Singapore International Arbitration Centre favor the online market giant Amazon and have halted the deal between Future Retail and Reliance retail.

On another note, the laws prevailing in the nation do not popularly consider the concept of international arbitration along with the emergency orders issued by those tribunals. It is known that these orders are usually just respected by the business houses.
In the dispute between Amazon and Future Retail, the reliance industries have suffered a lot too. Even after winning the making and therefore signing the deal, which ensured Reliance had full rights over the assets of Future Retail, which included the trendy supermarket chain Big Bazaar and other sister chains such as Brand Factory, Home Town, Central, and many more.

Moreover, the deal between these two could have provided a push to the reviving economy of our nation after a lot of suffering in the pandemic. Still, this could not be true due to the legal feud between Amazon and Future Retail. All the parties involved are currently seeking a quick final decision by the Supreme court and SIAC to move in a specific direction.

Article Proofread and Edited by Shreedatri Banerjee

Simerleen Kaur

Talk to me about economics, trade, and all things India.

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