Amazon wins case against Future Group, Singapore tribunal awards paltry amount in damages

E-commerce giant Amazon has won the long-standing court battle against FMCG major Future Group at the Singapore International Arbitration Centre.

The final judgment ruled in favour of Amazon saying that business tycoon Kishore Biyani-led Future Group breached its pre-existing contract while merging business with Reliance Retail.

According to the official order of the court, 835 of the 1,534 retail stores Future Retail Limited were transferred to Reliance during Amazon's acquisition of 49% in FCPL for Rs 1,400 crore. FCPL held a 10% stake in FRL.

However, Amazon has been awarded only Rs 23.7 crore by the Singapore tribunal in damages as against Rs 1,436 crore demanded by the e-commerce behemoth.

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Amazon argued that it should be compensated for the full value of its 2019 investment in FCPL, including Rs 1,430 crore paid under the Share Subscription Agreement and Rs 5 crore associated cost.

However, the tribunal said that even if all the contractual agreements had been fully performed, Amazon would not have recovered its investment due to the weak financial condition of FRL.

Further, the SIAC ruled that awarding full damages would unfairly shield Amazon from a commercial loss it was likely to incur regardless.

"Such an award would essentially allow Amazon to escape bad bargain," the final judgment noted.

According to a report by Bar & Bench, the SIAC has directed 11 promoters and parties, including Biyani, to jointly pay the amount, along with the interest at 10.3% annually from March 9, 2022, until full payment.

Future Group has to pay Amazon's arbitration and litigation costs as well, the tribunal order stated.

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Overall, the tribunal awarded Amazon total legal and related costs of Rs 77.3 crore and SGD 68,550.

The legal battle between Amazon and Future Group began in 2020 when industrialist Mukesh Ambani-led Reliance Industries announced the acquisition of Biyani's retail and fashion conglomerate for Rs 24,713 crore. Future Group, which was on the verge of bankruptcy with Rs 22,000 crore in debt, decided to sell its retail business and assets to Reliance.

Amazon objected to the deal, calling it a breach of contract. Thereafter, the US-based e-commerce giant initiated arbitration proceedings against Future Group in the same year.

Notably, the Competition Commission of India (CCI) had withdrawn approval for the Amazon-FRL deal and also imposed a Rs 200 crore penalty on the e-retailer in 2021. CCI had said that Amazon concealed significant details to get approval on the deal in 2019.

Thereafter, Amazon approached SIAC over the deal violation. Simultaneously, FRL filed a case before the Delhi High Court against Amazon in October 2020.

After two months, both CCI and the Securities and Exchange Board of India (Sebi) approved the FRL-Reliance acquisition in 2020.

In the subsequent year, multiple appeals were made to the Supreme Court by both parties.

In March 2022, the Supreme Court lifted the stay by the Delhi High Court on the SIAC. Last week, SIAC made the ruling in favour of Amazon.