Amazon, Future Group set to mull truce, may go for out-of-court settlement

Future Group and Amazon are likely to start negotiations for a possible out-of-court settlement of a year-long legal standoff over the proposed sale of Future Group’s assets to Reliance Retail once the Singapore arbitration centre gives its initial rulings later this month, according to two people familiar with the matter.

The Singapore International Arbitration Centre (SIAC) is to decide whether BSE-listed Future Retail Ltd (FRL) should be a party to the arbitration. Future had also asked SIAC to vacate an October 2020 stay by the arbitrator that restrained it from going ahead with the Reliance Retail deal until the final outcome on Amazon’s challenge.

“The outcome of the SIAC initial orders will decide which way the wind could blow,” said one of the persons cited above. He added that possible talks between Future Group and Amazon could be on how to financially compensate Amazon for its minority stake in a promoter company of FRL so that one of the country’s largest retail deals can go through unhindered.

“It could pave the way for negotiations between the two companies for a settlement rather than let it linger further,” said the person cited above.

The ecommerce giant said it has always wanted to discuss matters with Future Group.

“Amazon has consistently offered to assist FRL during the economic downturn caused by Covid and reiterated our openness for a dialogue even during the Delhi High Court hearings,” an Amazon spokesperson said in an email response.


On Tuesday, Amazon issued a press statement saying however "this should not be misconstrued as an offer for settlement."


Future Group did not respond to an email seeking comment.

In the event of non-negotiation between the two groups, the SIAC final ruling could spill over well into 2022 as the Centre is only expected to start hearing on the actual arbitration in November or December, sources said. A delay in the arbitration process could be detrimental to Future Group, which is laden with debt and facing a cash crunch, analysts said.

The pandemic has dealt a severe blow to Future Group’s plans to service its debt as hundreds of its stores remained shut for months and its businesses faltered as consumers stayed indoors last year.

By March 2020, Future Group was prompted to pledge the entire promoters’ shareholding with lenders as net debt ballooned to Rs 12,989 crore. Then, in August last year, the Kishore Biyani-led enterprise announced it had agreed to sell its retail assets to rival Reliance Retail on a slump sale basis for about Rs 25,000 crore.

The legal wrangle stems from a 2019 investment of Rs 1,431 crore by Amazon.com NV Investment Holdings to acquire a 49% stake in FRL’s promoter firm Future Coupons Pvt. Ltd (FCPL). Amazon objected to the proposed Future-Reliance deal and argued that such a deal was a breach of contract as per the US ecommerce giant’s capital infusion agreement in FCPL. Amazon said the agreement bars BSE-listed FRL from selling its assets to a dozen global and Indian companies, including Reliance.

The SIAC October 2020 interim order triggered a spate of lawsuits and counter-lawsuits between Amazon and Future Group for almost a year, first in the Delhi High Court and eventually in the Supreme Court. The apex court in August ruled that the SIAC emergency order was enforceable in India, pinning the prospects of the deal going through on the outcome of the SIAC arbitration.