In what could be a long drawn legal battle ahead, the Kishore Biyani-led Future Retail on Monday hinted at challenging an arbitration order that put a temporary hold on its Rs 24,713-crore deal to sell assets to Reliance Industries. Future Retail said it wasn’t party to the agreement under which Amazon.com had invoked arbitration proceedings and therefore actions taken by its board cannot be held back in arbitration proceedings.
Future Retail said that it is in the process of examining the interim order and it has to be tested under the provisions of Indian Arbitration Act in an appropriate forum. “As per advice received by FRL, all relevant agreements are governed by Indian law and provisions of Indian Arbitration Act for all intents and purposes and this matter raises several fundamental jurisdictional issues which go to the root of the matter….In any enforcement proceedings, FRL would take appropriate steps to ensure that the proposed transaction will proceed unhindered without any delay,” Future Retail said.
Late on Sunday evening, Reliance Retail Ventures (RRVL), a unit of Reliance Industries (RIL), has already said that its agreement with Future Retail was based on sound legal advice and that it is going to close the transaction shortly. “RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay,” it had said.
Amazon, which acquired an indirect minority stake in Future Retail last year, has alleged that Future’s sale of its retail, wholesale, logistics and warehousing businesses to Reliance breached its pre-existing contract, which included a right of the first offer and a non-compete clause.
On Sunday, the Singapore International Arbitration Centre restrained Future Retail and its founders from going ahead with the sale until a final decision is given.
In the past, several instances awards by international arbitration tribunals have been challenged by the aggrieved party in the high courts in India.
“”What needs to be seen if the award can be said to be governed by Indian law or seated in India. If that is the case, objections to the award may be filed in India under Section 34 of the Arbitration and Conciliation Act, 1996. Otherwise challenges to foreign seated arbitrations are not entertained before Indian Courts and remedy of appeal lies as per Singapore Law,” a legal expert told FE on condition of anonymity.