Amazon-Future feud sparks foreign vs local debate

The legal spat between Amazon.com Inc and Reliance Industries over the Reliance-Future deal has invoked a xenophobic fervor amongst watchers by sparking a foreign vs local debate. Amazon has accused the Future Group of violating a contract by agreeing to a sale to the Mukesh Ambani controlled Reliance Industries. The dispute has reached the Delhi High Court which is now contemplating if Amazon has any legal rights to object to this transaction. On its part, Amazon urged the high court to impose a business contract in this commercial dispute. The e-commerce giant alleged if Future is allowed to default on its contract with Amazon, it might scare off global investors. India cannot afford to let this happen at a stage when it needs foreign investments the most.

Deal to give Reliance undisputed market share

The deal holds utmost significance for Reliance as it assures the company an undisputed share in the Indian market. However, Amazon is not willing to cede this advantage to Reliance as India with its billion-plus consumers, is one its biggest markets. In the court hearing, Harish Salve, the celebrity lawyer representing Future Retail accused Amazon of threatening Future to either deal only with the e-commerce giant or shut down. And that aborting the Future-Reliance at its current stage would lead to thousands of job losses and bankruptcy. He argued as Amazon has no investment in Future Retail, Reliance is not obliged to seek permission to buy a stake in the company.

Amazon’s counter arguments

Countering these allegations, Gopal Subramanium, Amazon’s lawyer and India’s former attorney general said, Amazon had the right to block this deal as the e-tailer has already introduced Future Retail to a prospective investor to ease its distress. The company also has invested $6.5 billion in India so far besides creating thousands of jobs in the country.

Salve replied the Indian laws do not recognize the transaction between the e-commerce company and the Singapore arbitration tribunal, and the Reliance-Future deal will help save Future Retail from collapse. The lawyer filed a legal petition after Amazon apprised India’s market and antitrust regulators of the Singapore arbitration order of an interim stay.

Last week, Amazon suffered its first setback in the case as the deal was approved by the Competition Commission of India. Reliance now aims to finalize the deal as soon as possible.

Meanwhile media reports suggest, Future Retail’s plea to be excluded from being a party to the Amazon-Future Coupons' arbitration proceedings has been turned down by Court of Singapore International Arbitration Centre (SIAC) which has ordered the arbitration to proceed. The buzz is FRL had approached SIAC with its pleas the arbitration proceedings were part of a contract to which the company is not a party pleading it be excluded from being a party on account of jurisdiction objection. SIAC says an Economic Times report has decided “the arbitration process shall proceed and accordingly, a tribunal will be constituted in this matter.”