Future-Amazon: Delhi High Court Stays Arbitration Proceedings In Singapore Tribunal Till February 1

The Delhi High Court on Wednesday stayed further arbitration proceedings before the Singapore Tribunal between Amazon and Future Group till February 1.

The Court has also stayed the Single Judge order which had dismissed Future Group's plea challenging the two orders passed by the Singapore Arbitration Tribunal. The orders deferred the hearing in the plea filed by Future Group seeking termination of the arbitration proceedings instituted by Amazon. 

A bench led by Chief Justice DN Patel issued notice on the two appeals filed by Future Retail Ltd. and Future Coupons Pvt. Ltd. impugning the said Single Judge order. The notice has been made returnable on February 1, 2022.

The matter was listed pursuant to an urgent mentioning made by Senior Advocate Dayan Krishnan, appearing for Future Group.

"As an ex parte interim relief, looking at the order passed by statutory authority, CCI dated December 17, 2021, especially para 70, 75, 76, 78, 79 and 80 the approval granted which was kept in abeyance and suppression of material facts by respondent 1, there is a prima facie case made out in the favour of appellants. Moreover, balance of convenience is in favour of appellants," the Court ordered.

Adding that all the grounds will be dealt by the Court on February 1, including the maintainability of LPAs, the Court directed "Meanwhile we stay further proceedings of Arbitral Tribunal till the next date of hearing  and we also stay order of single judge."

Senior Advocate Mukul Rohatgi appearing for Future Coupons Pvt. Ltd. began his submissions by relying on the order passed by the Competition Commission of India (CCI) which had kept in abeyance the approval granted for Aamzon's deal with Future Group. He argued that if the approval is gone, the agreement automatically loses it's value.

"This means approval doesn't exist. If it doesn't exist, the agreement has no legal effect in India. The arbitration has not legal effect in India and is a nullity," he added.

He argued that the legal effect of the said order was that the agreement had no legal sanctity because of fraud and misleading statements made by Amazon as recorded by the CCI in it's order.

"Nobody has filed an appeal. The impact of order is clear. They are not willing to deal it as an preliminary issue. Heaven's are not going to fall. Half of the solicitor's office is down with COVID. So we went to the single bench," he said.

Rohatgi further argued that the learned Single Judge in the impugned order failed to appreciate the application and also the fact that the agreement will have no effect after the Commission's order.

"The Single Judge says as if the heaven's are falling, that the world has to live with covid. Your lordship the world has to live with covid, But we don't have to live with a situation where justice is denied," he added.

Adding to the aforesaid, Harish Salve appearing for Future Retail Ltd. referred to the Arbitration and Conciliation Act and argued that while the Arbitral Tribunal is master of it's procedure, the jurisdiction is limited.

On the other hand, Senior Advocate Gopal Subramanium appearing for Amazon submitted that it was not fair to say that Tribunal was not taking cognizance of application to terminate. He added that the entire case of the Future Group before the learned Single Judge was on the issue of priority to be given to the termination application.

"The matter before Single Judge was only on priority. This is reflected in the order. Incidentally even this approval has not been revoked. It has been kept in abeyance...," he added.

"..The Arbitral Tribunal has not relinquished it's duties. Being mindful, it says we will do it. On 8th it will be over. That is a question where we have filed replies. There is no snowballing of those applications in any manner."

Defending the single judge order, Subramanium added that the reason why it did not grant any relief to Future Group was because he had seen that the Tribunal had accommodated them. He therefore argued that it was not a fit case to grant any relief under Article 227.

Yesterday, Justice Amit Bansal had dismissed the petitions filed by the Future Group. In the pleas, reliance was placed on an order passed by the Competition Commission of India on December 17, 2021, which had kept the approval granted for Amazon's deal with Future Group in abeyance.

On receipt of the CCI order, an application was moved before the Singapore Tribunal seeking closure of arbitration proceedings stating that any assertion of contractual rights against Future Group by Amazon would be in direct contravention of the CCI order.

Future Group pointed that the schedule that was set down for hearing of the cross-examination of the expert witnesses by the Arbitration Tribunal from 5 to 8 January, 2022, is a complete travesty, averring that the Arbitration Tribunal was informed by the Future Group that during the ongoing proceedings 6 members of its legal team of 12 lawyers attending the case were Covid positive and thus, it was impossible for them to cope with the directions of the tribunal, file submissions and to instruct the concerned counsel on cross examination of the witnesses.

According to Future Group, the impugned orders passed by the Tribunal were illegal and without jurisdiction as being contrary to sec. 18 of the Arbitration and Conciliation Act, therefore, seeking quashing of the same.

Single Judge's Observations

The Court was of the view that just because the hearing of the termination application was scheduled for a date after the hearing of the expert witnesses, it did not mean that the Arbitral Tribunal was not willing to consider the said applications on merits or was discounting the merits of the said applications.

The Court further noted that prima facie, there was nothing to suggest that the Arbitral Tribunal denied equal opportunity to the parties or that the Arbitral Tribunal was not accommodating towards requests made by the Future Group.

On the submission of Future Group that some of its lawyers had tested positive for COVID-19, and therefore, the preparations for the examinations of witnesses scheduled in January had been adversely affected, the Court added:

"It is to be noted that the COVID-19 pandemic is a reality that the world has been living with for the last two years and may continue to live with for the near foreseeable future. Therefore, the business community at large as well as professionals, including lawyers/law firms, would have to learn to live with this reality and continue with their regular professional and business activities, subject of course, to any regulations that may be imposed by state/national governments. Court hearings as well as hearings in arbitrations have been successfully conducted in this period of two years through the virtual mode."

"A lot of conferences and meetings, where physical presence of parties was required earlier, have now given way to virtual conferences, which have proven to be almost as effective as physical hearings/conferences. Even as of today, when COVID-19 cases are on the rise in India, Courts in the country, including the Supreme Court of India, continue to function, albeit through the virtual mode. Functioning during the COVID-19 pandemic is a reality that lawyers, judges and arbitrators have had to come to terms with."

Further adding that all the parties in the arbitration proceedings are big corporations and have a battery of lawyers representing them before multiple fora, the Court said that even if some of the lawyers had tested positive for COVID-19, it can be duly expected that the parties and their law firms would endeavour to make alternate arrangements.

The Amazon-Future deal has given rise to several rounds of litigation in India. Amazon had invoked arbitration proceedings in Singapore to halt Future Retail's deal with the Reliance group. An emergency award was passed by the Singapore Arbitrator to halt the Future-Reliance deal. This was challenged by FRL in the Delhi High Court. Ultimately, the matter reached the Supreme Court, which approved the emergency award passed by the Singapore Arbitrator.

Background

Justice JR Midha, vide order dated March 18, held that Future Group had raised a vague plea of nullity and that Amazon's investment did not violate any law. In view of this, the Court rejected the contentions of the Future Retail Group with a cost of Rs. 20 lakhs.

The Court went ahead to hold that the respondents had deliberately and wilfully violated the interim order dated 25th October, 2020 and were liable for the consequences enumerated in Order XXXIX Rule 2A of the Code of Civil Procedure.

The Court also ordered that the property of Respondents no. 1 to 13(Future group companies and its promoters including Kishore Biyani) be attached. And the respondents were further directed by the Court to file additional affidavits indicating the details of their assets and properties.

It was also held that the Emergency Arbitrator had rightly invoked the 'Group of Company' doctrine in relation to the Future Group companies. In view of this, the Court issued a show cause notice to respondents as to why they shouldn't be detained in a civil prison for violation of the order dated 25th October, 2020.

Later, the Supreme Court had ruled in favour of Amazon in its dispute with Future Retail Limited(FRL) over the latter's merger deal with Reliance group. The top court held that the Emergency Award passed by Singapore arbitrator stalling FRL-Reliance deal was enforceable in Indian law and had also held that single judge's order was not appealable to the division bench of the High Court under Section 37(2) of the Arbitration Act.

Title: FUTURE RETAIL LTD Vs. AMAZON.COM NV INVESTMENT HOLDINGS LLC & ORS.