New Delhi: The Supreme Court ruled Friday in favour of US-based 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 Justice RF Nariman also dealt with the larger question and as a proposition of law, held that an award of an EA of a foreign country is enforceable under the Indian Arbitration and Conciliation Act. Future Retail had had argued that an EA is not an arbitrator under the Indian law as the term does not find any mention in the statute here.
“The EA Order is an order within section 17 (1) and can be enforced under Section 17(2) of the Arbitration and Conciliation Act,” the Supreme Court bench said.
Pronouncing the verdict, Justice Nariman said the top court has agreed with the findings of the single-judge of the Delhi High Court which had found the EA award in favour of the US firm to be enforceable in India.
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.
While the two companies did not immediately comment on the judgment, a legal expert who did not wish to be named, said that Future Retail is expected to file a review plea against the order and an appeal under section 37 (20) of the Arbitration Act against the EA’s interim award before the Delhi High Court to obtain appropriate relief to pursue its deal with Reliance.
The judgment, he said, does not deal with the merits of the dispute between FRL and Amazon. It has dealt with the questions of law which are academic in nature. The judgment has held that the interim award of SIAC emergency arbitrator is a binding order under section 17(1) of the Arbitration Act, he added.
The top court had reserved the judgement in the high profile case July 29 after hearing battery of lawyers including senior advocates Harish Salve and Gopal Subramanium, appearing for FRL and Amazon respectively.
“We will decide whether EA award falls under section 17 (1) (which deals with interim award by arbitral tribunal) of the Arbitration and Conciliation Act. And if yes, then whether it can be enforced under section 17 (2) (of the Act),” the bench had said.
The provisions of the Act deal with the interim measures ordered by an arbitral tribunal and section 17 (1) says: “Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.”
Section 17 (2) provides that the arbitral tribunal may require a party to provide appropriate security in connection with an interim measure ordered.
Salve, appearing for FRL, had referred to judgements on validity and the enforceability of arbitral awards and said that there was no notion of EA under the Indian law on arbitration and conciliation and, in any case, there was no arbitration agreement to this effect.
There was no provision for EA under the Indian Law and “it cannot be done by the process of construction”, Salve had said referring to the single-judge order of the Delhi High Court which had held the award of the EA to be valid.
Amazon had told the bench that the Biyanis of Future Group had negotiated with it to enter into certain agreements and is bound by the EA award restraining FRL from going ahead with Reliance Retail merger.
Subramanium in his submissions had reiterated that the EA’s award in favour of Amazon was valid and enforceable under the Arbitration and Conciliation Act of India.
Kishore Biyani and 15 others including FRL and Future Coupon Pvt Ltd (FCPL) have been made parties by Amazon in a batch of pleas challenging the Delhi High Court order of the division bench which paved the way for the deal.
The division bench had stayed February 8, the single-judge direction to FRL and various statutory authorities to maintain the status quo on the mega deal.
The interim direction was passed on FRL’s appeal challenging the February 2 order of the single judge which had ruled in favour of the US firm saying that the EA’s award was valid and enforceable.
Amazon had first filed a plea before the high court (single judge) for enforcement of the October 25, 2020, EA award by Singapore International Arbitration Centre (SIAC) restraining FRL from going ahead with the deal with Reliance Retail.