After Amazon received a favorable ruling from a Singapore arbitration court in regards to the deal between Reliance Retail and Future Group, the Indian retail giant has come forward to defend itself by saying that the deal is completely enforceable under the Indian law and it will be completed soon without any delay.
Reliance said in a statement, “RRVL is informed of an interim order passed by the Emergency Arbitrator in the arbitration proceedings invoked by Amazon under a shareholders’ agreement with the promoters of Future group. 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.”
Earlier this year, Reliance Retail Ventures (RRVL) had announced the acquisition of a majority stake in the second-largest retail firm in India, Future Group, for $3.4 billion. According to the deal, RRVL would take control of Future Group’s retail, wholesale, logistics and warehousing businesses. However, this deal did not go well with the American e-commerce giant, Amazon.
Amazon, which owns a 49% stake in the Future Group promoter, Future Coupons, has a first right to refuse any further purchase of a share in Future Group. Amazon’s contractual rights also reportedly include a non-compete like a pact. So when RRVL announced its acquisition of Future Group, it set off the American e-commerce giant and it immediately served a legal notice to the Kishore Bhayani-led Future Group. Amazon cited breaching of existing contracts by getting into a deal with Reliance in the legal notice.
Amazon further went ahead to file an arbitration against the Reliance-Future deal at the Singapore International Arbitration Centre. The hearing was led by V.K. Rajah on October 16 and an initial judgment was passed on Sunday ordering Future Group to hold off its deal with Reliance Retail for now. The Singapore court will now conduct main tribunal hearings in the case and has ordered a halt on the deal until the hearings get over.
An Amazon spokesperson said, “We welcome the award of the Emergency Arbitrator. We are grateful for the order which grants all the reliefs that were sought. We remain committed to an expeditious conclusion of the arbitration process.” RRVL responded to the order saying it “intends to complete the transaction in terms of the scheme and agreement with Future group without any delay”.
The legal battle comes at a time when both Amazon and Reliance Retail are playing their best cards to get hold of the Indian retail space. Amazon, which is still marginally behind Flipkart in India, looked to expand its outreach and service with the help of Future Retail. On the other hand, Reliance Retail, a company that has been collecting billions in investments this year, has already become a headache for other retail and e-commerce companies and aims to strengthen its position in the Indian retail and e-commerce space.
The Amazon-RRVL fight has taken some by surprise. That was largely because reports that suggested Amazon is interested in acquiring a sizeable stake in Reliance Retail. The deal would be worth billions of dollars according to several reports by Bloomberg and ET Now.