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Source: Times of India, Indian Express and The Hindu
Introduction:
Recently, the Supreme Court has ruled in favour of e-commerce giant Amazon against the merger deal between Future Retail Limited (FRL) and Reliance Retail.
The Supreme Court also upheld the interim award of the Emergency Arbitrator of the Singapore International Arbitration Centre (SIAC).
What is the issue?
Future retail [Future Retail Ltd (FRL) is the country’s second-largest retailer with 1500 stores. Future retail, in a 3.4 Bn deal, agreed to sell its retail business to Reliance retail. Amazon wanted to acquire stakes in Future retail.
What is the background of the event?
- As per a deal between Amazon and future retail, Amazon invested 1431 crore in Future Retail. As per this, Future Retail’s assets could not be transferred without Amazon’s consent.
- Future retail was also restricted to transfer assets to “restricted persons” which included the Reliance group.
- The parties also agreed to resolve any issues through SIAC Rules.
So, Amazon filed a plea to Singapore’s Emergency Arbitrator, which ruled against the merger in favour of Amazon.
Significance of the SC order:
- The SC dismissed FRL’s argument that the “Emergency Arbitrator is not an arbitral tribunal” under the Arbitration and Conciliation Act of 1996.
- The Supreme court also held that the award falls within the ambit of the Arbitration and Conciliation Act (Section 17) and is enforceable.
- Section 17 of the Act prescribes the mechanism for parties to an arbitration to seek interim reliefs from the arbitral tribunal during the pendency of the arbitral proceedings.
- The court also pointed out a recommendation that a High-Level Committee constituted by the Government of India under the chairmanship of Justice B N Srikrishna (retd) to review the institutionalisation of the arbitration mechanism in India.
- The committee noted that international practice is in favour of enforcing emergency awards(Singapore, Hong Kong and the United Kingdom all permit enforcement of emergency awards). So the committee recommended India to enforce the emergency awards in all of its arbitral proceedings.
