Reliance Industries and Future Retail vs Amazon: Delhi HC halts the $3.4B deal

The Delhi HC in an interim order has asked Future Retail to maintain status quo on the assets on Tuesday. Thus, until HC reverses the order the deal between Reliance Industries and Future Retail stands still. This order comes after Amazon initially took Future Group to Singapore International Arbitration Centre (SIAC). The SIAC had put a stay order on the deal. To this, Future group stated that it was not enforceable in India.

In a relief to Amazon, the HC said it is of the "clear view" SIAC's EA is enforceable in India. When Future Retail did not stand back with the EA, Amazon moved to Delhi HC. It also mentioned in its petition that Future was deliberately and maliciously ignoring the SIAC order to close the RIL deal by obtaining clearances from authorities.

A background

Reliance Industries in August 2020, announced the acquisition of businesses of Kishore Biyani’s Future Group for ₹24,713 crores or $3.4 billion. Amazon holds a 49% stake in a Future Group arm, Future Coupons. When it drew up the contract, it made a list of 5-6 companies that Future Group could not deal with. Reliance Industries was one of them. Amazon accused Future Group of breaching terms of a contract. The terms stated that Future Group would need Amazon's consent to raise money or sell a stake to another company.

For this breach of contract, Amazon moved to arbitration at SIAC. It argued that the company violated its contract by entering into a deal with its rival, Reliance Industries. Thus, the SIAC issued an order to temporarily halt the deal between the two Indian retail giants. Now, how much does the order hold up in India was always a question. But, in its recent order, Delhi High Court has stated that the SIAC order holds up in India. The Delhi high court rejected Future Retail’s submission that Amazon’s petition was not maintainable. It had also stated that the Singapore tribunal could not be considered an arbitrator under the Arbitration and Conciliation Act.

Read More: Understanding Amazon-Reliance-Future Group Case as CCI approved the latter’s acquisition

About the deal

The deal between Reliance Industries and Future entails the sale of Future Group's retail, wholesale, logistics and warehousing units to Reliance Retail Ventures Ltd. Biyani’s Future Group needs to complete the deal without delay to prevent a possible bankruptcy. But, the deal is caught between the fight of two retail giants for the control of India’s retail market.