RIL-Future deal: Bezos-Biyani battle begins with arbitration hearing in Singapore

An emergency arbitration hearing was held at the Singapore International Arbitration Centre (SIAC) in the matter of Future group's deal with Mukesh Ambani's Reliance Retail. The hearing was held last week and the verdict is expected to come in just a few days.

The arbitration hearing pertains to a legal notice issued by Jeff Bezos-led Amazon for alleged breach of agreement signed with the company. It had raised objections over the Rs 24,713 crore deal saying Future Group didn't seek prior permission from it before signing the deal with Reliance Industries.

The arbitration matter was heard by former Singapore attorney VK Rajah on October 16, Business Standard said in a report. Former Solicitor General of India Gopal Subramanium appeared for Amazon while Singapore-based Davinder Singh for Future group company Future Coupons.

Analysts say the RIL-Future deal poses a threat to Amazon's offline retail plans in India, while making Reliance Retail an undisputed leader in the gigantic offline retail segment. India's retail market is worth Rs 1.2 lakh crore. Only 7 per cent of this is online retail, which is dominated by Amazon, Walmart-owned Flipkart and Reliance JioMart.

The deal with Future group gives a lead to RIL to hold its grip over the consolidated offline retail market. Amazon had bought 49 per cent stake in Future Coupons for Rs 1,430 crore in August 2019. Future Coupons also own 7.3 per cent stake in Future Retail, a business Biyani sold to Mukesh Ambani's RIL.

Amazon has alleged that Future had signed a "non-compete" and "right of first refusal" clause with it but still went ahead with the deal without taking approval from the e-commerce company. Under this clause, Amazon had the first right to invest in Future Retail.

Also Read: RIL-Future Group Deal: How Kishore Biyani, Indian retail sector's poster boy bowed to winds of change

Future Group founder Kishore Biyani had recently said that several acquisitions over the last few years, exacerbated by the coronavirus crisis, drove him to sell his chain of retail stores to Mukesh Ambani-led RIL.

Citing reasons for the slump sale of Future Group's retail stores, warehousing and logistics business to RIL amounting to Rs 24,713 crore, Biyani stated there was no way it could have survived after losing around Rs 7,000 crore revenue.

Also read: 'Rent does not stop, interest does not stop': Biyani explains why he sold retail biz to RIL

In August, RIL announced acquisition of the retail and wholesale business and the logistics and warehousing business from Future Group as going concerns for Rs 24,713 crore.

Through the deal, the Ambani-led firm will acquire Future Retail that owns the BigBazaar and sells everything from groceries to cosmetics and apparel, and Future Lifestyle Fashions Ltd, which operates fashion discount chain Brand Factory. Future Retail operated 1,550 stores. Its flagship brands BigBazaar, FBB and Foodhall, Easyday, Heritage Fresh and WHSmith and Future Lifestyle Fashion operate 354 stores.

Also Read: BT Buzz: What next for Kishore Biyani after selling Future Retail to Mukesh Ambani's Reliance?