Amazon has been able to temporarily block a multibillion-dollar deal between two of India’s biggest retailers after a major legal victory in an Indian court.
Following a complaint by Amazon last year, an agreement by Reliance Industries to purchase local rival Future Retail for $3.3 billion has been put on hold on an order from a court in the country’s capital, New Delhi.
The High Court in Delhi said it was “satisfied that immediate orders are necessary to protect the rights of [Amazon]” and hence ordered all the parties involved in the deal to “maintain status quo” pending its final judgment.
“We have utmost respect for the Indian legal system and appreciate the interim order of the … Delhi High Court,” an Amazon spokesperson told the media.
It would “explore all legal remedies and take appropriate steps to pursue” its deal with Reliance, said Future Retail in a statement. It is assumed that the verdict would be challenged by the company in a higher court.
No comments on the verdict were available from Reliance.
This court case is turning out to be a proxy war between two of the richest men in the world in their quest to gain supremacy in the fast growing online retail market of India.
Both the parties – Jeff Bezos’ Amazon and Reliance, are vying to get access to popular grocery stores and retail shops in the Indian market. Reliance is owned by India’s richest man Mukesh Ambani. The aim of both the companies is to either het the vast retail network for themselves or to prevent the other party from acquiring it.
Future Retail, the cash cow of Indian conglomerate Future Group, is at the heart of the current battle. Popular brands such as Big Bazaar, a popular supermarket chain, are part of the retail chain in question.
According to securities filings, an investment made by Amazon in a Future Group entity in August 2019 gave the American e-retailer about 4.8 per cent stake in Future Retail as of September 30 last year. According to that deal, the right for first refusal for acquiring more shares in Future Retail rested with Amazon.
According to reports published in October last year quoting sources, a non-compete clause was included in the 2019 deal struck between it and the Future Group entity, Amazon argued. Reliance was among the list of 30 restricted parties with which Future Retail and Future Group could not do business according to that clause.
An attempt to enforce that deal was made by Amazon through the Singapore International Arbitration Centre (SIAC) as this Southeast Asian country is often viewed as a neutral jurisdiction for o settlement of business and trade disputes. Last October, a temporary halt to the deal was ordered by the SIAC emergency arbitrator.
The latest order on the issue by Delhi High Court declared that the SIAC order is “enforceable” even though questions about the validity of the Singapore arbitration court’s order in India were raised in the court by Future Group.
(Adapted from CNN.com)