SIAC Awards INR 24 Cr In Damages To Amazon Over Future Group Battle

In the latest twist in the years-long Amazon-Future Group battle, the Singapore International Arbitration Centre (SIAC) has reportedly awarded INR 23.7 Cr in damages to the ecommerce major and INR 77 Cr for legal costs. 

As per Bar and Bench, SIAC ruled that the Kishore Biyani-led retailer breached its existing contractual obligations towards Amazon when the Future Group entered into an agreement with Reliance.

For context, Reliance Retail signed a deal in 2020 to acquire Future Retail Ltd’s (FRL) logistics, retail and warehousing businesses for INR 24,713 Cr. 

The tribunal also reportedly observed that the resolution passed by FRL’s board to approve the Reliance deal effectively amounted to a breach of the agreement with Amazon.

While Amazon is said to have sought more than INR 1,436 Cr in damages (the amount the ecommerce major invested in Future Coupons Pvt Ltd in 2019), the arbitration tribunal granted a paltry sum of INR 23.7 Cr in damages.

In another blow to the ecommerce juggernaut, sources reportedly said that SIAC awarded only 60% of the legal costs incurred by the company during the arbitration proceedings, adding that the tribunal also declined to grant any “costs related to the initiation or defence of allied proceedings”.

As per the report, of the nearly INR 125 Cr legal expenses incurred by Amazon, the SIAC awarded INR 77 Cr towards legal costs and an additional INR 6 Cr towards arbitration fees.

Amazon Vs Future Group

At the heart of the matter is the ecommerce giant’s purchase of a 49% stake in Future Coupons, a promoter group entity of Future Retail, in 2019. The transaction was effectively meant to circumvent restrictions on foreign direct investment in multi-brand retail and give Amazon indirect access to FRL, which operated the Big Bazaar retail chain.

Matters took a turn for the worse two years later in 2021 after the Competition Commission of India (CCI) suspended the approval granted to the 2019 deal, saying the ecommerce major had not been upfront about the actual scope and purpose of the deal.

The competition watchdog kept the investment in the Future Group entity in abeyance and directed Amazon to pay a penalty of INR 202 Cr. 

Previously in 2020, Amazon had initiated arbitration proceedings against the debt-laden retail giant as Reliance began its takeover of the Future Group. In its plea, Amazon sought the transfer of assets of Future Retail – in which Future Coupons held a 9.82% stake. 

Meanwhile, as legal cases piled up, Reliance cancelled the INR 24,713 Cr deal with Future Group in April 2022.