The Singapore International Arbitration Centre (SIAC), an international arbitration organisation based in Singapore, recently made headlines as it halted a major deal between Future Group and Reliance Industries Limited. The Supreme Court upheld this decision, marking a significant moment within the field of international arbitration.
In August 2020, Future Retail Limited (FRL) announced its intention to sell its retail and wholesale business to Reliance Retail. However, this deal was disputed by Amazon, who claimed a breach of contract that they held with Future Coupons, the promoter firm of Future Retail.
Amazon’s agreement with Future Coupons allowed them a “call” option, granting them the opportunity to acquire all or part of Future Retail’s shareholding within a three to ten year timespan of the agreement. Due to the dispute, Amazon took Future Retail into Emergency Arbitration before the SIAC.
Role of Emergency Arbitration
Emergency arbitration allows a party involved in a dispute to apply for urgent interim relief before the formal constitution of an arbitration tribunal. In this case, the emergency arbitrator at the SIAC barred Future Retail from progressing with the Reliance deal.
Supreme Court’s Stance & Legal Implications
The Supreme Court dismissed Future Retail’s argument that an emergency arbitrator does not constitute an arbitral tribunal under the Arbitration and Conciliation Act of 1996. The court upheld the validity of the emergency arbitration award and stated it was akin to an order of an arbitral tribunal under Section 17 of the Act.
Section 17 of the Act outlines the process for parties in an arbitration to seek interim relief from the arbitral tribunal during the course of arbitral proceedings. The court referred to a recommendation given by a High-Level Committee constituted by the Government of India, which suggested that given international practice, India should also permit the enforcement of emergency awards in all arbitral proceedings.
Arbitration: A Core Concept
Arbitration is a process where disputes are resolved between parties through the appointment of an impartial and neutral third party known as an arbitrator. Both parties present their cases to the arbitrator who then arrives at a solution.
The Arbitration and Conciliation (Amendment) Act, 2021 has further streamlined the arbitration process. It amended the Arbitration and Conciliation Act (A&C Act 1996) to enable automatic stays on awards in certain instances and specify qualifications and norms for accrediting arbitrators.
Key Features & Impact of the Arbitration and Conciliation (Amendment) Act, 2021
The Act has modified the qualifications for arbitrators and grants courts the power to stay awards if they are based on fraudulent agreements or corruption, providing a significant check on the misuse of the provisions under A&C Act 1996.
Despite its advantages, the Act could potentially hamper the enforcement of international contracts and negatively impact India’s ranking in Ease of Doing Business Index. However, these changes could still assist in establishing India as a hub for domestic and international arbitration, despite possibly lengthening the duration for the resolution of commercial disputes.
Through its rulings and legislative changes, India continues to evolve in its approach to arbitration, striving to strike a balance between fairness and efficiency.