UPDATE 1: 1:33 a.m. ET 1/26/2021: Amazon.com NV Investment Holdings LLC in a
petition filed on Jan. 25, in the Delhi High Court, against Future Coupons Pvt. Ltd., (FCPL) Future Retail Ltd. (FRL) and promoters of Future Group companies, seeks amongst other items, to restrain the Future Group companies from taking any steps to complete the proposed INR 247.13 billion ($3.38 billion) merger announced on Aug. 29 with Reliance Industries Ltd (RIL), which is part of the Mukesh Dhirubhai Ambani Group (Transaction).
The Amazon petition is seeking to enforce and implement the emergency arbitration
award (EA) issued on Oct. 25, 2020, by the Singapore International Arbitration Centre, or SIAC, in favour of Amazon -- the validity of which has been extended during the full SIAC arbitration proceedings, which began on Jan. 5, and no application has currently been made to modify or vacate it.
The petition details that interim injunctions contained in the EA - which include restrictions around Future Retail taking steps to complete the Transaction, taking action over its assets or shares held by its promoters, issuance of securities or obtaining certain financing - are enforceable under the Indian Arbitration and Conciliation Act, 1996.
The Delhi High Court in its Dec. 21
order (Court Order) held that EA was valid under Indian law and that the EA was not at that time being challenged, the petition further notes.
Neither the Court Order or the EA has been challenged by the Future Group or related respondents and that the Delhi High Court observed that no question was raised in the proceedings as to whether the EA was binding on FRL, the petition further sets out.
Amazon alleges in the petition that the Future Group defendants have “wilfully disobeyed and breached” the injunctions detailed in the EA, including through Future Group “wrongfully misrepresenting” to regulators such as the competition Commission of India, Stock Exchanges and Securities and Exchange Board of India (SEBI) about the legal status of the Oct. 25 order, and despite binding directions, have urged the regulators to approve the Transaction.
The Amazon petition sets out that FRL’s assertion that the EA is “vitiated” and that the Transaction can proceed is “wrong and unlawful, being in violation of express injunctions” against FRL contained in the EA.
On Jan. 14, Amazon wrote to capital markets regulator SEBI and the Indian Stock Exchanges informing them that the EA is binding and valid under Indian law and that FRL communications contained a “litany of half-truths and misrepresents the true effect of the operative part” of the Court Order, the petition sets out.
Amazon further highlighted that in the absence of a challenge to the EA, FRL on its own is not entitled to disregard such orders and continue acting in breach of the EA, according to the petition.
However, the proposed deal between Future Group and RIL received a “no objection” from the Indian stock exchanges and SEBI, on Jan. 20, as
reported.
Amazon also details in the petition that the Future Group has also obtained financing from the MDA Group and that Kishore Biyani and the promoter group of Future Retail Ltd continue to encumber their shares in FRL, subsequent to the passing of the EA, which is contrary to the injunction contained in the EA.
Amazon’s Enforcement Requests
In addition to restraining action to progress and complete the Transaction, the petition further seeks to - as the EA does - restrain Future Group from issuing securities of FRL or obtaining, securing any financing, directly or indirectly, from any restricted person, including RIL, in any manner, contrary to the FCPL shareholders agreement and the FRL shareholders agreement.
Amazon is also seeking to restrain Future Group and its promoters from directly or indirectly taking any steps to transfer, dispose, alienate or encumber FRL’s retail assets or the shares held by the promoters in any manner without the prior written consent of Amazon.
Amazon has also requested that the Delhi High Court instruct the promoters to disclose their assets, including movable and immovable property and the court direct the attachment of these assets, according to the petition.
The petition is also asking the court to detain the promoters and certain directors of the Future Group.
Background
The EA is in connection with certain protective rights contained in a 2019 shareholders agreement entered into between Future Coupons Pvt. Ltd. and Amazon when the latter agreed to buy a 49% stake in Future Coupons Pvt. Ltd. for around $200 million, with a right to buy into Future Retail exercisable between the third and tenth year from the purchase,
as reported.
Amazon initiated the arbitration proceedings in the SIAC in October last year based on the alleged breach of the
shareholders agreement.
Future Retail on Nov. 7 filed a
suit in the Delhi High Court seeking relief against Amazon.com from “interfering” with the proposed merger with Reliance by “misusing” the EA, as
reported.
The Delhi High Court, in its Court Order, subsequently
dismissed Future Retail’s plea to restrain Amazon from writing to the regulators, though while doing so made certain
prima facie observations. Amazon then filed an
appeal to set aside these observations, which it claims could allow Future Retail to “collaterally bypass” the EA and upheld by the Delhi court.
The court has directed Future Retail Ltd. and other respondents to file,
by Feb. 12, responses to the appeal.
Future Retail has maintained that it was not a party to the shareholders agreement under which Amazon invoked arbitration proceedings at the SIAC and has raised jurisdictional objection to its inclusion as a party to the arbitration proceedings, as
reported.
Meanwhile, Future Group and its promoters appointed their nominee arbitrator, Professor Jan Paulsson and communicated the same to the SIAC in November last year, according to the petition.
--Dipika Lalwani
Original Story 9:29 a.m. UTC on Jan. 25, 2021BREAKING: Amazon Files Petition in Delhi High Court Today, Jan. 25, Against Future Coupon, Future Retail, Promoters for Allegedly Breaching Oct. 25 SIAC OrderRelevant Documents:Amazon’s Jan. 25 PetitionFuture Retail Announcement
Amazon.com NV Investment Holdings LLC filed a petition today, (Jan. 25), in the Delhi High Court against Future Coupons Pvt. Ltd., Future Retail Ltd. and promoters of Future Group companies, alleging that the defendants have willfully disobeyed and breached an
Oct. 25 order from the Singapore International Arbitration Centre, or SIAC, that put a temporary hold on Future Group’s proposed INR 247.13 billion ($3.38 billion) merger deal with Reliance Industries Ltd.
Future Retail Ltd. separately announced to the BSE Ltd. today that it received a communication on the same day from lawyers of Amazon.com NV Investment Holdings informing the company that Amazon has filed a petition under Section 17(2) of Arbitration and Conciliation Act, 1996.
Future Retail said in the statement that it would defend the matter and proceedings through its legal counsel.
More to follow...