Even after winning an injunction from the Singapore International Arbitration Centre (SIAC) against Reliance’s deal to acquire Future Retail, Amazon may not rest easy and could approach an Indian high court to appeal against the deal.
Amazon had initiated legal proceedings against the Kishore Biyani-owned Future Group, accusing the latter of violating the non-compete clause in the contract between both parties, with the proposed sale of its retail, wholesale, logistics, and warehousing businesses to Reliance Retail for INR 24K Cr in August this year.
Amazon had, last year, acquired a 49% stake in Future Coupons, the promoter entity of Future Retail. Future Coupon owns a 7.3% stake in Future Group, which led to Amazon acquiring around a 3.58% stake in the company too.
This week, the Singapore arbitrator, in an interim order, ordered a stay on the deal between Reliance and Future. However, after both Reliance and Future said that they would go ahead with the deal “without any delay”, questions arose about whether the decision of the SIAC is applicable in the Indian regulatory scenario. Legal experts have told Inc42 of a precedent in this regard when in 2019, the Delhi High Court chose to uphold the decision of the Singapore emergency arbitrator in Steer Engineering Private Limited vs GlaxoSmithKline Consumer Healthcare.
Amazon and Future Group have till next week to mutually agree on whether they want to continue the arbitration proceedings at the SIAC. If Future agrees to abide by the SIAC ruling, then both parties can mutually decide upon the members of the arbitration panel and continue the proceedings at the SIAC.
However, if Future doesn’t agree with the SIAC interim order, then Amazon would look to get a stay on the Reliance-Future deal through an Indian high court, something which could lead to a bitter legal battle involving three giants of the Indian retail ecosystem.
It is worth noting that the Reliance-Future Group deal also needs the approval of the Competition Commission of India (CCI), India’s antitrust watchdog. Currently, the CCI is investigating the offline and online aspects of the deal and its possible impact on the competition in the sector.
According to Namita Matthews, a partner at Bengaluru-based law firm Algo Legal, the arbitration proceedings could take up to a year to be completed. “The Party that does not succeed would also have the right to appeal, though the ambit of arbitration appeals is very limited. Nonetheless, there would be time lost by both sides,” she said.
“This, however, does not stop creditors of Future Group to start enforcing their claims, which could plunge Future Group into further serious financial distress.”
It is reported that Future Group firms owe around INR 16,000 Cr to a clutch of banks and debt mutual funds, while Future Group founder Biyani owes close to INR 11,000 Cr to lenders.
Other News
- Andhra Pradesh Chief Minister YS Jagan Mohan Reddy has requested IT minister Ravi Shankar Prasad to direct internet service providers (ISPs) to block 132 websites supposedly engaged in online real money gaming. However, rather puzzlingly, some of these websites which the Andhra CM wants to be banned, such as a proxy website for downloading popular esports title Fortnite, Chess.com and casual gaming website Miniclip, have nothing to do with real money gaming.
- After grilling Facebook and Twitter on the Personal Data Protection Bill, 2019, the Joint Parliamentary Committee (JPC) this week questioned tech giant Google and digital payments company Paytm over their links with China. The committee asked Google and Paytm to submit written responses to queries on structure, tax regimes, data processing and protection and privacy.
- BYJU’S-owned online coding platform WhiteHat Jr was, this week, asked by the Advertising Standard Council of India (ASCI), the advertising self-regulatory body, to pull down at least five of its advertisements which were in violation of the advertising code for making dubious and unsubstantiated claims. The coding platform has accepted ASCI’s direction and pulled down the advertisements that were flagged.
- While it works to develop UPI-like digital payments options in Singapore, the National Payments Corporation of India (NPCI) has also submitted a joint bid, along with US-based fintech company Euronet, to to the Central Bank of Myanmar for building the country’s proposed real-time Retail Payments System, as well as a QR Code Generation and Repository System.
- The government’s proposed pitch for making India a hub for manufacturing seems to have borne fruit. Shipments of ‘Made in India’ smartphones achieved their best tally of 53 Mn units in a single quarter — Q3 2020. However, barring Samsung which had a 24% market share for smartphone shipments, the remaining four companies in the top five in terms of market share are all based in China. These are Xiaomi, which had a market share of 23%, followed by Vivo at 16%, Realme at 15% and Oppo at 10%.
Among the movers and shakers this week, former public policy executive for Uber India Iravati Damle has been appointed as head of public policy for Zoom.
From the funding and acquisitions corner, overall, about $195 Mn was invested across 23 Indian startups this week.
Stay tuned for next week’s edition of News Roundup.