The dispute between Amazon and the Future Group has brought to the forefront the issue of recognition and enforceability of an interim order passed by an emergency arbitrator under the Arbitration and Conciliation Act, 1996.
After multiple proceedings before the Hon’ble Delhi High Court, the matter is presently before the Hon’ble Supreme Court and was posted on 04.05.2021 for final disposal. However, it appears the matter is yet to be taken up for hearing.
In the first of the series of posts on this topic, we provide an easy reference to the factual background and proceedings that have occurred so far through a timeline of events.
Timeline of events
|12.08.2019||Shareholders’ Agreement executed between Future Coupons Private Limited (‘FCPL’), Future Retail Limited (‘FRL’) as well as the promoters of FCPL and FRL.|
|22.08.2019||Shareholders’ Agreement executed between Amazon. Com NV Investment Holding LLC (‘Amazon’) and FCPL as well as the promoters of FCPL and FRL.|
|22.08.2019||Share Subscription Agreement dated 22.08.2019 executed between Amazon and FRL as well as the promoters of FCPL and FRL.|
|19.12.2019||FCPL sent a letter to FRL and to the compliance officer of Future Corporate Resources Private Limited referring to a list of restricted persons in Annexure 1 which included the Mukesh Dhirubhai Ambani Group.|
|June 2020||The promoters of FRL, Biyanis and FRL approached Amazon to provide additional funding to FRL citing distress and the need for Rs. 5000 Crores.|
|29.08.2020||FRL’s board of directors approved the transaction relating to the transfer of its retail assets to MDA. In terms of the proposed transaction, FRL was to amalgamate into another Future company, Future Enterprise Limited.|
|05.10.2020||Amazon initiated the arbitration proceedings on the basis of the arbitration agreement contained in Clause 25.2.1 of the Shareholders’ Agreement dated 22.08.2019 which provides for resolution of the dispute between the parties in accordance with the Rules of Singapore International Arbitration Centre (SIAC). Clause 25.1 also provides that the agreement shall be governed by and construed in accordance with Laws of India and Courts at New Delhi shall have exclusive jurisdiction over all matters relating to the agreement. Clause 25.2.2 stipulates that the seat of arbitration shall be New Delhi. |
Amazon also filed an application seeking an emergency interim relief under Rule 30.2 and Schedule 1 of SIAC Rules for restraining FCPL, FRL, promoters and key managerial personnel from pursuing the transaction with MDA. Mr. V.K. Rajah, SC was appointed as the Emergency Arbitrator.
|13.10.2020||The Learned Arbitrator asked the parties to submit their response to the four Supreme Court judgments namely: MTNL v. Canara Bank, 2019 SCC Online SC 995; Chatterjee Petrochem v. Hadia Petrochemicals Ltd. (2014) 14 SCC 574; Duro Felguera S.A. v. M/s. Gangavaram Port Ltd. (2017) 9 SCC 729; and, Ameet Lalchand Shah v. Rishabh Enterprises (2018) 1 SCC 678.|
|25.10.2020||The Learned Arbitrator passed the following interim order:|
“(a) the Respondents are injuncted from taking any steps in furtherance or in aid of the Board Resolution made by the Board of Directors of FRL on 29 August 2020 in relation to the Disputed Transaction, including but not limited to filing or pursuing any application before any person, including regulatory bodies or agencies in India, or requesting for approval at any company meeting; (b) the Respondents are injuncted from taking any steps to complete the Disputed Transaction with entities that are part of the MDA Group; (c) without prejudice to the rights of any current Promoter Lenders, the Respondents are injuncted from directly or indirectly taking any steps to transfer/dispose/alienate/ encumber FRL‘s Retail Assets or the shares held in FRL by the Promoters in any manner without the prior written consent of the Claimant; (d) the Respondents are injuncted from issuing securities of FRL or obtaining/securing any financing, directly or indirectly, from any Restricted Person that will be in any manner contrary to Section 13.3.1 of the FCPL SHA; (e) the orders in (a) to (d) above are to take effect immediately and will remain in place until further order from the Tribunal, when constituted; and, (f) the Claimant is to provide within 7 days from the date hereof a cross-undertaking in damages to the Respondents. If the Parties are unable to agree on its terms they are to refer their differences to me qua EA for resolution; and, (g) the costs of this Application be part of the costs of this Arbitration.”
|November 2020||FRL files a suit (CS (Comm) 493 / 2020) along with an application seeking inter alia interim injunction restraining Amazon from interfering with the Disputed Transaction including claiming through or under the proceedings before any court or tribunal, interdict consideration of the Disputed Transaction by the jurisdictional authorities in accordance with law.|
|21.12.2020||Order of the Single Judge in CS (Comm) 493 / 2020 declining the grant of interim injunction as prayed for, however, the statutory authorities/ regulators were directed to take the decision on the applications/ objections in accordance with the law. It is relevant to note that the court observed that while FRL had established prima facie that the assertion of control by Amazon on FRL on the conflation of the FCPL SHA and FRL SHA is not permitted under the FEMA FDI Rules; however, on the basis that FRL did not prove the requirements of balance of convenience and irreparable injury, the relief for interim injunction came to be dismissed.|
|January 2021||Arbitral tribunal constituted under the SIAC Rules.|
|26.01.2021||FRL approaches the NCLT, Mumbai to approve the scheme of arrangement as per its deal with MDA.|
|27.01.2021||Petition filed for enforcement (O.M.P (ENF) (COMM) 17/2021) of the interim order of the emergency arbitrator dated 25.10.2020 under Section 17 (2) of the Act read with Order 39 Rule 2 A and Section 151 of the CPC.|
|02.02.2021||The Hon’ble Single Bench of the Hon’ble Delhi High Court in O.M.P (ENF) (COMM) 17/2021 reserved the matter for orders and in the meantime ordered status quo to be maintained till such time that the matter is not disposed of.|
|08.02.2021||FRL preferred an appeal before a Division Bench of the Hon’ble Delhi High Court against the status quo order dated 02.02.2021 in O.M.P (ENF) (COMM) 17/2021. The Hon’ble Court stayed the operation of the status quo order and also allowed statutory authorities like the SEBI, NCLT etc. to proceed under the law. However, the same was done with the caveat that this was only a prima facie view and shall not come in the way of the order to be passed by the Single Judge.|
|22.02.2021||Amazon went on appeal before the Hon’ble Supreme Court challenging the order of the Division Bench of the Hon’ble Delhi High Court dated 08.02.2021. The Hon’ble Supreme Court in the meantime permitted the NCLT proceedings to go on, however with the caveat that it shall not culminate in a scheme.|
|18.03.2021||Order of the Single Judge in O.M.P (ENF) (COMM) 17 / 2021 holding that the emergency arbitrator is an arbitrator for all intents and purposes and the order of the emergency arbitrator is an order under Section 17 (1) and enforceable as an order of the Court under Section 17(2) of the Arbitration and Conciliation Act. Further, that FRL was a proper party to the proceeding. |
The Single Judge contrary to the findings in C.S. (Comm) 493 / 2020 held that the combining/ treating all agreements as a single integrated transaction does not amount to control over FRL and therefore, the petitioner’s investment does not violate any law. The Hon’ble Court also imposed costs of Rs. 20,00,000/- and issued a show cause notice as to why the promoters and key managerial personnel of FCPL and FRL should not be held in contempt of the interim order dated 25.10.2020 of the learned arbitrator. More importantly, the respondents were also directed to take no further action in violation of the interim order dated 25.10.2020 and the competent authorities for recall of the orders passed on their applications in violation of the terms of the interim order dated 25.10.2020 within two weeks.
|22.03.2021||A Division Bench of the Hon’ble Delhi High Court stayed the order of the Single Bench dated 18.03.2021.|
|19.04.2021||Amazon preferred an appeal before the Hon’ble Supreme Court against the order dated 22.03.2021 of the Hon’ble Delhi High Court. The Hon’ble Supreme Court stayed further proceedings before the single judge as well as the Division Bench of the Hon’ble High Court of Delhi. Matter was posted to 04.05.2021 for final disposal. However, it appears that the matter is yet to be taken up and heard.|