The Supreme Court has halted the $3.4 billion Reliance-Future Retail deal. The court announced that Singapore’s Emergency Arbitrator (EA) award, restraining Future Retail from going ahead with its merger deal with Reliance Retail, falls within the ambit of the Arbitration and Conciliation Act and is enforceable.
The decision comes as a big win for Amazon in the battle for the large Indian market. The e-commerce giant had filed pleas against the merger of Future Retail Ltd (FRL) with Reliance Retail.
The verdict is a setback for Future, India's second largest retailer with more than 1,700 stores, which agreed to sell its retail businesses to market leader Reliance in 2020. However, Amazon argued a 2019 deal it had with a unit of Future contained clauses prohibiting Future Retail from selling them to anyone on a restricted persons list including Reliance.
The e-commerce giant had first filed a plea before the high court for enforcement of EA award by Singapore International Arbitration Centre (SIAC) restraining FRL from going ahead with the deal with Reliance Retail. The high court division bench had however said that it was staying the single-judge order as FRL was not a party to the share subscription agreement (SSA) between Amazon and FCPL and the US firm was not a party to the FRL-Reliance deal.
In August 2020, the Future group had reached an agreement to sell its retail, wholesale, logistics, and warehousing units to Reliance. Subsequently, Amazon took FRL into EA before the SIAC over the alleged breach of contract by the Future Group.