Amazon won a legal victory over Ambani in the $3.4 billion Indian retail war

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Amazon website update

After the Supreme Court of India upheld an international arbitrator’s decision to prevent the billionaire Reliance Industries from acquiring Future Retail for US$3.4 billion, Amazon won a legal victory in India.

The US e-commerce group submitted the case to emergency arbitration last year, claiming that the transaction between Future and Reliance violated the contract between Amazon and the former. The Singapore Arbitration Court ordered the freezing of the transaction in October until it heard the case.

The award on Friday that recognized the arbitrator’s order was decided in India scrap A retrospective tax that was severely criticized by foreign investors and rejected by the International Court of Justice. Together, these two decisions represent a major legal victory and help create a level playing field for international investors in one of Asia’s largest economies.

“In many ways, the ruling reassures people that Indian courts will step in and respect the arbitration process,” said Promod Nair, a lawyer and arbitrator in Bangalore. “The fact that foreign investors have succeeded in judicial proceedings against Reliance (essentially India’s largest industrial group) is a good testament to the neutrality of the Indian judicial system.”

Amazon and Reliance are competing for dominance in India’s booming e-commerce market. Amazon claims that the sale of Future announced last year violated a contract it signed with a subsidiary of the Indian company that prohibits it from selling its retail assets without the consent of the US group.

Supreme Court Judge Rohinton Nariman ruled that the Singapore arbitrator’s suspension of trading is enforceable, stating that the order “keep great“In India. Arbitration hearings are expected to last throughout the year.

“We welcome the honorable Supreme Court of India upholding the emergency arbitrator’s ruling. We hope this will speed up the resolution of the dispute with Future Group,” Amazon said on Friday.

The company stated in a statement to the Indian Stock Exchange that in the future it “is told that it has legal remedies and it will exercise”.It “intends to seek all available ways to complete the transaction [with Reliance] Protect the interests of its stakeholders and labor.” Future has stated that if the Reliance transaction does not proceed, it may face bankruptcy.

The battle for the Indian retail market is dominated by Amazon and Walmart’s e-commerce group Flipkart, which together account for approximately 70% of the online market. The opponent of the two is Ambani’s huge physical store empire, which is rapidly entering the online field. Reliance’s acquisition of Future’s 1,500 stores will strengthen its position as the country’s largest retailer.

Amazon and Wal-Mart have been optimistic about the prospects of India’s growing middle class, but they have been hit by regulatory obstacles.New Delhi this week threat Flipkart was recently valued at US$37 billion and was fined US$1.35 billion for allegedly violating India’s foreign investment laws.

“There has been a lot of integration between Reliance and Future, which is a somewhat shocking decision,” said Sanjeev Kumar, an analyst at Forrester in New Delhi. “This stopped everything.”

Reliance did not immediately respond to a request for comment on the Supreme Court ruling.

Kumar added that during the pandemic, the short-funded Future improved the online services of its huge retail network, which covers fashion and groceries, which is one of the fastest growing e-commerce sectors. “This ruling puts Amazon in a better position.”

Amazon is under increasingly strict scrutiny from New Delhi, and the antitrust regulator, the Competition Commission of India, has restarted its investigation into allegations of anti-competitive conduct with Flipkart. Amazon said it complies with Indian laws and will cooperate with competition regulators.

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