Future Vs Amazon: Delhi High Court Refuses To Intervene In Arbitration
The Delhi High Court on Tuesday dismissed petitions by Future Group entities seeking a direction to the SIAC arbitral tribunal to first decide on their applications on termination of arbitration proceedings by Amazon. No prejudice will be caused to parties if the tribunal hears the applications to end arbitration at a later date, the high court said in its order. That later date being Jan. 8 as already confirmed by the tribunal.
The three-member arbitral tribunal, constituted under Singapore International Arbitration Centre Rules, heard arguments on allegation of contractual violation in November and is set to hear the parties on damages this month. Future Group entities wanted the arbitration tribunal to hear the termination application before the hearing on damages resumed. They also questioned whether the arbitration process should continue.
Counsel for Future Coupons Pvt. and Future Retail Ltd. argued in the Delhi High Court on Jan. 3 that the arbitration proceedings cannot go on in light of the competition regulator suspending approval to the 2019 transaction. Amazon's counsel resisted this, saying the arbitration agreement is an independent pact and it survives even if the underlying contract goes.
The high court did not find any merit in FCPL's argument that the termination application should get priority before the tribunal takes up the hearing of expert witnesses on damages.
No Merit In Future Group’s Request: Delhi High Court
The high court in its order noted that the grievance of the petitioners (FCPL and FRL)—that no date was fixed for the hearing of the termination application—stood addressed on January 1 when the arbitration tribunal informed the parties that it will take up the hearing of the termination applications on January 8.
The key findings by the bench in its order include:
No prejudice would be caused to the petitioners if the hearing on the termination applications was conducted on January 8.
The tribunal had earlier scheduled the hearing of the applications on January 4 but postponed it to January 8 due to the unavailability of Future Group's counsel.
The tribunal noted that if further oral submissions are required in the termination applications then it would find another date for the hearing.
The tribunal gave cogent reasons for scheduling the hearing on January 8.
The single judge bench of Justice Amit Bansal concluded that the arbitral tribunal had been accommodative towards all parties.
This is evident from the fact that the Arbitral Tribunal has cut short the scheduled four days’ hearing of the expert witnesses to three days and the fourth day i.e., Jan. 8, 2022, has been fixed for oral hearing on the termination applications filed by the petitioners.Delhi High Court order
FCPL had argued that the termination application goes to the root of the case. The arbitration proceedings would not survive if Future Group entities' termination applications succeed before the tribunal.
The bench dismissed this argument saying just because the hearing on the application is scheduled after the expert witnesses testimony, it cannot mean that the tribunal is not willing to consider the termination applications on merit or was discounting the merits of the application.
The bench also went on to note that the tribunal‘s order of December 30 makes it clear that the Future Group would be entitled to claim costs if they succeed in the termination applications.
Therefore, in my prima facie view, there is nothing to suggest that the Arbitral Tribunal has denied equal opportunity to the parties or that the Arbitral Tribunal has not been accommodating towards requests of the petitioners.Delhi High Court order
Further, the bench cited time efficiency as another reason for its decision not to intervene in the arbitral process or disrupt the hearing of expert witnesses.
The nature of international commercial arbitration, it pointed out, involves parties and arbitrators based in different jurisdictions. It's difficult to schedule dates and accepting adjournments for dates fixed much in advance is generally not accepted.
In the opinion of this Court, acceding to such a request for adjournment, is bound to derail the arbitration proceedings as it would be very inconvenient and cumbersome to schedule fresh dates for the arbitration proceedings, taking into account the availability of all arbitrators as well as the experts.Delhi High Court Order
CCI’s Order That Started Another Round Of Litigation
The SIAC tribunal is hearing an arbitration dispute initiated by Amazon.com NV Investment Holdings alleging violation of contractual obligation by Future Coupons.
Amazon had initiated the arbitration arguing that the Future Group's transaction with Mukesh Ambani-led Reliance Retail Ventures Ltd. violated the terms of its 2019 contract to invest in FCPL. Amazon had purchased a 49% stake in FCPL—a promoter entity of Future Retail. Via the deal it also got certain protective rights against any FRL asset sale.
While the hearings before the SIAC arbitral tribunal were ongoing, the Competition Commission of India suspended its 2019 approval to the transaction between Amazon and Future Group. Amazon had failed to identify and notify strategic interest over Future Retail, the regulator concluded.
Citing this order, FCPL and FRL first approached the SIAC tribunal seeking termination of arbitration proceedings. Subsequently, they approached the Delhi High Court requesting it to direct the SIAC tribunal to first decide the termination applications.
Delhi High Court's Justice Amit Bansal on Tuesday dismissed their case.
In his order the judge also cited Supreme Court case law that makes clear that courts should intervene in arbitration proceedings only under exceptional circumstances and if the arbitral tribunal's order is "completely perverse" or "lacking in inherent jurisdiction".
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, the court order said.
"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."