Amazon asks Sebi to wait for SIAC order

SHARE Inc. has asked India’s markets regulator to wait for the final order of a Singapore court before clearing the merger of Future group companies, a move that is seen as a precursor to an eventual sale of its assets to Reliance Industries Ltd.

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In a 21 December letter, Amazon told Sebi that the Singapore arbitration court’s ruling has been held valid under India’s arbitration law by the Delhi high court and, hence, the Future group’s amalgamation must wait till the Singapore court gives a final judgement.

“The Delhi high court has also made it clear that no observations were passed with respect to the merits of the interim award. Consequently, all findings contained in the interim award, including the finding that FRL (Future Retail Ltd) is a necessary and proper party to the arbitration proceedings, continue to be valid,” the Amazon letter, a copy of which Mint has reviewed, said.

The high court on 21 December allowed Amazon to oppose Future’s asset sale to Reliance but left it to regulators, including the Securities and Exchange Board of India (Sebi), to decide on its validity.

Amazon’s latest salvo to stall the ₹24,713 crore acquisition of Future group’s assets by Reliance Industries raises the possibility that the dispute may drag on for months, leading to a deterioration in Future group’s retail assets. Future group has been caught in the middle of a battle between Amazon and Reliance for supremacy in India’s retail market.

Acquiring Future’s network of retail, wholesale, logistics and warehousing assets will provide Reliance’s retail unit, already the biggest offline retailer, the firepower to take on Amazon and Flipkart in the online retail market, which has seen sales surge after the pandemic.

Future had petitioned the Delhi high court for an interim injunction restraining Amazon from interfering in the RIL-Future deal. Future Retail had argued that the Singapore arbitration court’s ruling is not legally enforceable in India. “Following the Delhi high court order, Amazon is contemplating an option to approach either a divisional bench of the high court or NCLT to stop Future group from the amalgamation if Sebi delays acting,” said a person directly familiar with the developments.

On 29 August, RIL signed a deal with Kishore Biyani’s Future group to buy out the retail, wholesale, logistics and warehousing businesses from Future group firms. Following this, Future group approached stock exchanges and Sebi for approval on a draft scheme of arrangement entailing merger of six group firms into its flagship Future Enterprises Ltd.

On 25 October, Singapore International Arbitration Centre’s (SIAC), through an interim order, prohibited Future from proceeding with the deal with RIL as it did not take Amazon’s consent before signing the deal, which was needed as per an agreement signed between Amazon and Future group in August last year when Amazon took a 49% stake in Future Coupons Pvt. Ltd.

Amazon has written five letters to Sebi, urging the regulator to stall the RIL-Future deal. In order to assist Sebi with the legal position on the validity of SIAC’s interim award, Amazon has obtained legal opinions from Dipak Misra (former chief justice of India) and Ajit Prakash Shah (former chief justice, high court of Delhi and former chairman, Law Commission of India). “The order passed by the emergency arbitrator remains valid and enforceable…and its sanctity cannot be ignored by any stretch of imagination,” says Misra, as per Amazon’s letter.

Amazon told Sebi “SIAC shall now proceed with the constitution of the tribunal in this matter” to pass its final verdict.

“The arbitration panel for SIAC may be formed soon after SIAC’s notification which is expected in the first week of January,” said the person cited above.

Emails sent to Amazon and Future did not elicit any response at the time of going to press.

Reliance Industries and financial stocks gained