FRL-Reliance deal: BIG JOLT! SC rules in favour of Amazon; Future Retail shares locked in lower circuit
Reliance Industries aiming to become a retail giant with Future Retail deal. While Amazon, which is already an e-commerce giant, sees a lot of opportunity in India and also aims to start its retail business here.
The Supreme Court on Friday ruled in favour of e-commerce giant Amazon by holding that Singapore's Emergency Arbitrator (EA) award, restraining the Rs 24,731 crore merger deal of Future Retail Ltd (FRL) with Reliance Retail, was valid and enforceable under Indian laws.
A bench of Justices R F Nariman dealt with the larger question and held that an award of an EA of a foreign country is enforceable under the Indian Arbitration and Conciliation Act despite the fact that the term EA is not used in arbitration laws here.
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The EA Order is an order within section 17 (1) and can be enforced under Section 17(2) of the Arbitration and Conciliation Act, it said.
Amazon.Com NV Investment Holdings LLC and FRL are embroiled in a bitter legal fight over the deal and the US-based firm has sought in the apex court that the EA award was valid and enforceable.
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Future Group and Amazon have been locked in legal battles, wherein US e-commerce giant has been accusing the FRL of violating pre-existing contracts when it sold its assets to Reliance. Future has denied any wrongdoing.
A two-judge bench of the Supreme Court said that a decision by a Singapore arbitrator in October - that put the deal on hold after finding merit in Amazon`s objections - was valid and applicable in India.
Amazon had argued that the order is binding, while Future had argued it was not. Both sides had agreed to use the Singapore arbitrator in case of disputes when they entered into a $200 million deal in 2019.
The shares of FRL were locked at a lower circuit of 5 per cent to Rs 52.55 per share, similarly, Reliance Industries' shares slumped by around 2 per cent to Rs 2093 per share on the BSE today.
Around 1,300 of Future`s more than 1,700 retail outlets in 400 cities sell groceries. Its budget supermarkets cater to middle-class shoppers, while its upmarket stores offer products like imported cheese and fresh guacamole, relatively rare in India`s retail landscape.
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