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Delhi High Court Case Comment: Future Retail Ltd. v. Investment Holdings LLC & Ors.

Updated: Nov 3, 2022


On 20th December 2020, the High Court of Delhi while dealing with the case between Future Retails Limited (FRL) and Amazon Inc., clarified an important legal point relating to the validity of “emergency arbitral awards” under the Arbitration and Conciliation Act, 1996. The Court was hearing a plea by Future Retail Ltd. to issue an order of interim injunction to restrain Amazon Inc. from writing to Indian statutory authorities including the Competition Commission of India and the Securities Exchange Board of India about an emergency arbitral award passed by the Singapore International Arbitration Center in Amazon’s favour.


The case revolves around two deals; one between the Future Group and Amazon and another between Future Group and Reliance Retail Ltd. The first deal between Amazon Inc. and Future Group was entered in August 2019, by which Amazon had bought 49 per cent in one of Future Group's unlisted firms, viz., Future Coupons Ltd (FCL), with the right to buy into the listed flagship FRL, after a period of 3 years but before 10 years. Future Coupons owns a 9.82 per cent stake in Future Retail. The deal between Future Group and Reliance Retail Ventures Limited (RRVL) entered in August 2020 was related to the acquisition of retail, wholesale, logistics and warehousing businesses of Future Group by Reliance Retail Ventures and Reliance Retail and Fashion Lifestyle Limited for Rs 24,713 crores. Amazon Inc. objected to the proposed sale of Future Retail’s assets to the Reliance Group. However, the deal was approved by the Competition Commission of India. Such an approval gave Amazon a big jolt as it owns a stake in Future Coupons Pvt Ltd, which is in turn a 9.82% shareholder in FRL. Amazon Inc. claimed that the 2019 pact it signed with Future Group prevented the latter company from selling its retail assets to certain parties, including Reliance Retail. Consequently, in October 2020, Amazon invoked arbitration on the ground that the Mukesh Dhirubhai Ambani Group of organisations was included in the negative list of 30 companies with which Future Group couldn't transact as per their settlement endorsed in 2019. Amazon Inc., in this proceeding won an interim award against the arrangement between Reliance Retail Ltd. and the Future Group and the Singapore-based single judge arbitration panel put the deal on pause. Amazon, in furtherance of this claim, knocked at the doors of statutory authorities of India including the Securities and Exchange Board of India and the Competition Commission of India apprising them of its 2019 pact with the Future Group and an Emergency Arbitral Award obtained from the Singapore International Arbitration Centre (SIAC) staying the deal between RRVL and Future Group. Amazon Inc. wanted these authorities to look into its claim and reconsider the decision of approving the deal. The present suit before the Delhi High Court was filed by the Future Group to pray for restraining Amazon Inc. from approaching the aforementioned statutory authorities in relation to the deal between RIL and Future Group.


FRL's main contention was that Amazon was not a party to its agreement with its own shareholders, and Amazon was not its shareholder but it was merely a shareholder of FCPL. Therefore, it could not deny FRL's right to enter into an agreement with Reliance. The contention raised by the Future Retail relating to the emergency award was that the emergency arbitral award under the SIAC Rules was of no consequence because it is not enforceable or recognizable in India. On the other hand, Amazon defended its right by alleging violation of the agreement it entered with FCPL. On the question of validity and enforcement of emergency arbitral award, it contended that both the parties had willingly chosen to adopt the SIAC Rules as rules of engagement. Additionally, it was claimed that Part I of the Arbitration & Conciliation Act 1996 does not disempower an Emergency Arbitrator.


Future Retail’s argument of non-enforceability of the emergency arbitral award in India was refuted by the Court and it was held that the award was completely valid on account of the fact that there was no express bar on enforceability of such an award under the Arbitration and Conciliation Act, 1996. The court also held that the Board Resolution passed by Future Retail Ltd. to give effect to Reliance Industries Ltd's (RIL) deal was not void. On the question of Amazon seeking conflation of agreements of FRL shareholder agreement and Amazon- Future Coupons Ltd.’s shareholder agreements, the Court held that such a conflation was contrary to the Foreign Exchange Management Act 1999. The Court declined to grant an injunction in FRL’s favour to restrain Amazon Inc. from reaching out to the statutory authorities. It upheld Amazon’s representation by stating that such a representation to the statutory authorities is not based on illegal premises, but rather on the alleged breach of FCPL’s (Future Coupons Private Ltd.) shareholder agreement and FRL’s (Future Retails Ltd.) shareholder agreement. Lastly, it stated that the statutory authorities were free to decide on the approval of the RRVL- FRL deal after considering the law on the issue.

Court's Rationale

The court’s rejection of the interim injunction against Amazon Inc. was based on three principles regulating grant of injunction viz., prima facie case, irreparable loss, and balance of convenience. On the first principle, the court stated that “the representation of Amazon based on the plea that the resolution dated 29th August, 2020 of FRL is void and that on conflation of the FCPL SHA and FRL SHA, the ‘control' that is sought to be asserted by Amazon on FRL is not permitted under the FEMA FDI Rules, without the governmental approvals, hence a prima facie case for injunction has been made out in favour of Future Retail Ltd.” However, the court stated that the tests of "balance of convenience" and "irreparable loss” are more important in this case than the prima facie test. It held the balance of convenience in favour of both FRL and Amazon Inc. Since Amazon’s representation to the legal authorities was based on the alleged breach of FCPL SHA and FRL SHA, and not on any illegal premise, and the approval to the deal by the Competition Commission of India favours the case of FRL, the court stated that weighing the balance would be decided at the appropriate forum as a matter of trial after the parties present evidence in their favour. In regard to the irreparable loss principle, the court stated that Amazon Inc. if not allowed to speak to its case before the statutory authorities, will endure an irreparable loss as it professes to have made preemptive rights in its support in the event that the Indian law is allowed in future. Same may not be the situation with FRL as regardless of whether Amazon makes its representation on the basis of inaccurate realities consequently utilising unlawful methods, it will be for the statutory specialists/authorities to apply their mind to current realities and legitimate issues and reach the correct conclusion. Hence the court declined to grant an injunction in FRL’s favour to restrain Amazon Inc. from reaching out to the statutory authorities.

Critical Analysis

The judgment, apart from deciding on the plea by Future Group, also dealt with an important question of law in the form of validity and enforceability of emergency arbitral awards in India. The court held that there is nothing mentioned in the Arbitration and Conciliation Act 1996, which prohibits enforcement of an emergency arbitral award obtained from a foreign forum in India. Emergency arbitration is a mechanism by which a disputing party applies for the emergency or urgent interim relief, before an appropriate arbitration tribunal is formally set up. The relief obtained from the emergency arbitration is subject to challenge before the appropriate arbitration tribunal, however the interim emergency relief can also be regarded as final award if the other party does not challenge it. Neither in the original 1996 Act nor in the 2015 Amendment, is there any mention of emergency arbitrations and their fate. This has created a problem in determining the disputes relating to the recognition and enforcement of such reliefs before Indian courts. Moreover, there is no specific mention of emergency arbitrations under the New York Convention 1958, which has worsened the situation for Indian Courts since there is no prescribed way of how to go about in cases involving validity and enforcement of emergency arbitral awards.

The only relevant provision towards which courts can look towards is Section 9 of the Arbitration Act which provides for interim measures by courts. However, the 2015 Amendment Act broadened Section 9 to include international commercial arbitrations within its scope. Section 9 is not clear on the validity and enforceability of the emergency arbitral awards, rather it provides an alternative mechanism (like emergency arbitration) by which Courts can issue interim relief in an emergency situation. It follows that if a party has won an award in emergency arbitration, it still needs to initiate fresh proceedings under Section 9 of the Arbitration Act to secure the same relief. This makes the provision quite absurd. Further, it may be possible that the arbitral award and the court's interim relief are contrary and this makes the whole process unsustainable. However, there has been a debate over interpretation of Section 9 in relation to whether the provision only provides an alternative remedy for emergency relief or it empowers courts to even accept and enforce an emergency arbitral award obtained from somewhere else. There are very few cases which have dealt with this issue. However, their view has not been pro- enforcement of emergency arbitral awards unlike the view taken by Justice Mukta in the present FRL v. Amazon case. For instance, the Bombay High Court, in HSBC PI Holdings (Mauritius) Limited v. Avitel Post Studioz Limited and Ors., stated that Section 9 provides two kinds of processes; first to file a separate suit before the courts praying for an interim emergency relief, and second, where the relief has already been obtained from an emergency arbitral tribunal and the same has not been challenged by the respondents, additionally it goes in line with the court’s view, then it is acceptable. The Delhi High Court in Raffles Design International India Pvt. Ltd. & Ors. v. Educomp Professional Education Ltd. & Ors. passed on October 7, 2016, stated that, “recourse to Section 9 of the Act is not available for the purpose of enforcing the orders of the arbitral tribunal”. However it added that, “it does not mean that the Court cannot independently apply its mind and grant interim relief in cases where it is warranted.” From the above, it is clear that Section 9 of the Arbitration and Conciliation Act does not allow Courts to recognise or enforce an emergency arbitral relief, rather it empowers them to issue such an interim relief on independently applying its mind, as and where it is warranted. Contrary to such an established view of the Bombay and Delhi High Courts, Justice Mukta seems to have deviated from the limited scope approach applied by the abovementioned High Courts and evoked a debate on the issue of enforceability of emergency arbitral awards in India. By expressly stating that there is no bar on enforceability of the emergency arbitral awards under the Arbitration and Conciliation Act, it now mandates clarification by the Supreme Court of India which has not tried to delve into this issue in its recent judgment issued on August 19, 2020, in an appeal from the aforesaid order of Bombay High Court.

However, the rationale of justice Mukta in so far as it goes to declaration of enforceability of emergency arbitral awards under the Arbitration and Conciliation Act seems outside the scope of the provisions of the Act. If there is nothing expressly mentioned about the bar on enforceability of emergency arbitral awards, there is also nothing in the Act which allows such enforcement. Although Justice Mukta may be positive in its approach of interpreting the provisions in accordance with changing times, the same cannot be backed by the law. There is a need for a clarification by the Supreme Court on this point and in the long run, all this can pave way for an amendment to the Arbitration and Conciliation Act incorporating the express provisions for validity and enforceability of the emergency arbitral awards in India. There is a need for such an amendment as Section 9 does not provide for validity or enforceability, rather it only provides an alternative relief by filing a suit. If not amended, the Section in its present form may completely defeat the purpose of emergency relief as the suits under Section 9 may not be taken up or be disposed of on an urgent basis.


The practice of emergency arbitration is well developed over the years with almost all the major arbitration centres including Indian centres providing such a mechanism in their rules. Moreover, many countries such as Singapore and Hong Kong have already implemented laws relating to the enforcement and recognition of emergency arbitrations. However, in India there is no legal provision recognising such a proceeding. The 246th Law Commission Report recommended expansion of the definition of "arbitral tribunal" by including an award/relief rendered in an emergency arbitral proceeding as well, but it could not find a place in the legislation. However, with this judgment of the Delhi High Court, it seems that the focus would be on amending the Arbitration and Conciliation Act to fill such a gap in the arbitration law of India.


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