Future Retail, the pioneering modern retail chain founded by Kishore Biyani, today said it will take steps to implement its agreement with Reliance Retail as it is not a party to the agreement quoted by global retailer Amazon to block its merger with Reliance Retail.
The agreement is with one of its promoters and group entities. An agreement with another company cannot be used to block its own actions, Future Retail pointed out.
“FRL [Future Retail Ltd] is not a party to the agreement under which Amazon has invoked arbitration proceedings,” it said.
“FRL has been legally advised that actions taken by the FRL / its board, which are in full compliance of the relevant agreements and eminently in the interest of all stakeholders cannot be held back in arbitration proceedings initiated under an agreement to which FRL is not a party,” it added.
US-based Amazon holds a 49% stake in Future Coupons Pvt. Ltd, which in turn gives it a stake in Future Retail.
Under a deal with Reliance Industries announced two months ago, various Future Group/promoter entities agreed to sell their stakes in FRL to Reliance Retail, effectively merging the retail and wholesale business of the group with that of Reliance Retail.
The deal would transfer to Reliance Retail around 1,800 outlets under various brands such as Big Bazaar, FBB, Easyday, Central and Foodhall in around 420 cities in India.
Amazon claims to have a shareholders’ agreement with Future Group that disallows its current deal with Reliance Retail and filed an arbitration suit in Singapore.
Amazon has already won an interim relief in a Singapore court, blocking Future Group’s attempts to sell its assets to Reliance Retail.
On Sunday, Reliance Retail too had said it plans to enforce its agreement under Indian law.
Future Retail maintains that it is free to do what it needs to, to carry out the agreement with Reliance Retail.
“FRL has been legally advised that actions taken by the FRL / its board, which are in full compliance of the relevant agreements and eminently in the interest of all stakeholders cannot be held back in arbitration proceedings initiated under an agreement to which FRL is not a party.”
It also seemed to indicate that it would challenge the jurisdiction of the Singapore arbitration court in an Indian forum.
“As per the advice received by FRL, all relevant agreements are governed by Indian Law and provisions of Indian Arbitration Act for all intents and purposes and this matter raises several fundamental jurisdictional issues which go to the root of the matter. Accordingly, this order will have to be tested under the provisions of Indian Arbitration Act in an appropriate forum.
“In any enforcement proceedings, FRL would take appropriate steps to ensure that the proposed transaction will proceed unhindered without any delay,” it said.
The deal, if it goes through, would more or less double the capability Reliance Retail to deliver goods through its new online platform Jio Mart.
Jio Mart is fast emerging as the biggest challenger for Amazon, which is currently India’s largest online retailer.