Indian based companies Reliance retail and Future groups had made a deal in 2019 according to which Reliance industries were to acquire Future retail group for $3.4 billion. Amazon, which holds 49% stake in Future groups objected to this deal and stated that when they bought Future group shares they had made an agreement that Future group will not sell their retail business to any other company without their consent. This agreement was made as Amazon decided to expand their business to retail industries and found Reliance industries taking over Futures to be a threat for Amazon’s future plans.
Future group had made all the backend work for the acquisition by the Reliance group as according to the statement given by the CEO, the company was facing losses and this acquisition would have led them back to the right direction. But Amazon was against this deal.
Amazon filed a case for emergency arbitration against Futures in Singapore International Arbitration Centre (SIAC) and the judgement was passed in favour of Amazon stating that there is a breach of contract by Future group.
Though the companies had got approval from the majority of the regulatory bodies like Competition Commission of India (CCI), Securities Exchange Board of India (SEBI), Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). But due to SIAC’s judgement the deal was put on hold and when the CEO and Founder of Future appealed to the New Delhi High Court, it provoked the previous court decision and hence Amazon appealed in the Supreme Court of India.
The two-judge bench of Justice Rohinton Fali Nariman and Justice B R Gavai in the Supreme Court of India wanted to be sure that the SIAC’s verdict will hold good according to the Indian Arbitration Act and once it was proved that such an award is well within the Act, the judgement by the Supreme Court was also passed in the favour of Amazon resulting in the threat to the deal.
The next step being, the entire case will be fought between Amazon and Future group in the Permanent Arbitration in Singapore International Arbitration Centre (SIAC) and the judgement passed then will be final and steps will be taken according to the award declared.
The judgement given by the Supreme Court not only became a threat to the deal between Reliance industries and Future groups but also stock prices were affected with 2% decline in Reliance industries stocks and 10% decline in Future group’s stocks. After the final judgement by the permanent arbitration of SIAC the future of the deal will be decided.