‘Future’ tense for Reliance as legal battle with Amazon likely to continue

Kul Bhushan co-reported this story.

In a long-drawn battle between the Jeff Bezos-led Amazon and Mukesh Ambani-headed Reliance Industries Ltd (RIL) over Future Retail, India’s Supreme Court has finally delivered a verdict.

The top court has ruled that an emergency order handed out by the Singapore International Arbitration Centre (SIAC) in October 2020 is enforceable in India, in a landmark ruling that is viewed as a big boost to Amazon. The SIAC had last year paused the sale of Future Group’s retail businesses to Reliance Retail in a deal pegged at US$3.4 billion.

The size of India’s retail sector is estimated to be US$883 billion, with grocery retail making up US$608 billion / Photo credit: briangoodman / 123RF.

While the verdict puts a question mark on how the Reliance-Future deal will proceed – one of the biggest deals ever in retail – it also sends a positive signal to international players and foreign companies, reaffirming that their rights will be protected in the under the country’s laws.

Just yesterday, the Indian government introduced a bill in parliament to do away with the controversial retrospective tax amendments, which had led to legal disputes with companies such as Vodafone and Cairn Energy. The amendments also aim to improve India’s image among foreign investors.

“We welcome the verdict of the Hon’ble Supreme Court of India upholding the Emergency Arbitrator’s award. We hope that this will hasten a resolution of this dispute with Future Group,” said Amazon in a statement.

“It remains to be seen how things would evolve in the next few weeks and now it’s the Singapore-based arbitration panel that would have the last say on the dispute, rather than the Indian Supreme Court,” Salman Waris, managing partner at TechLegis Advocates & Solicitors, an India-based law firm, told Tech in Asia.

Cash-starved Future Group issued a statement to India’s stock exchange, saying that “it will exercise” the remedies available to it within the ambit of the law. “Future Retail intends to pursue all available avenues to conclude the deal to protect the interests of its stakeholders and workforce,” it said.

An email sent to the Reliance Group by Tech in Asia didn’t elicit a response.

How it began

In 2019, Amazon had paid a little over US$205 million to acquire a 49% stake in Future Coupons, a promoter group entity of Future Group’s retail business. As per the terms of the deal, Amazon also holds a 3.5% stake in Future Retail, the retail arm of Future Group, and the right of first refusal to buy more shares in the unit.

See also: Amazon vs. Reliance Retail: First shots fired in the Indian ecommerce battle

Amazon accused the Future Group of violating this contract by agreeing to sell its businesses to Reliance without first offering the ecommerce giant the chance to increase its shareholding.