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The Intriguing Emergency arbitration case of Future Retail v. Amazon
The Intriguing Emergency arbitration case of Future Retail v. Amazon
Introduction to Emergency Arbitration
Emergency arbitrations allow a party to seek interim relief from an arbitration institution before the arbitration tribunal is formed. It is used when the parties cannot wait for the establishment of an Arbitral Tribunal because doing so would result in irreparable harm to the party requesting it.
Emergency Arbitration in India
In India, there is no provision in the Arbitration and Conciliation Act, 1996 that grants statutory validity to emergency arbitration. The term "Arbitral Tribunal" is defined in section 2(1)(d) of the Arbitration Act as "compositions of either a sole arbitrator or a panel of arbitrators," however it does not include the authorizing provisions for Emergency Arbitration. Therefore the 246th Law Commission in its report recommended adding the word ‘Emergency Arbitration’ under section 2(1) (d) of the Act.
As a result, the 246th Law Commission suggested in its report that the expression "Emergency Arbitration" be added to section 2(1) (d) of the Act.
The facts of the case
The validity of emergency arbitration was questioned in this case before a Delhi High Court single judge bench. For the first time, in this case, the Court affirmed the emergency award given by the emergency arbitrators.[1]
The issue occurred as a result of a Shareholder Agreement between the Future Retails Group and Amazon. The Future Retails Group is prohibited from selling its assets to the parties named in the agreement. However, the Future Retail group agreed to an acquisition agreement with Reliance, under which shares were determined to be transferred to the Reliance group. Because the acquisition violated the shareholder agreement, Amazon triggered the agreement's arbitration clause and filed an emergency arbitration application with the SIAC. Amazon was successful in securing an emergency injunction preventing the Future group from proceeding with the Reliance acquisition.
With the EA award, Amazon knocked on the doors of all regulatory bodies overseeing the Future Group and Reliance acquisition transaction. The Future Group, infuriated by this, filed an interim case with the Indian Court, requesting a permanent and temporary injunction against Amazon.
Judgment
The Delhi High Court held:
“[…]The SIAC rules will apply to the arbitration conducted in terms of Clause 25 of the FCPL SHA to the extent they are not contrary to (i) public policy of India and/or (ii) mandatory requirements of the law under the A & C Act, 1996 […] In the present case, the parties have expressly chosen the SIAC rules as the curial law governing the conduct of arbitration proceedings. The said rules are self-sufficient to govern the proceedings under arbitration at every stage. The courts in such cases would uphold the express choice of the parties subject to the public policy of India and the mandatory provisions of the A & C Act, 1996.”
The court alluded to and reaffirmed this judgment in its decision in Amazon v. Future Coupons, in which it agreed with the emergency arbitrator's reasoning on the issue of jurisdiction and held that:
“Section 2(6) of the Arbitration and Conciliation Act, 1996 gives complete freedom to the parties to authorize any person including an institution to determine the disputes between the parties. Section 2(8) of the Arbitration and Conciliation Act, 1996 provides that where the parties have authorized an institution, the agreement shall include the rules of that institution. Section 19(2) of the Arbitration and Conciliation Act, 1996 gives complete freedom to the parties to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.”
The Court affirmed the legality of the Emergency Award in this instance based upon the argument.
Conclusion
With the aforementioned decision approving emergency arbitration, it appears that the area of emergency arbitration in India is set to expand. Currently, while the Amazon-FRL story plays out in front of the Special leave petition in the Supreme Court, investors are waiting for a decision that speaks to India's nascent economy.
[1] Future Retail v Amazon.com Investment Holdings, decided on 21st December 2020
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.
- Emergency arbitrations allow a party to seek interim relief from an arbitration institution before the arbitration tribunal is formed.
- The 246th Law Commission suggested in its report that the expression
- The Court affirmed the legality of the Emergency Award in this instance based upon the argument.
