In October 2020, Amazon had obtained a favourable Emergency Award from the Emergency Arbitrator (EA) in Singapore. This Award had put on hold Future Retail’s transaction with Reliance Retail to acquire stake worth INR 1,431 crore in Future Coupons Pvt.
In March, a single judge bench of the Delhi High Court held this emergency arbitrator’s order to be enforceable. Future Retail’s appeal against the order to a divisional bench of the same court stayed the enforceability of the order. Both the orders were stayed by a Division Bench successively on February 8 and March 22, 2021. Amidst the litigation maze, the Supreme Court stayed the proceedings in the High Court on April 19, 2021 and decided to hear the case by itself.
Almost a year later, Justice Rohinton F. Nariman and B.R. Gavai formed the Bench to uphold validity and enforceability of the Emergency Award, completely stopping Future Retail Limited (FRL) from selling its stakes to Reliance Retail. The Bench dictates, that the award is “exactly like an order of an arbitral tribunal” which contemplated under Section 17 of the 1996 Act. Hence, an award by the EA was like an order under Section 17(1) (i.e., interim measures ordered by an arbitral tribunal) of the Act.
The order records that Reliance Retail was among the “restricted persons” or “prohibited entities” with whom FRL’s Future Coupons Private Limited and Mr. Biyani could not strike a deal. In October, EA injuncted FRL from proceeding with the deal with with Reliance group as it would have been opposed to the agreement which recognised Reliance Retail as “restricted person”.
The recent order scorned FRL’s argument that the “Emergency Arbitrator is not an arbitral tribunal” under the Arbitration and Conciliation Act of 1996. Senior advocate Harish Salve had argued that the EA, which functions under the Arbitration Rules of the Singapore International Arbitration Centre was a “a foreigner to the Indian Arbitration Act”. He further contended that Amazon, represented by senior advocate Gopal Subramanium, by urging to enforce the EA award, was trying to “fit a square peg in a round hole”.
Mr. Subramanium argued that the EA award can never be characterised as a nullity and ignored rather it must be obeyed.
SC’s ruling from the top court shifts the focus back to Singapore where the arbitral tribunal is likely to pronounce its ruling soon.
Also Read: Amazon- Future retail & Arbitration, Amazon and Future- twister.
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