On 6 August 2021, in Amazon.Com NV Investment Holdings LLC Versus Future Retail Limited & Ors. the Supreme Court of India decided two important questions of law:
- whether an emergency award under the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC Rules”) can be said to be an order under Section 17(1) of the Arbitration and Conciliation Act, 1996; (“Arbitration Act”); and
- whether an order passed under Section 17(2) of the Arbitration Act in enforcement of the emergency award by a Single Judge of the High Court is appealable.
The brief highlights of the judgement are as follows:
- The dispute emanates from two shareholder agreements, one between Amazon.com NV Investment Holdings LLC (“Amazon”) and Future Coupons Pvt. Ltd. (“FCL”), among other parties and a second shareholder agreement between the Biyani Group including FCL and Future Retail Limited (“FRL”);
- As per the shareholder agreements, FRL could not transfer its retail assets without FCL’s consent which, in turn, could not be granted without Amazon’s consent.
- Amazon invested INR 1,431 Crores (approx. USD 193 million) in FCL in 2019, however, subsequently in August 2020, FRL entered into a transaction for amalgamation of FRL with the Mukesh Dhirubhai Ambani Group (Reliance Industries Group), the latter being a “restricted person” under the shareholder agreements.
- Amazon accordingly filed an application for emergency interim relief under the SIAC Rules for injunctions against the above stated transaction.
- The Emergency Arbitrator passed an interim award injuncting FRL from taking any steps in furtherance of the disputed transaction (“Award”).
- The Biyani Group thereafter went ahead with the disputed transaction, describing the award as a nullity and the Emergency Arbitrator as coram non judice in order to press forward for permissions before statutory authorities/regulatory bodies.
- FRL, consistent with this stand, chose to file a civil suit before the Delhi High Court seeking to prohibit the arbitration proceedings and asked for an interim relief to restrain Amazon from writing to statutory authorities by relying on the Emergency Arbitrator’s order, calling it a “tortious interference” with its civil rights.
- Amazon filed an application under Section 17 (2) of the Arbitration Act, wherein a Single Judge of the Delhi High Court held that the Award was enforceable. In an appeal against this decision, a division bench of the Delhi High Court stayed the order of the Single Judge of the Delhi High Court.
- In the appeal against the Delhi High Court division bench order before the Supreme Court, Amazon submitted that the Award was binding upon the parties.
- Answering the first question stated above, the Supreme Court held that the parties agreed to the SIAC Rules and that the Award would be an order under Section 17(1) of the Arbitration Act. The Supreme Court further observed that “such orders are an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties.”
- Answering the second question stated above, the Supreme Court held that Section 37 of the Arbitration Act, does not include a right of appeal against the enforcement of an order made by an Emergency Arbitrator under Section 17(2) of the Arbitration Act. The Supreme Court observed that despite the inclusion of Section 17(2) of the Arbitration Act for enforcement of interim measures in the Arbitration and Conciliation (Amendment) Act, 2015, no corresponding amendment was made to Section 37 to include Section 17(2) and thereby grant a right of appeal from such orders, and set aside the judgments of the Delhi High Court division bench, dated 8 February 2021 and 22 March 2021.
The judgment can be accessed through the following link: