Amazon-Future Agree to Discuss an Out-of-Court Settlement

The complex, long drawn conflict between three of the largest players in the Indian retail market—Amazon, Future Group, and Reliance—appears to have reached a new stage today. The outcome of this case will eventually decide who dominates the Indian retail market for fashion, lifestyle, and groceries.

A Bench composed of Chief Justice of India N.V. Ramana, and Justices A.S Bopanna and Hima Kohli, has granted 10 days for the three companies to enter into a dialogue and attempt to resolve the conflict outside of Court. The hearings before the Delhi High Court and National Company Law Appellate Tribunal (NCLAT) will continue in this period. This opportunity, sought primarily by Amazon, comes after the Competition Commission of India (CCI) revoked the shareholder agreement between Amazon and Future Coupons. It raises questions about whether Amazon has the right to interfere in the sale between Future and Reliance in the first place. 

The Context

In August of 2019, Amazon acquired a 49% stake in Future Coupons, with the remaining 51% held by Future Group’s Founder and CEO, Kishore Biyani. On August 12th, a few days before the agreement was signed, Future Retail entered into a shareholders agreement with Future Coupons—it particularly gave Future Coupons veto power over the sale of Future Retail’s assets to market competitors, such as Reliance. 

One year later, with the company on the verge of bankruptcy, Biyani inked a deal to sell Future Retail’s assets to Reliance—a deal that would make the latter one of the largest fashion, grocery, and lifestyle retailers in the Indian market. With its dreams of dominating India’s retail market threatened by Reliance, Amazon filed a complaint against the deal in the Singapore International Arbitration Centre in October of 2020—by the 25th, the Centre had halted the deal, and Future Retail had filed a case before the Delhi High Court on Amazon’s ‘unwarranted’ interference in the matter.

On December 17th 2021, the CCI revoked Amazon’s shareholder agreement with Future which gave Amazon a 49% stake in Future Coupon. The CCI stated that Amazon failed to disclose the interconnected set of agreements that effectively gave it control over Future Retail. CCI imposed a penalty of ₹202 crore on Amazon. Amazon then appealed against this Order before NCLAT. 

Subsequently, in the same month, Future approached the Delhi High Court to stay the arbitration proceedings underway in Singapore against the sale of Future Group to Reliance. On the 5th of January, 2022, a two-judge Bench of the Delhi HC stayed the arbitration proceedings, on the grounds that the CCI’s revocation of the agreement rendered a dispute arising from it invalid. Amazon appealed against the decision in the SC. 

On February 23rd 2022, the SC noted that the NCLAT’s decision on the CCI’s revocation will have bearing on the decision of the Court. It directed the parties to urge the NCLAT to swiftly hear the matter. 

Today’s Developments

In today’s hearing, Senior Advocate Gopal Subramaniam appearing for Amazon suggested that the parties hold a dialogue outside of Court to try and resolve the matter. Frustration around the multiplicity of cases surrounding the Future-Reliance sale appears to grip both parties. Exclaiming that the case has become a ‘tangled web’, Senior Advocate Harish Salve appearing for Future, agreed to advise the parties to attempt an out-of-Court settlement. CJI Ramana stated that it is in the ‘interest of business’ to resolve the conflict at the earliest. 

This attempt at non-adversarial resolution is a first since the Amazon-Future-Reliance dispute began brewing in 2019. The Court has adjourned the matter to March 15th, giving time for parties to discuss possible solutions. 

To read SCO’s journalism of the litigation of the Amazon-Future deal, click here.