Future Retail vs Amazon: Delhi High Court Reserves Judgment 

In arguing against the legality of Emergency Arbitration in India, Future Retail Ltd. has overlooked critical principles of arbitration law, Amazon's counsel Gopal Subramanium told the Delhi High Court. The court has reserved its judgment on the matter.

Subramanium was responding to Future Retail's argument that the interim order by the Emergency Arbitration, constituted under the SIAC Rules, is passed without jurisdiction, it is a nullity and non-est.

The court has to rule on Future Retail's plea that Amazon.com NV Investment Holdings must be stopped from interfering with the approval process for its Rs 27,000 crore deal with Reliance Retail Ventures Ltd.

Amazon, which invested in Future Coupons Ltd., a promoter company of Future Retail, has won a temporary stay on the Future Group-Reliance Retail deal. Post this, Amazon had written to market regulator and the stock exchanges to consider the interim order while reviewing the scheme of arrangement and the deal with Reliance Retail.

Here are the key arguments made by Senior Advocate Gopal Subramanium for Amazon on the final day of the hearing:

Consent Forms The Basis Of Arbitration

Future Retail had argued that the concept of Emergency Arbitrator is ‘alien' to Indian Arbitration Act. And so, the Emergency Arbitrator inherently lacked jurisdiction to hear the matter. Subramanium countered that to say that there's a difference between exercise of jurisdiction and inherent lack of jurisdiction. He argued:

• Both Future Group and Amazon had consented to resolve any dispute as per Singapore International Arbitration Centre's Rules.
• All arbitration agreements are founded on only one jurisdictional fact: consent. First important principle overlooked by Future Retail is if consent exists, which is not disputed here, there cannot be inherent lack of jurisdiction.
• Second, section 2(8) of the Arbitration Act is vital. It says when parties choose rules of engagement, that would be part of arbitration agreement itself.
• And third, the principle is that courts and arbitrators can determine their own jurisdiction. Doctrine of competence-competence states an arbitral tribunal has the power to determine its own jurisdiction. There is no mandatory provision, no nullification in the Indian Arbitration Act that disempowers an Emergency Arbitrator.
• An Emergency Arbitrator, by consent of parties, can be a sole arbitrator and will fall under the definition of “arbitral tribunal”.
• Section 5 of Arbitration Act says in matters governed by this part, no judicial authority shall intervene.

Future Retail's argument of inherent lack of jurisdiction of the Emergency Arbitrator is deeply flawed, he added.

Also Read: Future Retail Argues Emergency Arbitrator's Interim Order Is Unlawful

Emergency Arbitrator's Order Has Efficacy

Arbitration Act, 1996, gives an arbitral tribunal the powers of a court. Interim orders, even by an Emergency Arbitrator, will have efficacy as an order of the court.

• Award of the Emergency Arbitrator is jurisdictionally competent. Future Retail may not agree with it but it can't wish it away.
• Legality of underlying contract and arbitration process is being collaterally challenged.
• Prayers in the suit are to stultify the arbitration process.
• Arbitration jurisprudence says courts must encourage rather than bring arbitral proceedings to a grinding halt

Also Read: If I Have A Relationship With Amazon, I Have Violated The Law, Future Retail Says

Not The East India Company

During the hearings, Future Retail's counsel Harish Salve compared Amazon to the East India Company, an American Giant, The Big Brother whose prior written consent must be sought for the deal with Reliance Retail. Shareholders' agreements between Amazon-Future Coupons and Future Retail-Future Coupons give it this right, Amazon has argued. To this, Future Retail responded that if these agreements are conflated, it would amount to ‘control'.

Subramanium countered this to say:

• Control means right to appoint majority of directors, say in day-to-day management etc. Prior consent on certain matters doesn't amount to ‘control.'
• There are two schedules to Future Coupons' shareholders' agreement. There's another list besides restricted persons. It's called “company barred persons”, This entity (Reliance) is on that list as well.
• As per this agreement, even Amazon can't sell its 49% in Future Coupons to a “company barred person”. Parties consciously agreed to restrictions on transfer to such persons.
• The same promoters, independent directors who approved the 2019 agreements continue to be in control, on board of Future Retail. Now, it can't argue fiduciary duty of directors.
• Investment is in Future Coupons - a wholesale company involved in gift vouchers, coupons. But it obviously has some relation to Future Retail.
• Amazon can't be described as East Indian Company, Big Brother. It introduced Future Retail to another investor i.e Samara Capital.
• Amazon has created jobs in India, invested $6.5 billion all over the country.

Also Read: Amazon Says It Had Arranged Rescue Deal For Future Group

The case was heard by Justice Mukta Gupta of the Delhi High Court. The date for the pronouncement of the judgment is not known yet.

Also Read: When Did You Become ‘Bhishma Pitamaha'? Future Retail Asks Amazon