InvestorQ : What happens to the Future Group Reliance deal now that the Supreme Court has ruled in favour of Amazon?
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What happens to the Future Group Reliance deal now that the Supreme Court has ruled in favour of Amazon?

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Riya Dwivedi answered.
3 months ago
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On Friday, in a significant development, the Honourable Supreme Court upheld the order of the Singapore emergency arbitrator, blocking the acquisition of assets of the Future group by Reliance Industries. The deal was supposed to have helped Reliance to substantially expand its retail brick and mortar footprint while it was absolutely essential for the Future group to prevent a virtual bankruptcy of its operations.

The Supreme Court bench, held in no uncertain terms, that the October 2020 order by the Singapore International Arbitration Centre or SIAC was enforceable under Section 17(2) of India’s Arbitration Act. This virtually puts the Rs.24,700 crore merger deal on hold and hands out a big win for Amazon. Amazon has an indirect stake in Future Retail through Future Coupons and that deal called for Amazon to be consulted before selling to competition.

After Amazon had approached the SIAC, it had issued an emergency order blocking the sale, triggering a legal battle in India between Amazon and Future group. The moot point then was the enforceability of the order. Since then, the Singapore tribunal has heard both parties, and a final order is expected in the next two weeks. However, now that the Supreme Court has ruled in favour of Amazon, there is not much of recourse for FRL.

Meanwhile, Future Retail promised to continue its legal fight, although it is not clear if it would be worth the effort. The argument of the Future group is that the SC judgement addresses the limited aspect of enforceability of the emergency arbitrator’s order and not the merits of the disputes. Eventually, it looks like a proxy battle between Reliance group and Amazon for leadership of the Indian ecommerce space via Future group.

A lot will now depend on the final decision of the SIAC with respect to the merits of the case. If the Future group loses, Amazon may once again offer Future Group the funding support and promise to bring in large investors to pump money into Future Group. If Amazon loses, Future can go ahead and finalize the deal with RIL. While Future may still get a funder, RIL may not get the 1,700 stores of Future group, which it wanted.

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