The proceedings against Future Retail Limited (FRL) are not maintainable as FRL is not a party/signatory to the arbitration agreement invoked by Amazon, the company has said.
In a regulatory filing, the company said that FRL’s jurisdictional objections are pending determination with the SIAC Registrar.
Further SIAC has appointed an Emergency Arbitrator, however, the Indian law does not recognize an Emergency Arbitrator. “Accordingly, the Interim Order is unlikely to have an impact either on the FRL or the Company,” it said.
It said that notice of Arbitration has been issued by Amazon against FRL and other FRL promoter group persons in accordance with the Singapore International Arbitration Centre (SIAC) Rules for alleged violation of the provisions of the shareholders’ agreements.
Further, as per SIAC Rules, Amazon has filed an application seeking interim relief, injuncting the Respondents from giving effect to the Composite Scheme of Arrangement.
“As per information received, FRL is in process of initiating appropriate proceeding to protect its rights and seek necessary reliefs against in relation to the interim award which is not enforceable under Indian law,” the company said.
“There would not be any change in status of the proposed scheme until the Interim Order passed by the Emergency Arbitrator of SIAC is executed by the Indian court of appropriate jurisdiction”, the company said.
FRL said it has shared only the dispositive order of the Emergency Arbitrator since it is not a public document. Further, a copy of the Interim Order has been separately submitted by FRL to the stock exchanges claiming confidentiality since the same is not a public document.
As an alternative to its claim and injunctive reliefs against the scheme, Amazon has sought damages amounting to Rs 14,31 crore along with interest being the amount invested by Amazon into Future Coupons Pvt. Ltd. It may be noted that even if such a claim is approved by the Arbitration or at any other judicial forum, the same would be payable by Promoters and there would not be any financial impact either on the FRL or the Company.
By the Interim Award dated 25 October 2020 (Interim Award), the Emergency Arbitrator has granted ad-interim reliefs sought by the Claimant against the Respondents and directed injunction against the respondents from taking steps in furtherance of the board resolution of FRL dated August 29, 2020.
It also granted Injunction against the respondents from taking steps to complete the disputed transaction with Mukesh Dhirubhai Ambani group.
Injunction against respondent from disposing off FRL’s retail assets or shares held in Company by the promoters without the written consent of the Claimant and injunction against Respondents from issuing securities of FRL or securing financing from any restricted persons; (e) The Claimant has been asked to provide a cross-undertaking in damages.
It may be noted that the Interim Award would not have any impact until the Indian court permits execution thereof in view of the provisions of the Arbitration and Conciliation Act, 1996. Accordingly, the impact cannot be quantified at this stage.