Amazon was granted an interim award against its partner Future Group selling retail business to Reliance Industries for INR 24,713 crore after a single-judge arbitration panel based in Singapore put the deal on hold.
Future was brought within the confines of arbitration after the indebted Kishore Biyani group firm signed the deal to sell retail, wholesale, logistics and warehousing units to billionaire Mukesh Ambani-owned Reliance.
Amazon had agreed to purchase 49% of one of Future’s unlisted firms in 2019 with the right to buy into flagship Future Retail after a time frame of three years to 10 years.
The Future group was asked to put the deal on hold until the panel finally decides the matter, sources with direct knowledge of the development shared.
An Amazon spokesperson said that the arbitration panel has granted the relief sought by it and expect an speedy conclusion of the arbitration process.
“We welcome the award of the Emergency Arbitrator. We are grateful for the order which grants all the relief that were sought. We remain committed to an expeditious conclusion of the arbitration process,” the Amazon spokesperson said.
Amazon believes Future Group violated the contract by entering into the deal with rival Reliance.
The deal would have helped Reliance almost double its footprint as India’s largest retailer.
RIL retail arm Reliance Retail Ventures (RRVL) said it has been informed about the interim order passed by the emergency Arbitrator in the arbitration proceedings invoked by Amazon and it intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay.
“RRVL has entered into the transaction for acquisition of assets and business of Future Retail Limited under proper legal advice and the rights and obligations are fully enforceable under Indian Law.
“RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay,” said RRVL.
With the dispute, Amazon is drawing the battle lines with Reliance in the race for India’s estimated $1 trillion retail market, where online shopping is gaining ground. It needs the Indian partner to strengthen its foothold after becoming the authorised online sales channel for Future Retail’s stores that sell everything from groceries to cosmetics and apparel.
Amazon team was represented by Gopal Subramanium, Gourab Banerji, Amit Sibal and Alvin Yeo, while Future Retail side was represented by advocate Harish Salve, sources shared.
Amazon has been ramping up their preparedness ahead of the much-awaited festive season by widening its delivery footprint across the East and the North Eastern Region.
Last year Amazon had bought a 49 per cent stake in one of Future”s unlisted firms, Future Coupons Ltd, with the right to buy into flagship Future Retail after a period between three and 10 years. Future Coupons owns a 7.3 per cent stake in Future Retail.
The scuffle between Future and Amazon comes at a time when Reliance has been bolstering its position in the country’s retail segment.