Future Vs Amazon: Delhi High Court Stays International Arbitration Proceedings

The Delhi High Court on Wednesday stayed the ongoing arbitration proceedings between two Future Group entities and Amazon. The interim order was passed by a division bench of Chief Justice DN Patel and Justice Jyoti Singh.

Pointing to the competition regulator's order finding suppression of material facts by Amazon.com back in 2019, the division bench said that the balance of convenience is in favour of the Future Group entities.

The order comes a day after a single-judge bench of the Delhi High Court had refused to intervene in the arbitration proceedings. Their petitions dismissed, Future Retail Ltd. and Future Coupons Pvt. appealed the Jan. 4 decision to a higher bench.

While the Future Group entities and Amazon have been locked in multiple legal battles for the past year, both at the international arbitration tribunal and in Indian courts, this leg is about the two Future companies now seeking termination of arbitration proceedings. Their main grounds are the recent CCI order that suspended approval of Amazon's 2019 investment in Future Coupons. While they lost before the single judge bench, the division bench has granted them interim relief.

Future Group Made Out A Prima Facie Case: Delhi High Court

On Wednesday, Future Group entities' lawyers argued that the single judge bench did not appreciate the import of the CCI order.

In the Jan. 4 order, there is no consideration of the order of the CCI, the heavy hand with which they have come down on Amazon, Mukul Rohatgi, senior advocate and counsel for Future Coupons, argued before the division bench.

Future Retail's counsel Harish Salve said that since the competition regulator had revoked its approval to the 2019 deal, the arbitral tribunal has to hear the application to end arbitration before its hearing in the main matter can proceed.

The Future Group entities also cited unavailability of their counsels who have tested positive for Covid-19 for deferring the hearing scheduled by the tribunal on examination of expert witnesses on quantum of damages.

The division bench of the high court found a prima facie case in favour of the Future Group in light of the CCI order. The bench issued notices to the parties to file their reply by February 1 and put on hold the arbitration proceedings until the next date of hearing.

In view of this order, the arbitral tribunal has terminated the arbitration proceedings scheduled between Jan. 5-8, 2022, until further orders, Future Retail said in an exchange filing later on Jan. 5.

What's At The Heart Of The Matter?

The Singapore arbitral tribunal is hearing an arbitration dispute initiated by Amazon.com NV Investment Holdings LLC, alleging violation of contractual obligation by Future Coupons. Amazon had initiated the arbitration arguing that the Future Group's transaction with Mukesh Ambani-led Reliance Retail Ventures Ltd. violated the terms of its 2019 contract to invest in Future Coupons. Amazon had purchased a 49% stake in Future Coupons—a promoter entity of Future Retail. Through the deal, it also got certain protective rights against any Future Retail asset sale.

It is to assert these rights that the American retail giant initiated international arbitration. Meanwhile, the cash-strapped Future Group entities are keen to implement the deal with Reliance Retail.