Why stopping Future's asset sale to Reliance may not be easy

Legal experts explain the implications of the latest twist in the Amazon-Reliance battle for billion-plus consumers’ purse.

In their latest effort to stall the Rs 25,000 crore-Future Group-Reliance Retail deal, Amazon.com Inc has asked the Delhi high court to restrain Future Group from taking steps to sell its assets or shares and enforce the interim order passed by the Singapore International Arbitration Centre.

In its petition before the court, Amazon is said to have sought imprisonment of Future group promoters for alleged violation of securities market rules by illegally encumbering group company shares.

Legal experts explain the implications of the latest twist in the Amazon-Reliance battle for billion-plus consumers’ purse.

Could someone be arrested for alleged breach of an international arbitration order?

Legal experts point out that under Section 17 (2) of the Arbitration & Conciliation Act 1996, an order passed by the arbitral tribunal is deemed to be an order of the court.

It is enforceable, as any other court order, through the Code of Civil Procedure.

The Code lays down various modes of executing a decree, and one such mode is arrest and detention of the judgment-debtor in a civil prison, experts add.

There have been few precedents for enforcement of interim foreign awards in India, says Murali Neelakantan, a corporate lawyer.

These have primarily been through invocation of Section 9 of the Act by applying to an Indian court to protect the assets that are the subject of the dispute.

However, most legal experts point out that it is rare to enforce an interim order through provisions under the Code.

They say that the interim order by SIAC in this case was given by an Emergency Arbitrator.

The final arbitral tribunal has now been constituted by the SIAC.

This tribunal could reconsider, modify or vacate any interim order of the Emergency Arbitrator.

“This appears to be a hurried attempt by Amazon to try and enforce the order of the Emergency Arbitrator before it is revisited by the arbitral tribunal that has now been constituted in this matter,” says Ajay Thomas, an independent arbitrator.

Why the move seeking arrest of Future promoters could turn out to be pre-mature?

Experts point out that two conditions are required to be fulfilled to invoke the arrest provisions in the Code.

“Firstly, the award should have been declared as enforceable and deemed to be a decree of a court.

"Secondly, there should be bad faith, not just indifference to satisfy the decree of the court,” says Ashish Kumar Singh, managing partner, Capstone Legal.

Experts say these provisions are likely to be considered once the court passes any order on the enforceability of the award.

Currently, Amazon does not have an order from any court in India that can stop the asset sale.

However, a lot can change as the case is sub judice before the high court, experts add.

Why is it difficult to implement an interim order by SIAC?

The Indian Arbitration & Conciliation Act, 1996 does not recognise the concept of an Emergency Arbitrator.

The legal fraternity is divided over the larger question of the validity, recognition and enforcement under Indian law of the “interim” orders of an Emergency Arbitrator.

There are court orders that have held that foreign interim arbitral awards are not enforceable as a decree of the court.

In the absence of statutory provision, a suit can be filed under Code of Civil Procedure seeking injunctive relief during the pending arbitration proceedings.

Alternatively, an application for interim relief can be filed under Section 9 of the Act, say experts.