Future Group reserves $134mn for Amazon legal battle

By Rahul Vaimal, Associate Editor
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Big Bazaar
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The Indian conglomerate company, Future Group is said to have reserved about $134 million in an escrow account to confront all present and future liabilities in its arbitration fight with global eCommerce giant Amazon.

As per the reports, the escrow account reserve will be increased to $201 million, which will be equal to the investment made by Amazon in Future Coupons.

However, the Future Group’s top officials are hoping that their deal with Mukesh Ambani-owned Reliance Retail Ventures, will be complete as per previously scheduled, a person closer to the subject said.

“The understanding within the company is that even if Future Group loses the arbitration, it would have to pay a maximum of monetary damages. And we are ready for that. That is the idea behind keeping the money aside in the escrow account,” the person quoted above said.

Regarding the prevailing arbitration fight, legal experts opined that even if the Future Group decided to continue with the deal, it would force Amazon to either go to an Indian court by seeking an injunction on the deal or to approach the Singapore International Arbitration Centre (SIAC) for an early hearing in the subject.

Amit Jajoo
Amit Jajoo
Partner at IndusLaw

“The interim order passed by the emergency Arbitrator of SIAC is not in itself enforceable by Indian courts, although it holds persuasive value and parties are expected to abide by it. To enforce the interim order in India, Amazon can apply for interim reliefs under Section 9 of the Arbitration and Conciliation Act from Indian courts.”

Dispute begins

In August, Future group had declared that it would sell the retail and wholesale business of its supermarket chain Big Bazaar, premium food supply unit Foodhall and fashion and clothes supermart Brand Factory’s retail and wholesale units, to the Indian conglomerate owned Reliance Retail Ventures.

In 2019, the American eCommerce major Amazon bought a 49 percent stake in Future Coupons, which translates to roughly 5 percent ownership in Future Retail.

Amazon argues that the ongoing deal with Reliance Retail is a violation of a non-compete clause and a right-of-first-refusal pact and was also denying it the “call” option that was included in the agreement that it had with Future Coupons.

According to Amazon’s claim, the agreement gives it the provision to acquire all or part of Future Retail’s share in the company, within three to 10 years of the deal. The company also adds that Future Group is restricted from transferring or selling its assets to third parties without informing the American company.

Due to this, Amazon had filed an arbitration against Future Coupons, Future Retail, and other promoter entities in the SIAC and secured an interim stay in its favor.

The order was welcomed by Amazon India, whereas Future Retail and Reliance Retail Ventures stated that they would continue with the sale proceedings as scheduled.