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Delhi High Court does an about-turn and halts Future, Amazon arbitration proceedings a day after refusing to interfere

A division bench issued the stay order, reasoning that Future Group may otherwise incur an irreparable loss.

The Delhi High Court on January 5 halted the arbitration proceedings between Future Group and Amazon currently taking place at a Singapore arbitration tribunal. Only a day earlier, the Court refused to stop the proceedings stating that the arguments made by Future held no merit and does not warrant interference in the proceedings of the tribunal.

Read: Why The Delhi High Court Declined To Interfere In The Arbitration Proceedings Between Future Retail And Amazon

The tribunal had scheduled hearings of expert witnesses in the Future vs Amazon case between January 5 to January 8, but Future requested the tribunal to adjourn these hearings and instead consider the termination application filed by them in light of the recent order issued by the Competition Commission of India (CCI) suspending the approval it gave for Amazon’s investment in Future Coupons in 2019. Since the tribunal refused to accept these requests, Future had sought the intervention of the Delhi High Court.

The CCI order has been a major setback for Amazon as the company has so far used its investment in Future Coupons to block the sale of Future Retail to Reliance. The latest decision by the Delhi High Court deals yet another blow to the US e-commerce giant.

Why did the Delhi High Court change its decision?

Future Retail’s arguments: Future Retail on Wednesday appealed the dismissal order issued by single-judge Justice Amit Bansal on Tuesday arguing the following:

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  • CCI order makes arbitration a nullity: Senior Advocate Mukul Rohatgi, appearing for Future Coupons, reiterated that the CCI order makes the agreement signed between Amazon and Future Coupons void. “This means approval doesn’t exist. If it doesn’t exist, the agreement has no legal effect in India. The arbitration has no legal effect in India and is a nullity,” Rohatgi said, according to Live Law.
  • Amazon has not filed an appeal to the CCI order: “Nobody has filed an appeal. The impact of order is clear. They are not willing to deal it as a preliminary issue,” Rohatgi added.
  • Arbitration is Delhi-based: Rohatgi submitted that although the arbitration is being heard in a Singapore tribunal, it falls under New Delhi and thus is under Indian law. This is in possible counter to the single judge order, which stated that “there is only a very small window for interference with orders passed by the Arbitral Tribunal while exercising jurisdiction under Article 227.”
  • The single-judge failed to appreciate the application: “We requested the single bench to declare the arbitral proceedings to be having no legal effect […] The learned single-judge here did not appreciate the importance of order in my favour,” Rohatgi was quoted as saying by Bar and Bench.

“The Single Judge says as if the heaven’s are falling, that the world has to live with covid. Your lordship the world has to live with covid, But we don’t have to live with a situation where justice is denied.” – Senior Advocate Mukul Rohatgi

Court decision: A bench constituting Chief Justice DN Patel and Justice Jyoti Singh agreed with Future’s arguments, putting the arbitration proceedings on hold and staying the single-judge order. If the proceedings are not halted, it would cause irreparable loss to Future, Patel said while staying the arbitration proceedings till the next date of hearing, which is scheduled for February 1.

“Looking at the order passed by CCI, especially paragraphs 70, 75, 76, 78, 79 and 80 the approval granted by order dated October 2019 is kept an abeyance […] In view of these facts, there is a prima facie case in favour of appellant and balance of favour is also in their favour. If stays is no granted there will be irreparable loss.” – Court order as quoted by Bar and Bench

Amazon’s argument: On the other hand, Senior Advocate Gopal Subramanium, appearing for Amazon, defended the single-judge order saying that the reason the judge did not grant relief to Future was that the arbitration tribunal has been accommodative of Future’s requests and judicial intervention in procedural aspects of an arbitration tribunal is only carried out in exceptional cases. “The circumstances for correction of tribunal order under Article 227 is very narrow and therefore there cannot be any intervention here,” Subramanium was quoted as saying by Bar and Bench.

What is Amazon’s next move?

Amazon is likely to challenge the Delhi High Court’s latest decision, Reuters reported. Separately, Amazon’s counsel on Wednesday also pointed out that the approval given by CCI has not been revoked and that it has only been kept in abeyance, and that the company is going to appeal the CCI order, which is currently at the heart of the issue.

Reuters reported on Monday that Amazon has informed the arbitration tribunal that CCI’s suspension of the 2019 deal does not mean the transaction is void and that Amazon can reapply for clearances. Amazon also reiterated to the arbitrator that CCI acted beyond its powers and that there are many grounds to challenge the watchdog’s decision.

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