HOW TO CLAIM INTELLECTUAL PROPERTY RIGHTS FOR A DISCOVERY AMAZON V FUTURE- RIL DEAL

HOW TO CLAIM INTELLECTUAL PROPERTY RIGHTS FOR A DISCOVERY AMAZON V FUTURE- RIL DEAL

Abstract

This article gives a brief about the famous case of Amazon vs. Future group. The base of the case of that Amazon and Future group entered into an agreement, a part of which also included a list of 30 companies with whom the Future Group would be unable to do business, including Reliance Retail, a subsidiary of Reliance Industries Limited. Regardless of the Amazon-Future Group agreement, Future Group announced a partnership with Reliance retail in August 2020. The rest of the article talks in detail about the procedures that are being followed by the Amazon as well as the future group.

 

INTRODUCTION

Future Group, India's second-largest retailer, has been sent with a legal notice from Amazon for breaching the terms of its contract by selling a significant chunk of the company to Anil Ambani's Reliance Retail. In late August, Future Group sold its retail and wholesale operations, as well as its transportation and warehousing operations, to Reliance Retail for $3.4 billion.However, Future Group and Amazon had a contract before Reliance Retail entered the picture.

Amazon bought a 49 percent share in Future Coupons, a group organization run by Future Group's retail division, last year. According to a document at the time, the agreement offered Amazon a 3.58 percent investment in Future Retail, as well as the right of first refusal to buy more shares in the company directly or through businesses. The arrangement between Amazon and Future Retail also limited the Indian firm from getting into deals with particular firms, according to TV network ET Now, which first reported on the legal warning.

AMAZON AGAINST FUTURE GROUP: WHERE DID IT ALL BEGIN?

Amazon proposed to the Competition Council of India (CCI) in September 2019 to purchase 49 percent of Future Coupons, India's second-largest retail chain, Future Retail.

CCI approved the notice in November 2019, and it included three sets of transactions:

  • Future Coupons will be purchased by Amazon for 49 percent of its stock (FCL)
  • Future Corporate Resources Private Limited (FCRPL) has transferred some Future Retail (FRL) shares to Future Coupons. FCL had purchased FRL equity warrants, which were convertible into equity shares and represented 7.30 percent of FRL's share capital.
  • As a result, Amazon will own 3.58 percent of Future Retail, a company that Reliance Retail had planned to buy for INR 25,000 crore.

Three agreements were triggered as a result of the transactions:

  • Amazon has reached an arrangement with Future Coupons' shareholders (FCPL SHA).
  • Amazon and FCPL have reached a shareholder agreement (FCPL SHA).
  • Amazon has a share subscription deal with FCPL (FCPL SSA).

 

Aside from the transactional aspect, Amazon had gained some clout because of the ‘call option' it was given. Amazon was given the option to buy all or part of the shares of the marketing firm Future Retail under the 'call.'

According to sources, the agreement also included a list of 30 companies with whom the Future Group would be unable to do business, including Reliance Retail, a subsidiary of Reliance Industries Limited. This was meant to be another exclusive arrangement with Future Group like the one Amazon struck with Shoppers Stop in 2017.

Regardless of the Amazon-Future Group agreement, Future Group announced a partnership with Reliance Retail in August 2020. According to the agreement, Reliance Retail would pay INR 24,713 crore for the Future Group's complete retail, wholesale, logistics, and warehousing businesses.The Singapore International Arbitration Centre (SIAC) issued the emergency order in response to a request from Amazon, the world's largest e-commerce company.

 

WHY DID AMAZON SEEK ARBITRATION FROM THE SIAC?

 

The arbitral institution that will administer the arbitration, the applicable rules, and the location of the arbitration will be determined by the parties' contractual agreement. In this case, Amazon and Future Group decided to refer their disputes to SIAC, with Singapore likely being the contractually agreed-upon seat/location of arbitration.

 

WHY WAS THE FUTURE-RIL TRANSACTION PUT ON HOLD BY AN EMERGENCY AWARD?

The process of appointing the arbitral tribunal begins after a dispute is referred to arbitration according to the parties' agreement. In a three-person tribunal, both parties usually appoint one member each, with the third member being jointly appointed by the two nominees or by SIAC if they are unable to agree. This procedure requires a specific amount of time to perform.

Parties can, however, request that SIAC appoint an emergency arbitrator to get immediate interim relief while the main arbitral panel is being appointed, according to SIAC guidelines.

As a result of Amazon's request, SIAC appointed an Emergency Arbitrator, who, after hearing the parties, issued the emergency award.

 

HOW WILL THE PARTIES IN INDIA BE ABLE TO ENFORCE THIS INTERIM AWARD?

According to Ashish Kabra, who heads Nishith Desai Associates' International Dispute Resolution & Investigations Practice in Singapore, there is currently no clear process in place under Indian law to implement the Emergency Arbitrator's orders.

 

IS FUTURE GROUP ABLE TO APPEAL THE EMERGENCY ARBITRATOR’S INTERIM AWARD IN INDIA?

The Future Group is unable to challenge the verdict of the Emergency Arbitrator in India. It can make a direct application to the Emergency Arbitrator, demonstrating why the order should be vacated or altered, or it can wait until the arbitral panel is assembled and then make a formal application to the main tribunal.

 

If a petition is filed with the High Court of India under Section 9 of the Arbitration & Conciliation Act, 1996, the Future Group may object to the High Court not granting the Emergency Arbitrator's reliefs.

 

SINGAPORE HAS BEEN A CENTER FOR INTERNATIONAL ARBITRATION FOR A VARIETY OF REASONS -

Because foreign investors often wish to avoid the rigors of Indian courts, Singapore has emerged as the favored destination for international arbitration involving Indian enterprises. Singapore is seen as a neutral place for resolving disputes by foreign investors who have invested in India. Singapore has built a good reputation as a rule-of-law-driven jurisdiction that adheres to high international standards.

In Mumbai, India now has its international arbitration center. However, in the context of arbitration, this is a very recent phenomenon. India was the most frequent user of SIAC's arbitration seat in 2019, referring to 485 cases, followed by the Philippines with 122, China with 76, and the United States with 65, according to SIAC's annual report.

 

WILL THE COMPETITION COMMISSION OF INDIA’S (CCI) JUDGEMENT ON THE FUTURE-RIL AGREEMENT BE AFFECTED BY THE INTERIM AWARD?

There is no necessity in the regulations for the CCI to defer its decision because of the Emergency Arbitrator's order. The order's passive or perception-based impact, according to Kabra, cannot be ruled out.

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      BY ANAMIKA