CITATION: CS(COMM) 493/2020
In the case of Future Retail Ltd. V. Amazon case the issue was majorly regarding the legal status of Emergency Arbitrator and the consequential order passed therefore.
FACTS IN BRIEF
The facts which led to this case are as following :
The Future Retail Ltd. (FRL) is a listed company operating in the retail sector of the country,
“having more than three lakhs shareholders and over 25,000 employees, operating retail chains in more than 400 cities in every State of the country through digital platforms and also through about 1534 physical stores across India”. Covid-19 pandemic has had a devastating impact on the Indian retail sector including FRL which is in serious economic peril. FRL’s financial condition is rapidly deteriorating with notices being received from banks, financial institutions, creditors, landlords and vendors etc. Therefore, FRL entered into a deal with Reliance, with the latter acquiring the retail and wholesale business including the logistic and warehouse business for a considerable amount along the its liabilities. Reliance also agreed to invest into FRL’s merged equity and to help pay of its residual liability, saving FRL from insolvency.
On the other hand, Amazon.Com Investment Holdings LLC (defendant) had entered into a contract with Future Coupon (FCPL), a Subsidiary Holding Company under the Future Group claiming 49% stakes in the company. But while dealing with the company Amazon had put a condition that Future Retail will not sell its assets to some particular companies. This list of companies also included Reliance as well. Therefore, according to Amazon the Future Group violated a particular clause of the Contract. The same contract had clause that said that if any problem arises between the Future Group and Amazon, it will be settled via arbitration with it arbitral proceedings taking place in Singapore International Arbitration Centre (SIAC), Singapore. Here, the SIAC panel passed an interim order in favour of Amazon, which put a restrain over Future Group to proceed with the deal with Reliance.
Later, Amazon urged institutions like SEBI and Competition Commission of India (CCI)
to not review or suspend review of Reliance deal and not grant no objection certification on the grounds and it goes against the agreement.
Due to constant interference of Amazon in the deal that was taking place between FRL and Reliance. FRL filed suit impleading Amazon to restrain its interference before SEBI, CCI, etc. Also, the are not seeking any anti-arbitration injunction to declare the Emergency Award Order (EA Order) and interim order passed as invalid. But they argued that the EA order passed by the arbitrator under the rules laid down by SAIC is of no consequence as “it was not enforceable and it was not recognized under Part I of the Arbitration and Conciliation Act, 1996”.
Held : The Court ruled in favour of amazon and dismissed the contentions of FRL regarding the legal Status of the arbitrator and consequential order passed thereof. The court said, “Where the parties exercising autonomy expressly choose different procedural rules for conduct of arbitration, they are assumed to be aware of the provisions of such rules, including the procedure for obtaining interim relief, and the fact that such rules provide for emergency arbitration by appointment of an emergency arbitrator. In the present case, the parties had with open eyes left it for themselves, to choose between availing interim relief from the emergency arbitrator on the one hand, or the Courts under Section 9 of the A&C Act on the other hand. Thus, Amazon has exercised its choice of the forum for interim relief as per the arbitration agreement between the parties. Nothing in the A&C Act prohibits the parties from doing so”.
The case prima-facie is in the favour of Amazon based on the merits of the case and FLR has given no good legal reason for the Amazon to back off from interfering with the sale of its Retail Assets to the Restricted Person.
On if come to talk about the legal status of the Emergency Arbitrator, the status of the same s solely based on the autonomy of the parties involved. Thus, they have similar power to grant interim order that to an Arbitral Tribunal. But the Arbitral Tribunal has the power modify, terminate or reconsider an Emergency Award or Order passed.
Here the parties with their own free will entered into an arbitration and agreed to incorporate SIAC rules, the parties agreed to the provision of emergency Arbitration.
Also, if we look at the current legal framework that is present to govern arbitration under Arbitration and Conciliation Act, 1996 has proved to be sufficient to include Emergency Arbitration. For instance definition of ‘Arbitral Tribunal’ under section 2(1)(d) includes a sole arbitrator or a panel of arbitrators, hence, is broad enough to include Emergency Arbitrator. It’s a similar situation for Interim Orders under Section 17(1) and 17(20),which give the Arbitral Tribunal powers similar to court to pass interim order and make enforceable in the same manner as if passed by court. Here, under Section 37 of the same act the orders are made appealable in court.
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