The Delhi High Court declined ad-interim injunction in favour of Future Retail Ltd. against Amazon.com Inc. from writing to statutory authorities.
The statutory authorities and regulators are directed to decide in accordance with the law, the Delhi High Court said.
Amazon, that invested in Future Coupons Pvt. Ltd, a promoter company of Future Retail, had won a temporary stay in October on the Future Group-Reliance Retail deal. This was an interim order passed by the Emergency Arbitrator at the Singapore International Arbitration Centre. The two Future Group companies then moved the Delhi High Court seeking to stop Amazon from writing to statutory authorities against granting approval to the transaction.
‘No Claim Of Amazon Lies Against Future Retail’
Future Retail in this case was represented by Senior Advocate and former Solicitor General Harish Salve as well as Senior Advocate and former Attorney General Mukul Rohatgi who broadly argued on three major points;
- Indian arbitration law does not recognise orders of an emergency arbitrator
- Amazon cannot claim investor protection rights against Future Retail
- No contract can stop Future Retail’s directors from discharging their fiduciary duties
Future Retail’s lawyers called the emergency arbitrator’s order, which put on hold the deal between Future Retail and Reliance, a piece of paper that had no recognition under the Indian law.
Senior Advocate Mukul Rohatgi told the court that the order was not tested in any judicial forum and was a complete nullity.
In any case, Future Retail argued that Amazon had invested in Future Coupons and Future Retail (the company doing the deal with Reliance) has no contractual obligation to Amazon as that would be a violation of India’s FDI policy.
Future Retail told the court that the agreement between these two parties (FCPL and Amazon) cannot dilute the fiduciary duties of the directors of Future Retail who took every measure -in this case a scheme of arrangement with Reliance Retail – to save the sinking company. The promoters of Future Retail, Salve argued, had the right to update the list of a restricted person with who the company could engage in transactions with and Amazon had no role in that.
The hearing also saw Amazon’s actions being compared to the East India Company which was trying to further its illegitimate interests.
’’Please don’t allow this American giant to kill Future Group only to further its illegitimate interest to make sure that Reliance does not get its hands in. That’s its game plan—if I can’t get it, let Reliance not get it too,’’ Harish Salve requested the court.
‘We Are No East India Company’: Amazon
The arguments for Amazon were presented by Senior Advocate and former Solicitor General Gopal Subramanian.
Subramanian defended the interim award by the emergency arbitrator and argued that the concept is well recognized in Indian law as rules of the Delhi, Mumbai and Madras arbitration centers too have provisions for emergency arbitrators.
In this case, both the parties had agreed to follow the Singapore International Arbitration Centre’s rules which make the emergency award final and binding, Subramanian argued.
Subramanian also argued that the Future Coupon shareholders’ agreement had specified that Future Coupons cannot transfer or encumber their securities in Future Retail Ltd without mutual written consent of Future Coupons and its existing shareholders.
Therefore, there was nothing wrong in Amazon writing to the authorities to bring the award to their attention, Amazon argued, adding that the interim order by the emergency arbitrator is equal to an order of the court by virtue of Section 17 of the Indian Arbitration law.