CASE ANALYSIS OF RELIANCE VS AMAZON
The Supreme Court upheld the enforcement of an order by the Singapore International Arbitration Centre (SIAC)’s emergency arbitrator that puts on hold the Future Group’s deal with Reliance Industries Limited.
FACTS OF THE CASE
In August 2020, Future Retail Limited (FRL) had announced that it would sell its retail and wholesale business to Reliance Retail.
Before the deal could be executed, Amazon objected to it, alleging a breach of contract it had with Future Coupons (the promoter firm of Future Retail).
Amazon said that its agreement with Future Coupons had given it a “call” option, which enabled it to exercise the option of acquiring all or part of Future Retail’s shareholding in the company, within three to 10 years of the agreement.
Subsequently, Amazon took Future Retail into Emergency Arbitration before the SIAC, where an emergency arbitrator barred the latter from proceeding with the deal.
SIAC ( Singapore International Arbitration Centre )
It is a not-for-profit international arbitration organisation based in Singapore, which administers arbitrations under its own rules of arbitration and the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules.
ARBITRATION UNDER ARBITRATION AND CONCILIATION (AMENDMENT) ACT, 2021
Arbitration is a process in which disputes are resolved between the parties by appointing an independent third party who is an impartial and neutral person called arbitrator. Arbitrators hear both the parties before arriving at a solution to their dispute.
It amends the Arbitration and Conciliation Act (A&C Act 1996) so as to (i) enable automatic stay on awards in certain cases and (ii) specify by regulations the qualifications, experience and norms for accreditation of arbitrators.
A&C Act 1996 is an act to amend and consolidate a law related to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental therewith.
FEATURES OF THE ACT:
Qualifications of Arbitrators:
It does away with the qualifications of the arbitrators under 8th Schedule of the Arbitration and Conciliation Act, 1996 which specified that the arbitrator must be:
An advocate under the Advocates Act, 1961 with 10 years of experience,
An officer of the Indian Legal Service.
Unconditional Stay on Awards:
If the Award is being given on the basis of a fraudulent agreement or corruption, then the court can grant an unconditional stay as long as an appeal under Section 34 of the arbitration law is pending.
BENEFITS OF THE ACT :
Would bring about parity among all the stakeholders in the arbitration process.
Checking misuse of the provisions under Arbitration and Conciliation Act, 1996 would save the taxpayers money by holding those accountable who siphoned off of them unlawfully.
SHORTCOMINGS OF THE ACT :
India already lags behind when it comes to the enforcement of international contracts and agreements. The Act can further hamper the spirit of Make in India campaign and deteriorate rankings in Ease of Doing Business Index.
India aims to become a hub of domestic and international arbitration. Through the implementation of these legislative changes, resolution of commercial disputes could take longer duration now onwards.