Amazon believes Future Group violated the contract by signing a deal with rival Reliance.
New Delhi:
Amazon.com Inc won an interim award on Sunday against its partner Future Group that sold retail business to Reliance Industries Ltd for Rs 24,713 crore after a Singapore-based single-judge arbitration panel suspended the deal.
Amazon, which had agreed to buy 49 percent of one of Future’s unlisted firms last year with the right to buy into flagship Future Retail Ltd after a three- to ten-year period, had taken Future into arbitration. after the indebted Kishore Biyani group firm. signed a pact to sell retail, wholesale, logistics and warehousing units to billionaire Mukesh Ambani’s Reliance.
In approving an interim award in favor of Amazon, VK Rajah asked the Future group to put the deal on hold and said the deal cannot be carried out until it finally decides the matter, sources with direct knowledge of the development said.
Confirming the development, an Amazon spokesperson said the arbitration panel has granted the requested waivers and expects a speedy conclusion of the arbitration process.
“We welcome the award of the Emergency Arbitrator. We are grateful for the order granting all requested waivers. We remain committed to a speedy conclusion of the arbitration process,” said the Amazon spokesperson.
Amazon believes Future Group violated the contract by signing a deal with rival Reliance.
The deal would have helped Reliance nearly double its presence as India’s largest retailer.
Meanwhile, commenting on the development, RIL’s retail arm, Reliance Retail Ventures Limited (RRVL), said that it has been briefed on the interim order approved by the Emergency Arbitrator in the arbitration proceeding invoked by Amazon and that it has the intention to assert your rights and complete the transaction in terms of the plan and agreement with Future Group without delay.
RRVL has carried out the transaction for the acquisition of assets and businesses of Future Retail Limited under proper legal advice and the rights and obligations are fully enforceable under Indian law.
“RRVL intends to enforce its rights and complete the transaction in terms of the scheme and the agreement with the Future group without delay,” RRVL said.
With the dispute, Amazon is drawing battle lines with Reliance in the race for the estimated $ 1 trillion retail markets of India, where online shopping is gaining ground. You need the Indian partner to strengthen its position after becoming the authorized online sales channel for Future Retail stores selling everything from groceries to cosmetics to clothing.
A source said that a three-member arbitration panel, with Future and Amazon appointing a representative each and a third member as a neutral arbitrator, would decide the dispute in 90 days.
The Amazon team was represented by Gopal Subramanium, Gourab Banerji, Amit Sibal and Alvin Yeo. While Future Retail’s side was represented by advocate Harish Salve, sources said.
At the beginning of October 16, the arbitration panel of the Singapore International Arbitration Center concluded the hearing.
Amazon has sent a legal notice to Future Group, alleging that the retailer’s sale of Rs 24,713 crore assets to Reliance Industries violated an agreement with the e-commerce giant and dragged the Future group firm into arbitration.
Previously, on August 29, 2020, the Future group had announced the sale of its retail, wholesale and logistics, etc. to Reliance Retail Ventures Limited, the retail arm of Reliance Industries.
Amazon, last year, had bought a 49 percent stake in one of Future’s unlisted companies, Future Coupons Ltd, with the right to buy into the flagship Future Retail after a period of three to ten years. Future Coupons owns a 7.3 percent stake in Future Retail.
The fight between Future and Amazon comes at a time when Reliance has been strengthening its position in the country’s retail segment.
Reliance Retail Ventures Ltd, run by India’s richest man Mukesh Ambani, has been on a fundraising spree and, since September, has raised Rs 37.710 crore by selling a stake in its retail division.
RRVL, operates India’s largest, fastest growing and most profitable retail business, encompassing supermarkets, consumer electronics chain stores, cash wholesaling wholesale, fast fashion stores and the JioMart online grocery store.
It operates around 12,000 stores in nearly 7,000 cities, with 640 million visitors in the major categories of groceries, consumer electronics, and clothing. Reliance Retail’s revenue in fiscal 2020 was Rs 1.63 crore lakh.
The investments provide Reliance Retail with funds to compete both offline and online. The investments come as the country’s retail sector prepares for the upcoming festival season and would help Reliance launch an assault on rivals such as Flipkart and Walmart-owned Amazon.
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