Future-Amazon : Delhi High Court Dismisses Future Group's Plea Against Continuation Of Arbitration Proceedings In Singapore Tribunal

This Tuesday, the Delhi High Court dismissed the two petitions moved by the Future Group challenging the two orders passed by the Singapore Arbitration Tribunal. The orders deferred the hearing in the plea filed by Future Group seeking termination of the arbitration proceedings instituted by Amazon. 

Justice Amit Bansal pronounced the order which was reserved by the High Court yesterday.

In the plea filed by the Future Group, reliance was placed on an order passed by the Competition Commission of India on December 17, 2021, which had kept the approval granted for Amazon's deal with Future Group in abeyance.

On receipt of the CCI order, an application was moved before the Singapore Tribunal seeking closure of arbitration proceedings stating that any assertion of contractual rights against Future Group by Amazon would be in direct contravention of the CCI order.

Future Group pointed that the schedule that was set down for hearing of the cross-examination of the expert witnesses by the Arbitration Tribunal from 5 to 8 January, 2022, is a complete travesty, averring that the Arbitration Tribunal was informed by the Future Group that during the ongoing proceedings 6 members of its legal team of 12 lawyers attending the case were Covid positive and thus, it was impossible for them to cope with the directions of the tribunal, file submissions and to instruct the concerned counsel on cross examination of the witnesses.

"For the reasons stated in this petition, if no immediate and urgent relief is granted to the Petitioners, the Petitioners will be forced to participate in arbitration proceedings without having been afforded a fair and reasonable opportunity to prepare and present its case," the plea read.

According to Future Group, the impugned orders passed by the Tribunal were illegal and without jurisdiction as being contrary to sec. 18 of the Arbitration and Conciliation Act, therefore, seeking quashing of the same.

"….the Arbitral Tribunal has failed to appreciate that it was required under Indian law to first hear such application before proceeding with the second tranche hearing. It was incumbent on the arbitral tribunal to decide the application before proceeding with second tranche hearing," the plea added.

Court's Observations

The Court was of the view that just because the hearing of the termination application was scheduled for a date after the hearing of the expert witnesses, it did not mean that the Arbitral Tribunal was not willing to consider the said applications on merits or was discounting the merits of the said applications.

"Therefore, no prejudice would be caused to the petitioners if the hearing of the termination applications is conducted on 08th January, 2022. In any event, it is not for this Court to interfere with the scheduling of the arbitration proceedings as sought in the present case," the Court said.

The Court further noted that prima facie, there was nothing to suggest that the Arbitral Tribunal denied equal opportunity to the parties or that the Arbitral Tribunal was not accommodating towards requests made by the Future Group.

On the submission of Future Group that some of its lawyers had tested positive for COVID-19, and therefore, the preparations for the examinations of witnesses scheduled in January had been adversely affected, the Court added:

It is to be noted that the COVID-19 pandemic is a reality that the world has been living with for the last two years and may continue to live with for the near foreseeable future. Therefore, the business community at large as well as professionals, including lawyers/law firms, would have to learn to live with this reality and continue with their regular professional and business activities, subject of course, to any regulations that may be imposed by state/national governments. Court hearings as well as hearings in arbitrations have been successfully conducted in this period of two years through the virtual mode."

"A lot of conferences and meetings, where physical presence of parties was required earlier, have now given way to virtual conferences, which have proven to be almost as effective as physical hearings/conferences. Even as of today, when COVID-19 cases are on the rise in India, Courts in the country, including the Supreme Court of India, continue to function, albeit through the virtual mode. Functioning during the COVID-19 pandemic is a reality that lawyers, judges and arbitrators have had to come to terms with."

Further adding that all the parties in the arbitration proceedings are big corporations and have a battery of lawyers representing them before multiple fora, the Court said that even if some of the lawyers had tested positive for COVID-19, it can be duly expected that the parties and their law firms would endeavour to make alternate arrangements.

"An adjournment at the last minute cannot be sought in respect of an international commercial arbitration of this magnitude, involving arbitrators, counsels and experts from different jurisdictions," the Court said.

"Mere fixation of tight timelines or denial of requests for adjournment by the Arbitral Tribunal or deciding the order in which the Arbitral Tribunal considers the applications filed by the parties cannot be reason enough to contend that the orders of the Arbitral Tribunal are perverse or lacking in inherent jurisdiction. Therefore, no exceptional circumstances or perversity have been demonstrated/made out in the petitions or during the hearing to warrant the exercise of jurisdiction by this Court under Article 227 of the Constitution of India," it added.

The Amazon-Future deal has given rise to several rounds of litigation in India. Amazon had invoked arbitration proceedings in Singapore to halt Future Retail's deal with the Reliance group. An emergency award was passed by the Singapore Arbitrator to halt the Future-Reliance deal. This was challenged by FRL in the Delhi High Court. Ultimately, the matter reached the Supreme Court, which approved the emergency award passed by the Singapore Arbitrator.

Background

Justice JR Midha, vide order dated March 18, held that Future Group had raised a vague plea of nullity and that Amazon's investment did not violate any law. In view of this, the Court rejected the contentions of the Future Retail Group with a cost of Rs. 20 lakhs.

The Court went ahead to hold that the respondents had deliberately and wilfully violated the interim order dated 25th October, 2020 and were liable for the consequences enumerated in Order XXXIX Rule 2A of the Code of Civil Procedure.

The Court also ordered that the property of Respondents no. 1 to 13(Future group companies and its promoters including Kishore Biyani) be attached. And the respondents were further directed by the Court to file additional affidavits indicating the details of their assets and properties.

It was also held that the Emergency Arbitrator had rightly invoked the 'Group of Company' doctrine in relation to the Future Group companies. In view of this, the Court issued a show cause notice to respondents as to why they shouldn't be detained in a civil prison for violation of the order dated 25th October, 2020.

Later, the Supreme Court had ruled in favour of Amazon in its dispute with Future Retail Limited(FRL) over the latter's merger deal with Reliance group. The top court held that the Emergency Award passed by Singapore arbitrator stalling FRL-Reliance deal was enforceable in Indian law and had also held that single judge's order was not appealable to the division bench of the High Court under Section 37(2) of the Arbitration Act.