In the matter of Amazon v Future Coupons, the Supreme Court of India recently pondered on a crucial area of arbitration law and issued a landmark judgment. The Supreme Court heard a dispute involving the enforceability of Emergency Arbitration. Its legality under Indian law was a point of contention for both sides, and the Supreme Court viewed it as a serious question of law. This article delves into the factual analysis as well as the judgment’s ramifications.

Facts of the Case:

In this case, Biyani’s Future Company has agreed to sell its retail, wholesale, logistics, and storage operations to Reliance Retail, a part of the umbrella Reliance Industries Limited (RIL) group. Future Retail will sell its supermarket chain Big Bazaar, premium food distribution unit Foodhall, and fashion and clothing superstore Brand Factory’s retail and wholesale businesses to Reliance Retail as part of the deal. These agreements gave Amazon exclusive rights to Future Group’s retail assets and required Future Group to obtain Amazon’s written authorization before designating the assets[1]. Following that, the Reliance Industries Group, which was classified as a “restricted person,” entered into a transaction with the Future Group for a future merger that would transfer the retail assets to the Reliance group. This deal was the subject of a legal dispute between Amazon and the Future Group, which resulted in arbitration proceedings. According to the arbitration clause in the agreement, Amazon filed a claim against Future Group under the SIAC Rules (Rules of the Singapore International Arbitration Centre). Also, it was pre-decided that the seat of arbitration would be New Delhi, India. On October 25, 202, an emergency arbitrator issued an Interim Relief in Amazon’s favour. However, when Future Group failed to comply with the emergency order, Amazon filed a lawsuit in the Delhi High Court to have the order enforced. The case was later appealed to the Supreme Court, which decided on the issues listed below.

Issues Raised:

The major issues in this case before the SC were:

1. “Is an emergency arbitrator an arbitrator under the Arbitration & Conciliation Act, and may a “award” made by an Emergency Arbitrator appointed under Schedule 1 of the SIAC Rules be deemed an order under Section 17(1) of the Act”?
2. “Is it possible to challenge an order made by a learned Single Judge of the High Court under Section 17(2) of the Act enforcing an Emergency Arbitrator’s award”?

Rule:

For that regard, the words ‘Emergency Arbitrator’ and ‘Emergency award’ are not found in the Arbitration and Conciliation Act (A&C Act). The Court did point out, however, that the parties are free to agree on a set of Arbitral Institutional Rules. This means that the parties have the option of using emergency arbitration procedures included in the rules they choose. This is shown by the following parts of the A&C Act:

“Section 2(6)- Authorizes the parties to decide an arbitral institution for the determination of issues that arise between the parties.”

“Section 2(8)– Parties can agree on the arbitration rules to be applied.”

“Section 19(2)– they can also agree on the procedure that shall be followed by the tribunal for the proper conduct of its proceedings.”

The Supreme Court remarked that the main aim underlying the above-mentioned measures was to respect party autonomy throughout the arbitration. It went on to say that appointing an emergency arbitrator and proceeding for interim relief in accordance with institutional standards do not violate the A&C Act because it contains no provision prohibiting such behavior.

The second main point of contention was the arbitral tribunal’s definition and whether or not it included an emergency arbitrator. The literal reading of Section 2(1)(d) of the A&C Act excludes an emergency arbitrator, and the term “arbitral tribunal” refers to either a single arbitrator or a panel of arbitrators in this context.The Supreme Court, on the other hand, expanded the reach of this clause to encompass emergency arbitration.

The term ‘unless the context otherwise requires’ was mentioned in the section, and the SC made it clear that any interim award issued by an emergency arbitrator would fall under the umbrella of orders issued by the ‘arbitral tribunal’ by reading it together with Section 2(1)(a) (which allows for “any” arbitration). It went on to state that there was no difference between an arbitral tribunal’s order and an emergency arbitrator’s order, and that both could be enforced in front of the high court.

Analysis:

Section 32(2)(c) of the A&C Act empowers an arbitral tribunal to terminate proceedings if the tribunal determines that the continuation of proceedings has become unnecessary or impracticable for any reason (other than the withdrawal of a claim or the parties’ consent to stop proceedings). According to the Future Group, the arbitration itself did not survive due to the CCI order, and so there was no need for the tribunal to hear any evidence in this regard.  As a result, the key issues that the Court would have had to consider prior to granting a stay would have been: (a) whether any “irreparable loss” would be caused to the party if the expert evidence was completed prior to deciding the termination application; and (b) whether arbitral proceedings could be terminated based on an appealable order, i.e., an order that has not reached finality.

Conclusion:

The Indian judiciary has established substantial jurisprudence over the years addressing the extent to which courts can intervene in arbitral processes or overturn arbitral verdicts. In doing so, it has addressed the importance of arbitration as a method of resolving economic disputes, particularly those that span borders. Any involvement is limited to extremely rare and exceptional conditions. This is a legal as well as a pragmatic one, given the disruption that continual judicial involvement may cause to the course of arbitral procedures. This is also compatible with the Government of India’s aim of promoting international commercial arbitration. However, the division bench’s ruling negates years of work by the court, legislators, and policymakers, and sends a mixed message that would hinder the use of foreign commercial arbitration by Indian enterprises and their contractual counterparts.

Research Paper By – Prashasti Tiwari 

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2. Umakant Varottil, Amazon – Future Group: Delhi High Court’s Intrusiveness in Staying Arbitral Proceedings, IndiaCorp Law,
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