SC upholds S’pore court orderonFuture-RILdeal

The apex court held that the award of an EA of another country is enforceable under the laws in India

NEW DELHI: In a major victory for e-commerce giant Amazon, the Supreme Court on Friday ruled that Future Group is bound by an emergency award that restrains it from a $3.4 billion sale of retail assets to Mukesh Ambani’s Reliance Industries Ltd (RIL).

A bench of justices Rohinton F Nariman and BR Gavai held that the Singapore-based Emergency Arbitrator (EA) award, passed in October 2020, was enforceable under Indian arbitration law, and will bind the Kishore Biyani-led group of companies to pertinent agreements with Amazon.

“A party cannot be heard to say, after it participates in an Emergency Award proceeding, having agreed to institutional rules made in that regard, that thereafter it will not be bound by an Emergency Arbitrator’s ruling,” said the bench, while allowing the petitions filed by Amazon, which is engaged in a legal wrangle with RIL for domination of the Indian retail market.

In its 103-page judgment, the top court noted that “it cannot lie in the mouth of a party to ignore an Emergency Arbitrator’s award by stating that it is a nullity when such party (Future Group) expressly agrees to the binding nature of such award from the date it is made and further undertakes to carry out the said interim order immediately and without delay.”

The case was about Future’s decision to sell its assets to Reliance; Amazon contended that it violated the former’s 2019 contract with it. The Singapore EA agreed, restraining Future from going ahead with the deal, even as it went about the arbitration proceedings. The top court’s order upholds that ruling.

Underlining that the Future Group agreed to the Singapore International Arbitration Centre (SIAC) Rules and participated in the proceedings before it, the bench held that no party can turn around after losing and say that the award is a nullity or coram non judice (not before a proper judge) when there is nothing in the Arbitration Act which interdicts an Emergency Arbitrator’s order.

The court, referring to a body of Supreme Court judgments, accepted Amazon’s argument and said that an Emergency Arbitrator’s award will be a valid award within the contemplation of the Arbitration Act, and has to be held as an order under Section

17(1) of the Act (for passing interim reliefs).

An Amazon spokesperson said: “We welcome the verdict of the Hon’ble Supreme Court of India upholding the Emergency Arbitrator’s award. We hope that this will hasten a resolution of this dispute with Future Group.”

Future Group said that it has remedies available in law, which it will exercise. “FRL intends to pursue all available avenues to conclude the deal to protect the interests of its stakeholders and workforce,” said a Future Group’s spokesperson, adding they were awaiting the decision of the arbitral tribunal on the emergency award.

Meanwhile, rejecting the argument of the Future Group that an emergency award is outside the ambit of Section 17 of the Arbitration Act and an Emergency Arbitrator cannot be construed as an “arbitral tribunal”, the bench highlighted that there is nothing in the Act that prohibits contracting parties from agreeing to a provision providing for an award being made by an Emergency Arbitrator.

The court pointed out that Amazon and Future Group have not bypassed any mandatory provision of the Arbitration Act by agreeing to the SIAC Rules and the award of the Emergency Arbitrator. The court also refrained from entertaining submissions by Future Group on “third parties” being affected in enforcement proceedings.

The court also refrained from entertaining submissions by Future Group on ‘third parties’ being affected in proceedings.