Future Retail Deliberately Disobeyed Emergency Order, Amazon Tells Delhi High Court

Future Retail Ltd. is bound by the order of the emergency arbitrator which had paused Reliance Retail’s deal with Future Group, Amazon.com NV Investment Holdings LLC told the Delhi High Court on Thursday.

Amazon approached court after the market regulator granted conditional approval to Future Group’s scheme of arrangement and sale of its assets to the retail arm of Reliance Industries Ltd. on Jan. 20.

In its petition dated Jan. 25, Amazon has argued that the Kishore Biyani-led Future Group ignored the directions of the Emergency Arbitrator and continuously pursued regulatory authorities requesting them to approve the transaction. Future Group, it has said, has maliciously and deliberately disobeyed the arbitrator’s order.

And so, it has asked the high court to restrain and direct:

• Future Retail (and other related parties) from taking any steps in furtherance of the transaction.
• Future Retail from taking any steps to complete the transaction with Reliance Retail.
• Future Retail and others from alienating, transferring or disposing off any assets without Amazon’s prior written consent.
• Detention of Biyani and other executives of the Future Group in civil prison for ignoring the arbitrator’s orders.

Future Retail Bound By Emergency Arbitrator’s Order, Amazon Argues

This time, Amazon has approached the court under section 17(2) of the Arbitration and Conciliation Act,1996. The provision allows a party to seek enforcement of an interim order passed by an arbitral tribunal in the same manner as it would for a court order.

In the first round of litigation before the Delhi High Court, Amazon had argued that the concept of an emergency award isn’t alien to Indian arbitration law. This view was upheld by the court. As a result, Amazon has now sought enforcement of the emergency award under section 17. But Future Group has contested this on grounds that for the purpose of relief under section 17, an emergency award isn’t recognisable.

Arguing on behalf of Amazon, Senior Advocate Gopal Subramanium said that:

• Till today, Future Group hasn’t sough a vacation of the interim award. The arbitral tribunal was constituted within 90 days of the Emergency Arbitrator’s order on Jan. 5 but no party has sought vacation of the emergency order.
• Therefore, it must be implemented and Future Retail must be stopped from proceeding with the transaction with Reliance Retail.
• Future Retail has written letters to the authorities saying the Emergency Arbitrator’s order is a nullity. No party can unilaterally declare an order to be a nullity and therefore is bound by its impact.
• Future Retail should be injuncted from relying on regulatory orders of Securities and Exchange Board of India and Competition Commission of India to take steps in furtherance of the transaction.
• Future Group must be restrained from alienating, transferring, disposing of any assets without Amazon’s prior written consent.

Will Collapse If Transaction Doesn’t Go Through: Future Retail

Arguing for Future Retail, Senior Advocate Darius Khambatta told the bench that the Indian arbitration law recognises the interim orders of an arbitral tribunal but not those by an emergency arbitrator for the purposes of section17 of the Arbitration and Conciliation Act, 1996.

Khambatta said the emergency arbitrator will not qualify to be covered by section 17 as it’s different from a permanent or final arbitral tribunal.

He also said that their petition seeking the National Company Law Tribunal’s nod for the transaction was filed on Jan. 26. The transaction has already received clearance from the CCI and the market regulator.

The high court will continue hearing the arguments on Jan. 29. Senior Advocate Harish Salve will respond to Amazon’s arguments.