scorecardresearch
Follow Us:
Thursday, September 23, 2021

Towards an arbitration-friendly jurisdiction

The railing in the Amazon-Future Group case has laid the foundation for recognition and enforcement of emergency awards under Indian arbitration law.


Updated: August 19, 2021 7:19:28 pm
Amazon had invested an amount of Rs 1,431 crores in Future Coupons Pvt. Ltd. (FCPL) based on rights granted to FCPL with regard to FRL, particularly for FRL’s retail stores, under certain shareholders’ agreements.

Written by Abhishek Shivpuri

The legal tussle between Amazon and the Future Group regarding the acquisition of Future Retail Ltd. (FRL) by the Reliance Industries Group has been in the headlines. The first battle has been won by the tech giant. The judgment delivered by the Bench of Justice Rohinton F Nariman and Justice B R Gavai has laid the foundation for recognition and enforcement of emergency awards under Indian arbitration law. It is a reaffirmation of the fact that India is gradually stepping towards being an “arbitration-friendly” jurisdiction.

The genesis of the tussle was the transaction entered into between the Biyani Group and the Reliance Industries Group in August 2020 for the amalgamation of FRL with Reliance Industries and for complete disposal of its retail assets in favour of the Group. Prior to the said transaction, Amazon had invested an amount of Rs 1,431 crores in Future Coupons Pvt. Ltd. (FCPL) based on rights granted to FCPL with regard to FRL, particularly for FRL’s retail stores, under certain shareholders’ agreements. Amazon initiated arbitration against the Biyani Group, including FRL, under Singapore International Arbitration Centre (SIAC) Rules. No entity from the Reliance Industries Group was made party to the arbitration. Amazon made an application seeking urgent interim reliefs under SIAC rules and the appointment of an emergency arbitrator. The emergency arbitrator appointed, made an award in favour of Amazon in October 2020, restricting the Biyani Group from proceeding ahead with the disputed transaction.

This leads to the question — “What is an emergency award?” It is an award rendered by an emergency arbitrator, appointed prior to the formal constitution of an arbitral tribunal by an arbitral institution. It is a recent mechanism introduced by arbitral institutions to encourage parties to seek urgent interim relief from an arbitral institution rather than from a court. The raison d’etre for this is that arbitration is a dispute resolution mechanism requiring minimal interference from courts. Many leading arbitral institutions such as SIAC, ICC and LCIA have provisions for the appointment of an emergency arbitrator. As far as India is concerned, the 246th Law Commission Report had recommended an amendment in the Arbitration and Conciliation Act, 1996 (‘Indian Arbitration Act’) to grant statutory recognition to an emergency award. The proposed amendment, however, was not included in the amended Act. Some of the indigenous arbitral institutions though, such as the Delhi International Arbitration Centre, have made provisions for emergency arbitration.

Interestingly, the Biyani Group proceeded with the disputed transaction, construing the emergency award as a nullity. On the other hand, Amazon filed an application before the Delhi High Court for enforcement of the award. The matter was heard by Justice J R Midha (Retd.) who had the task of answering two novel legal questions — whether the emergency award is an interim order under section 17(1) of the Indian Arbitration Act, and whether it can be enforced under section 17(2).

Midha passed a detailed judgment in March 2021 against the Biyani Group, holding the emergency award to be an interim order under section 17(1) and enforceable under the Indian Arbitration Act, and also holding the Biyani Group to be in violation of the emergency award and directing attachment of its assets. The Biyani Group, indubitably, challenged the order.

The case eventually reached the Supreme Court. With no precedential assistance and significant questions to be answered, it was to be seen whether the decision of the Supreme Court would be accorded global appreciation, or would be castigated similar to that in ONGC v. Saw Pipes. The Supreme Court judgment emphasised party autonomy in arbitration, which includes the right of the parties to choose institutional rules as the governing rules of arbitration. Once chosen, the parties are bound by such rules. The Court also held that the Indian Arbitration Act does not prohibit the parties from agreeing to a provision providing for an emergency arbitrator and that the term “during the arbitral proceedings” is wide enough to encompass emergency arbitration proceedings. The Court ultimately held the emergency award to be an interim order under section 17(1) of the Indian Arbitration Act and enforceable under section 17(2).

This judgement has contributed to the development of Indian arbitration law. In a narrower sense, it is a huge victory for Amazon. But in the broader scheme of things, it is a victory for Indian arbitration and a sigh of relief for arbitral institutions.

The writer is Principal Associate with ELP Law Offices, Delhi

📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines

For all the latest Opinion News, download Indian Express App.

  • The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.
0 Comment(s) *
* The moderation of comments is automated and not cleared manually by indianexpress.com.
Advertisement
Advertisement
Advertisement
Advertisement
X