FUTURE RETAIL, a unit of Future Group, is likely to move the Delhi High Court seeking directions on going ahead with its Rs 24,713-crore deal with Reliance Retail Ventures, which has been put on hold by the Singapore International Arbitration Centre (SIAC), sources told The Indian Express.
The petition, which is likely to be filed by Tuesday, is expected to challenge the interim order issued on Sunday by an emergency arbitrator of the SIAC. Future Retail is hopeful of getting an early hearing, within the week, sources said.
Following a plea by e-commerce giant Amazon citing alleged contractual violations, the interim order had asked Future Retail, Future Coupons and the parent company Future Group “not to take any steps in furtherance to the Board Resolution of August 29”.
Legal experts said the interim order does not hold much value under Indian laws, and Future and Amazon will have to approach courts in India to seek directions on the course of action.
“For interim orders, there is no provision as such for enforcement under Indian Laws. They (Amazon) may have to file a proceeding in India and seek enforcement of the award, the interim order. This is a heads-up for them (Future),” Amit Jajoo, partner at IndusLaw, said.
Amazon had objected to the Future-Reliance deal, and subsequently instituted arbitration against Future Coupons, Future Retail and Future Group.
On Sunday, Amazon said it welcomed the interim order but remained committed to the arbitration process. Reliance Retail said it intends to “enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay”.
On Monday, Future Retail notified the exchanges that it had received communication from the SIAC, and enclosed the interim order. The company also said that all agreements it had with companies were “governed by Indian Law and provisions of the Indian Arbitration Act for all intents and purposes”.
“This matter raises several fundamental jurisdictional issues, which go to the root of the matter. Accordingly, this order will have to be tested under the provisions of Indian Arbitration Act in an appropriate forum,” the company said in a statement.
On August 29, Future Retail had announced that it would “sell by way of a slump sale the retail and wholesale business” of its supermarket chain Big Bazaar, premium food supply unit Foodhall, and fashion and clothes supermart Brand Factory’s retail and wholesale units, to Reliance Retail, a unit of Mukesh Ambani-owned Reliance Industries.
The deal, however, ran into legal trouble with Amazon, which had last year signed a Rs 2,000-crore deal with Future Retail under which the e-commerce major would acquire 49 per cent stake in Future Coupons, the promoter firm.
Following the Future-Reliance deal, Amazon had also said that its agreement with Future Coupons had given it a “call” option.
This provision, Amazon has claimed, enabled it to exercise the option of acquiring all or part of Future Retail’s shareholding in the company, within three to 10 years of the agreement. It said the deal also required Future Group to inform Amazon before entering into any sale agreement with third parties.
The deal, Amazon had further said, was a violation of a non-compete clause and a right-of-first-refusal pact. The Future Group had said that it had not sold any stake in the company, and was merely selling its assets and therefore not violated the contract.
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