Supreme Court holds Singapore EA award against Reliance-Future merger enforceable
In a major victory for Amazon, the Supreme Court on Friday held that Singapore’s Emergency Arbitrator (EA) award, restraining the Rs 24,731-crore merger deal of Future Retail Ltd (FRL) with Reliance Retail, is valid and enforceable under Indian arbitration laws.
The order means Future Retail and Reliance Retail cannot proceed with their amalgamation plans.
The apex court also set aside the two orders of February 8 and March 22 of the division bench of the Delhi high court which lifted the single-judge’s orders staying the FRL-RRL merger.
Amazon.com NV Investment Holdings LLC and FRL have been embroiled in a bitter legal battle over the deal and the US-based firm has appealed to the apex court that the EA award was valid and enforceable.
A bench of justices R.F. Nariman and B.R. Gavai decided two important questions in the judgment — whether an ‘award’ by an EA under the Arbitration Rules of the Singapore International Arbitration Centre (SIAC) can be said to be an award under India’s Arbitration and Conciliation Act.
The second question was “whether an order passed under Section 17(2) of the Arbitration Act in enforcement of the award of an Emergency Arbitrator by a Single Judge of the high court is appealable”.
The Supreme Court bench has answered both questions. Justice Nariman, in the 103-page judgment said: “We... answer the first question by declaring that full party autonomy is given by the Arbitration Act to have a dispute decided in accordance with institutional rules which can include Emergency Arbitrators delivering interim orders, described as ‘awards’”.
“Such orders are an important step to help decongest the civil courts and afford expeditious interim relief to the parties. Such orders are referable to and are made under Section 17(1) of the Arbitration Act”.
Answering the second question, the top court said no appeal lies against an order made by a court for ensuring the enforcement of the EA’s award as done by FRL in this case against the single-judge order restraining it from going ahead with the deal with RRL.
In a regulatory filing with the stock exchanges, Future Retail said it has been advised by its counsel that “it has remedies available in law, which it will exercise”.
FRL intends to pursue all available avenues to conclude the deal to protect the interests of its stakeholders and staff.
Regarding the Singapore arbitration process, it said: “The Arbitral Tribunal has concluded hearings on the questions (i) whether the interim award of the emergency arbitrator should continue and (ii) whether FRL is at all a party in the Arbitration proceedings. The decision of Arbitral Tribunal is awaited.”
Legal eagles believe that Future Retail will challenge the EA order again before the Delhi high court.
The judgment 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, an expert said.
The focus will now switch to Singapore where the arbitral tribunal is expected to pronounce its ruling on the dispute between Amazon and FRL.
The ruling will also have a significant bearing on all arbitration cases being fought overseas; the ruling comes just a day after the Modi government decided to end the retrospective effect of the tax measure passed in 2012 that allowed the taxman to pursue claims against indirect transfer of Indian assets.