The arbitration process in the battle between the Future group and Amazon has been stayed.

A division bench of the Delhi high court decided on Wednesday to intervene and halt the proceedings before the arbitration tribunal of Singapore International Arbitration Centre (SIAC) on the ground that the balance of convenience stood in favour of the Kishore Biyani-led group after the Competition Commission of India withdrew its approval granted in 2019 which enabled Amazon to pick up a 49 per cent stake in Future Coupons Pvt Ltd.

Amazon had also acquired pre-emptive rights arising from an indirect stake in Future Retail Ltd which it has been using to stymie the closure of the Rs 24,713 crore deal between Future Retail and Reliance Retail struck in August 2020. The interim order was passed by a division bench comprising Chief Justice D.N. Patel and Justice Jyoti Singh.

In a late night regulatory filing on Wednesday, Future Retail said the SIAC has terminated the arbitration proceedings scheduled between January 5 and January 8 after the stay order was passed by the Delhi high court on Wednesday, reports PTI.

The stay order came just a day after single judge bench of Justice Amit Bansal dismissed petitions filed by the two Future group entities, FRL and FCPL, seeking a stay on the arbitration proceedings that was due to start in Singapore on Wednesday and run till January 8.

Justice Bansal had said in his order that the Future group entities had not been able to demonstrate any “exceptional circumstances or perversity” in the Singapore proceedings to warrant the court to exercise its powers of jurisdiction under Article 227 of the Constitution of India.

However, the division bench of the Delhi high court read the facts differently.

Chief Justice D.N. Patel and Justice Jyoti Singh said there was a prima facie case in favour of the Future group entities and, if a stay was not granted, it would cause an irreparable loss to them.

“We hereby stay further proceedings of the arbitral tribunal till the next date of hearing and we also stay the single judge’s January 4 order till the next date of hearing,” the bench said while listing the matter for further hearing on February 1.

The high court also issued a notice to Amazon.com NV Investment Holdings LLC on the appeals filed by FRL and FCPL challenging Justice Bansal’s order.

Last month, the Competition Commission of India suspended the deal between Amazon and Future Coupons and said there was a “deliberate design” on the part of Amazon to suppress the actual scope and purpose of its proposal in 2019. The CCI had said that its approval for the transaction which was given in November 2019, will remain in “abeyance”.

Amazon will have to make another application within a period of 60 days from the receipt of the order.

Valid decision

Analysts said the Delhi high court decision on Wednesday was legally valid as under The Arbitration and Conciliation Act, 1996, Indian courts have the power to decide disputes arising out of an arbitration agreement even if it was arbitrated by a foreign tribunal.

The international tribunals are bound by the orders of the India court, the analysts said.

It is immaterial whether the international arbitral tribunal is located in a foreign country or has a seat in India, although in the present dispute the Singapore Arbitral Tribunal has a seat in Delhi.

ED case

Meanwhile, in a separate development, the Delhi High Court said that it would hear a plea from Amazon on January 12 against an investigation being conducted by the Enforcement Department into transactions of two other Amazon group entities: Amazon Wholesale (India) Pvt Ltd and Amazon Seller Services.

The ED investigates violations of the Foreign Exchange management Act (Fema) and the Prevention of the Money Laundering Act. The two Amazon companies have argued that they are Indian entities and their transactions do not have a foreign exchange element.

Counsel for ED informed a single judge bench of the Delhi High Court that due to the Covid-19 pandemic, it would not insist on the physical appearance of Amazon officials.

Justice Rekha Palli said that at this stage, it “would not comment” on the information being sought by the agency or direct the agency to “hold its hand”.