India’s top court on Friday handed Amazon a major victory in a dispute where it sought to block its partner Future Group from selling $3.4 billion (roughly Rs. 25,200 crores) in assets to rival Reliance Industries.
The outcome of the tussle involving two of the world’s richest men, Amazon’s Jeff Bezos and Reliance’s Mukesh Ambani, is seen reshaping India’s pandemic-hit shopping sector and deciding if Amazon can blunt Reliance’s dominance of the country’s nearly trillion-dollar retail market.
Amazon and Future have been locked in legal battles over the Future Group deal, with the US firm accusing the Indian group of violating pre-existing contracts when it sold its assets to Reliance. Future has denied any wrongdoing.
A two-judge bench of the Supreme Court said that an interim decision by a Singapore arbitrator in October – that put the deal on hold after finding merit in Amazon’s objections – was valid and enforceable in India.
Amazon had argued that the order is binding, while Future had argued it was not. Both sides had agreed to use the Singapore arbitrator in case of disputes when Amazon invested $200 million (roughly Rs. 1,480 crores) in a unit of Future in 2019. The arbitration proceedings are still ongoing.
Shares in Future Retail were up 6 percent ahead of the ruling, but tanked 10 percent and hit a lower-circuit breaker in Mumbai trading after the order. Reliance Industries fell as much as 2.3 percent.
Future Retail said in a statement it had been “advised that it has remedies available in law, which it will exercise.” It did not elaborate on the legal options, but said it will take steps to conclude the deal and protect the interests of its stakeholders and workforce.
Amazon said in a statement that it welcomed the court’s ruling, adding: “We hope that this will hasten a resolution of this dispute with Future Group.”
Reliance did not respond to a request for comment.
India strictly regulates its retail and e-commerce sector. That has made it difficult for foreign giants like Walmart and Amazon to rapidly expand in one of the world’s fastest growing consumer markets, whose retail landscape is dominated by brick-and-mortar retailers.
Liquidation fears
Future had previously said the deal’s failure would push the company towards liquidation and impact livelihoods of 50,000 employees and 6,000 small- and medium-sized vendors.
But the arbitrator in October said “economic hardship alone is not a legal ground for disregarding legal obligations”.
Future is still trying to convince a Singapore arbitration panel to revoke the October interim decision stalling the deal, a lawyer involved in the case told Reuters on Friday. That decision is expected in coming weeks.
“Everything is clear for Amazon, it is a big win for them. It’s for the arbitration panel to decide now,” said the lawyer, who declined to be identified.
The dispute started after Future, India’s second-largest retailer with over 1,700 stores, entered into a deal last year to sell its retail, wholesale, logistics and certain other businesses to Reliance for $3.38 billion (roughly Rs. 25,060 crores), after COVID-19 hit its operations hard.
Amazon, which had its sights set on ultimately owning part of Future’s retail assets itself, argued the 2019 deal it had with a unit of Future contained clauses prohibiting the Indian group from selling them to anyone on a “restricted persons” list including Reliance.
Around 1,300 of Future’s retail outlets in 400 cities sell groceries. Its budget supermarkets cater to middle-class shoppers, while its upmarket stores offer products like imported cheese and fresh guacamole, relatively rare in India’s retail landscape. That makes Future a prized asset for both Reliance and Amazon.
Though the Supreme Court ruling is a shot in the arm for Amazon, it faces another challenge from India’s antitrust regulator which recently accused the US firm of concealing facts when it sought approval for the 2019 investment in the Future unit, Reuters has reported. Amazon has said it is confident of addressing those concerns.
© Thomson Reuters 2021
Source By:- Gadgets.NDTV.Com
