Delhi High Court finds Emergency Award enforceable, relief for Amazon

In a major relief for Amazon, the Delhi High Court gave a prima facie finding that the Emergency Arbitrator rightly proceeded against Future Retail Limited (FRL), that the Emergency Award (EA) was not a nullity, and that it was enforceable under Section 17(2) of the Arbitration Act.

The e-commerce giant, Amazon had moved the Delhi High Court last month for enforcement of the EA passed under Section 17(2) of the Arbitration & Conciliation Act. It alleged that Future Group, Kishore Biyani as well as other promoters and directors were “deliberately and maliciously” disobeying the EA in spite of their participation in the arbitration proceedings.

Amazon asserted that Future Coupons Pvt Ltd, a shareholder in FRL and in which it holds 49 per cent stake, could not have given its consent to the FRL-Reliance deal in the absence of its approval. It told the Court that had it not been for the assurance given by Future Group promoters and FCPL that the retail assets for FRL would be protected, there would have been no investment in FCPL by the US-based company. The e-commerce giant said it had “protective rights” in FRL and not “controlling rights” in FRL and the same were being breached by the sale of FRL assets to a restricted entity, i.e., Reliance.

FRL argued that the EA was a nullity and not enforceable under Section 17(2). The Indian company contended that there was no arbitration agreement or privity of contract between Amazon and FRL. It also said that the Single Judge had already prima facie opined that the Board Resolution approving the transaction with Reliance was valid.

Also Read: Amazon launches seller registration, account management services in Kannada

The judge directed the respondents (FRL) to maintain status quo till pronouncement of the reserved order. It directed FRL to file an affidavit stating the steps and actions taken by it from October 25, 2020 when the EA was passed, till now in connection with the deal with Reliance.

Last month, stock exchanges had cleared Future Group’s deal with Reliance, despite Amazon’s repeated requests to regulators to block the deal.