Singapore-based Emergency Arbitrator VK Rajah, former Attorney General of Singapore, threw a spanner in the works for Kishore Biyani when he decided to restrain the Future Group entities from proceeding with the Rs 24,700 crore deal to monetise the retail business.
And while Amazon, which believes that the sale of Future’s retail business is a violation of its contract with Future Coupons, might be celebrating the interim relief, there are many questions raised on the enforceability of the Emergency Arbitrators’ directions.
Amazon’s legal team believes that having consented to and submitted to the jurisdiction of the Emergency Arbitrator, the Future Group and its entities are bound by the interim stay. Amazon bolsters this claim by also citing the rules of engagement of the Singapore International Arbitration Centre (SIAC).
Legal experts, however, don’t believe that the enforcement will be that easy. In this context, CNBC-TV18 spoke to various legal experts, who have helped identify options before the Kishore Biyani-led group.
Option 1 – Challenging the stay in Singapore
This, experts say, is the most obvious option available to the Future Group – that once the Arbitral Tribunal is established, the interim orders can be placed before it and challenged.
However, experts also suggest that this poses many problems. For one, they point out that the very reason an Emergency Arbitrator was appointed was on account of the time required for setting up an arbitral panel. Waiting for setting up an Arbitral Tribunal exposes the Future Group and importantly the prospective deal, to uncertainties of time taken.
The Future group, with its back against the wall and with the clock ticking on the Rs 24,700 crore deal, may be wary of waiting for the Arbitral Tribunal.
But interestingly, Option 4, which we’ll discuss in a bit, might just make the wait, worthwhile for Kishore Biyani.
Option 2 – Moving an Indian court
If the Future Group chooses to not wait for the Arbitral Tribunal, it can contest the applicability and enforceability of the interim directions in an Indian High Court.
The most likely destination is likely to be Delhi HC if this option is preferred.
The Future Group may prefer to invoke Section 34 of the Arbitration and Conciliation Act. Section 34 provides for limited grounds to challenge an arbitral award. Future Group may seek directions from the Delhi HC to stall the interim directions of the Emergency Arbitrator from taking effect.
But there’s a catch. Section 34 provides only for setting aside an arbitral award. It does not make a mention of the applications for setting aside emergency orders of interim nature.
Option 3 – Amazon acts, Future reacts
The Kishore Biyani-led group could also wait for Amazon to move courts. The conventional understanding of the Arbitration and Conciliation Act dictates that to enforce any award, Amazon will have to launch enforcement proceedings in an Indian High Court. Again, the destination of choice is likely to be the Delhi High Court.
To enforce the Emergency Arbitrator’s directions, staying the Rs 24,700 cr deal, Amazon could prefer to move the High Court under Part II of the Arbitration and Conciliation Act, for ratification and enforcement.
Here, again, legal experts point out that Part II of the Arbitration Act only provides for enforcement of final awards.
Option 4 – Future Retail distances itself
Legal experts point out that Arbitration and Conciliation Act simply does not recognize and provide for an Emergency Arbitrator or enforcement of interim directions flowing from one.
Law Commission 246th report had recognized this anomaly and had even suggested an amendment. The proposed amendment was designed to recognize Emergency Arbitrators as per the rules of the Arbitration Centre. However, even the 2015 Amendment failed to usher in the recommendation.
Moreover, as was visible in “Option 3”, even Part II proceedings only recognize final awards.
In such a scenario, either “Option 1” or a hybrid of “Option 1” and “Option 3” – would be available. In other words, given the lack of recognition and enforcement of an emergency arbitrator’s directions, Future Group could simply proceed with the said transaction, while considering an appeal when the Arbitral Panel is finally constituted or contesting when Amazon looks to enforce the interim stay.This list of options available is not exhaustive, and given the grey areas, is subject to the creativity of the legal teams. However, it is indicative of the broad strokes of Future’s playbook.