Amazon - Future Group Arbitration- Delhi High Court Dismisses Future's Application Being Interlocutory

The Delhi High Court has dismissed the petition filed by Future Coupons Pvt. Ltd., challenging the order passed by the Arbitral Tribunal allowing Amazon's application for amendment of Claims, seeking repudiatory damages for breach of Agreements executed with Future Coupons. The Court ruled that the said order was interlocutory in nature, and thus, it is not amenable to challenge under Article 227 of the Constitution of India. The Court added that Section 34(2)(a)(iv) of the Arbitration and Conciliation Act, 1996 (A&C Act) specifically envisages challenge to a final arbitral award, on the ground that the award dealt with a dispute outside the terms of reference to arbitration. Therefore, the remedy under Section 34 of the A&C Act, to challenge the final award, subsisted and was available to the petitioner, the Court said. The single bench of Justice C. Hari Shankar reiterated that interlocutory arbitral orders are amenable to challenge under Article 227 of the Constitution only in cases where the order is assailed on the ground of want of good faith, or where the party is otherwise remediless. A Share Holders Agreement was executed between Future Coupons Resources Pvt. Ltd (FRL) and Future Coupons Pvt. Ltd. (FCL). Also, a Share Holders Agreement and a Share Subscription Agreement was executed between FCL and Amazon.Com NV Investment Holdings LLC (Amazon), envisaging investment by Amazon to acquire 49% equity in FCL. A conditional approval was granted by the Competition Commission of India (CCI) for Amazon to invest in FCL. Thereafter, FCL gave consent to FRL to enter into a Scheme of Arrangement with Reliance Industries Limited, under which the retail assets of FRL and its group companies, including the supermarkets run under the name "Big Bazaar", were to be sold to Reliance. Aggrieved by this, Amazon initiated arbitral proceedings under the aegis of the Singapore International Arbitration Centre (SIAC). Amazon claimed that it had special protective rights in FRL through FCL and that prior consent of Amazon was required to be obtained before the sale or disposal of FRL's retail assets to Reliance. Thus, Amazon sought an order restraining FRL from proceeding in terms of the Scheme of Arrangement with Reliance. An interim order was passed by the Emergency Arbitrator, restraining FCL and FRL from proceeding with the Scheme of Arrangement with Reliance. Thereafter, FCL filed a complaint to CCI, contending that Amazon, while obtaining approval, had concealed from CCI the factum of the Share Holders Agreement executed between FRL and FCL. The CCI passed an order upholding the objections raised by FCL and accordingly, put the approval granted by it in abeyance. Relying on the CCI order, the petitioners, including FCL, applied to the Arbitral Tribunal under Section 32(2)(c) of the A&C Act, seeking termination of the arbitral proceedings. The petitioner contended before the Tribunal that since the approval granted by CCI was placed in abeyance, the Share Holders Agreement and the Share Subscription Agreement executed between FCL and Amazon could no longer be acted upon. Therefore, it argued that there was no dispute which survived for adjudication before the arbitral tribunal. Rejecting the application filed by the FCL, the Arbitral Tribunal held that the CCI order could not be said to have rendered the continuation of the arbitral proceedings "unnecessary" or "impossible", which are the only two exigencies in which the arbitral proceedings could be terminated under Section 32(2)(c). After Reliance took over several retail assets of FRL, which were the subject matter of the Scheme of Arrangement, Amazon filed an Addendum before the Arbitral Tribunal to supplement its Statement of Claims, claiming repudiatory damages. Amazon, in its Addendum, contended that since the retail assets of FRL were sold to Reliance, the order of injunction passed by the Emergency Arbitrator had been breached. Amazon averred that the said act amounted to "repudiatory breaches" of all the Agreements between the parties. It contended that the prayers in the original Statement of Claims, seeking specific performance of the Agreements, had become incapable of being granted. Amazon claimed that the repudiatory breaches of the agreements by FRL and FCL, had entitled Amazon to repudiatory damages. The Arbitral Tribunal passed an order allowing the application filed by Amazon under Section 23(3) of the A&C Act, to supplement its Statement of Claims. Against the order passed by the Arbitral Tribunal rejecting FCL's application seeking termination of the arbitral proceedings, as well as the order passed by the Tribunal allowing Amazon's application to supplement its Statement of Claims, the petitioners- including Future Coupons Pvt. Ltd. (FCL) and Future Coupons Resources Pvt. Ltd. (FRL), filed a petition under Article 227 of the Constitution of India...

Amazon - Future Group Arbitration- Delhi High Court Dismisses Future's Application Being Interlocutory

Parina Katyal

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