SIAC Who? Future plugs chinks in Amazon's case, Reliance does not want delay

Source :Sify
Author :Finance Desk
Last Updated: Mon, Oct 26th, 2020, 17:06:17hrs
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Mumbai: The jubilation in the Amazon camp over aborting Future-Reliance's Rs 25,000 crore deal seems to have fallen flat on its face. That because recent reports from Reliance and the Future Group indicates that the duo may go ahead with their strategic partnership.

On Monday, Future Retail published a notification that reveals its stance. The filing observed that decisions taken by Future' board were in line with existing Indian laws. And, that the legal team at Future Group was studying the scope of the SIAC (Singapore International Arbitration Centre).  

The announcement from Future Retail was almost in sync with a notification from Reliance Retail that was filed a day ago. That filing report read - "RRVL intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future group without any delay."

Here are excerpts from Future' filing.  

"As per the advice received by FRL, all relevant agreements are governed by Indian Law and provisions of Indian Arbitration Act for all intents and purposes and this matter raises several fundamental jurisdictional issues which go to the root of the matter..."

"In any enforcement proceedings, FRL would take appropriate steps to ensure that the proposed transaction will proceed unhindered without any delay," the filing read.

"FRL has been legally advised that actions taken by the FRL/its board, which are in full compliance of the relevant agreements and eminently in the interest of all stakeholders cannot be held back in arbitration proceedings initiated under an agreement to which FRL is not a party," Future Retail said.

Amazon's entry in Future-Reliance Deal:

In August, stakeholders were informed of Reliance's acquisition of Future Retail. The deal would involve subsuming of five Future enterprises into one which would collectively be bought by Reliance Retail for approximately Rs 25,000 crores.  

Existing shareholders of those listed companies would receive shares of Future Enterprises.  

Amazon approached the Singapore International Arbitration Centre (SIAC) complaining that it entered into a deal in 2019 with Future Group for a 49 percent stake in Future Coupons. Future Coupons is a Future Group entity. The Amazon Future transaction was estimated at Rs 1,500 crores.  

The Amazon camp in its interpretation found two major supporting factors. First, Amazon had the "first right" to buy Kishore Biyani's stake between three years to ten years from the date of the transaction. Secondly, Future Group was restricted to sell or transfer assets to third party without consent from Amazon.  

What SIAC said and the Amazon Camp:

The Rs 24,713 crore deal that the Future Group signed with Reliance Retail in August will have to wait for 90 more days to get effective.

On Sunday, the Singapore Arbitration court in Singapore sought for temporarily stalling alliance between Reliance Retail & Future after Amazon approached it.  

The Singapore International Arbitration Centre (SIAC) recommended that the Rs 24,713 crore deal between Reliance Retail and the Kishore Biyani promoted Future Retail be set aside for 90 days or until a final decision was drafted. Amazon, meanwhile, has been asked to prepare a proposal for Future Retail should the case arrive in its favour.  

After the SIAC interim-decision, an Amazon spokesperson is quoted as having said, "We welcome the award of the Emergency Arbitrator. We are grateful for the order which grants all the reliefs that were sought. We remain committed to an expeditious conclusion of the arbitration process..."

On Monday, stocks of Reliance Industries Limited ended the day down by nearly 4 percent or by 84 points to end at 2,028.70. Reliance counters saw 5.61 lakh shares being exchanged.  

Shares of FRL ended in the red by 5 percent or 4 points to 73.85. Nearly a million shares exchanged hands on Monday.  

Also Read: From 2018: When Biyani travelled to meet Bezos in Atlanta