NEW DELHI: The tussle between two of the world’s richest men — Jeff Bezos and Mukesh Ambani — to dominate India’s estimated $1 trillion retail market is testing foreign investor patience with flip-flopping court rulings.
This week saw new developments in Amazon.com Inc’s legal battle to block Ambani’s Reliance Industries Ltd from acquiring Future Retail Ltd’s assests, in what would be the country’s largest retail-sector deal. Last week, a single judge at a high court in New Delh estrained culture group films from selling their assests. On Monday, a set of judges at the court overruled that decision. Amazon can appeal the latest ruling in the supreme court.
The Keenly watches case may set an important legal precedent for investors on whether emergency decisions by foreign arbitrators are valid in india. Amazon had petitioned indian courts with an order from an emergency arbitration court in Singapore that barred Future Retail from making a deal with reliance.
It could also help overseas investors judge the validity of agreements in India, which the World Bank has ranked among the bottom 15% of countries in terms of enforcing contracts, worse than Venezuela, Syria and Senegal.
“Not giving effect to a foreign arbitration award undermines India’s already floundering reputation as a good place toinvest and do business in,” said Bharat Chugh, a former civil judge in Delhi and now a lawyer practicing in India’s top court. Speedy enforcement of contracts and foreign arbitration rulings are important for overseas investors when assessing the attractiveness of an investment destination, he said.
Spokespeople at Reliance Industries, Amazon’s local unit and Future Group weren’t able to comment immediately on the latest ruling. Future Retail’s lawyers have argued in court that the deal is their only chance to avoid bankruptcy and save jobs.
Future Retail’s shares climbed as much as 10% to Rs 80.5 in Mumbai, the most since November, while its 5.6% 2025 dollar bonds rose 5.9 cents on the dollar, and are now set for their biggest rise since January 21, to 83.54 cents as of noon in Hong Kong, according to Bloomberg-compiled prices.
Future Retail has argued in court that the pact with another group firm doesn’t bind it and that the pact with another group firm doesn’t bind it and the Singapore’s emergency arbitration order wasn’t enforceable in India. That prompted Amazon to petition the Delhi High Court to ensure compliance.
“Last week’s order would have been some solace to foreign investors worried about the arbitration enforcement regimein India, but the order passed on Monday against Amazon would raise fresh concerns,” said Samudra Sarangi, a partner at law firm Panag & Babu. “An appeal before the Supreme Court may be inevitable.”