In 2019, Amazon had invested in Future Group entities—acquiring a 49% stake in Future Coupons—promoter entity of Future Retail. Future Coupons holds 9.82% in Future Retail. At the time, Future Coupons and Future Retail had also entered into a shareholder agreement.
The tribunal’s award on Wednesday is the outcome of pre-arbitration hearings that took place in July this year. Future Retail had raised two main issues:
- Jurisdictional challenge to the arbitral tribunal where Future Retail argued that it wasn’t a signatory to the contract between Amazon and Future Coupons. And so, it cannot be made party to the proceedings arising out of the shareholders’ agreement between them.
- Vacation of interim award of October 2020 by an emergency arbitrator which put on hold the Rs 27,513-crore deal between Mukesh Ambani’s Reliance Retail Ventures Ltd. and Future Group.
The tribunal is yet to rule on the second issue.
Amazon had alleged that the deal violates its contractual rights.
As per the SHA, Amazon said, Future Retail required prior approval from Future Coupons on certain matters such as transfer or licence of all or substantially all of its assets or material assets; transfer of assets above a certain threshold to a related party; amendment of articles of association in conflict with the terms of the shareholder agreement, etc.
Broadly, Amazon argued that its approval is required for the deal between Future Retail and Reliance Retail Ventures.
In October last year, the emergency arbitrator granted an interim award in favour of Amazon. It had directed Future Group to put on hold its transaction with Reliance Retail. On Jan. 5, a three-member arbitration tribunal was constituted comprising Michael Hwang, Professor Jan Paulsson and Professor Albert Jan van den Berg.
The main hearing on whether there’s been a contractual breach by Future Group, as alleged by Amazon, is likely to commence in November this year. BloombergQuint