Amazon-Future dispute: SIAC Tribunal holds it has jurisdiction to decide arbitration

A Singapore International Arbitration Centre (SIAC) tribunal has found that it has jurisdiction to hear and decide all matters arising out of Amazon's dispute with Future Retail Limited (FRL) in connection with the latter's deal with Reliance Retail..The tribunal further held that it had jurisdiction over FRL in the arbitration invoked by Amazon over disputes arising out of Shareholder Agreements it had entered into with Future Coupons Private Limited (FCPL SHA), notwithstanding the fact that FRL is not a signatory to the FCPL SHA..The partial award passed by the tribunal on Wednesday stated,"For the reasons set out above, the Tribunal decides that:321.1. it has jurisdiction over FRL in this Arbitration in view of its determination that each of the Parties is bound by the FCPL SHA Arbitration Agreement, including FRL notwithstanding its non-signatory status; and 321.2. it has jurisdiction to hear and decide all disputes in connection with and arising out of the FCPL SHA, including all disputes under the FRL SHA and SSA, in view of its determination that the FCPL SHA Arbitration Agreement extends to disputes under the FRL SHA and the SSA.".Amazon had initiated arbitration against FRL, FCPL and the Biyanis in October 2020. In March this year, FRL filed a jurisdictional objection application, stating that the tribunal had no jurisdiction to decide the arbitration, relying on Section 16 of the Arbitration and Conciliation Act, 1996..FRL had contended the following, among other reasons, for challenging the jurisdiction of the tribunal:There is no privity of contract or any agreement to arbitrate between FRL and Amazon. There is no basis to bring it into this arbitration initiated by Amazon pursuant to the FCPL SHA Arbitration Agreement, to which FRL is not a party.Even if arbitration proceedings are to go through, FRL would have the right to nominate an arbitrator, which it has been denied in this arbitration, in violation of the fundamental principle of party autonomy. FRL's case is supported by the prima facie findings of the Delhi High Court in proceedings related to the present dispute. FRL relied on the Delhi High Court’s interim order dated December 21, 2020, wherein it was observed that “there is no arbitration agreement between FRL and Amazon as such.”Section 7 of the Indian Arbitration Act states that an arbitral tribunal’s power is limited to those parties to an arbitration agreement under which that tribunal is constituted.Amazon and others did not mutually intend to bind FRL to the FCPL SHA. Thus, the Group of Companies Doctrine, through which a judicial authority can join a non-signatory party to an arbitration, does not apply..Countering these arguments, Amazon contended:The FCPL SHA Arbitration Agreement constitutes a valid arbitration agreement in writing for the purposes of Section 7 of the Indian Arbitration Act.FRL was given the opportunity through the notice of arbitration to nominate an arbitrator. However, FRL declined to do so.The December 21, 2020 interim order of the Delhi High Court did not consider it fit to grant the injunction requested by FRL to prevent Amazon from communicating the Emergency Arbitrator Award to the regulators and statutory authorities in India.The Tribunal has jurisdiction to decide whether FRL is a party to the FCPL SHA Arbitration Agreement..The tribunal ruled that FRL confuses the processes of (i) joining a non-signatory that is not a party to an arbitration agreement, with (ii) discovering whether a non-signatory is in fact a party to an arbitration agreement.On its power to determine if a non-signatory is a party to an arbitration agreement, the tribunal held the following:"Under Indian law, this power is codified in Section 16(1) of the Indian Arbitration Act, which provides that an arbitral tribunal “may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement”. This is simply the power of Kompetenz-Kompetenz which all international arbitral tribunals have, at least in the first instance, to determine their own jurisdiction.".Summing up FRL's role with respect to the agreements entered into with Amazon, the tribunal noted,"In sum, this entire transaction is, in essence, a stool with three legs, with each leg being an essential and indispensable part of the construct that the Parties have erected. First, through the FRL SHA, FCPL was accorded certain negative, protective, special and material rights in FRL. Second, through the FCPL SHA, the rights that were accorded to FCPL under the FRL SHA were to be exercised for Amazon’s benefit. Third, the SSA recorded Amazon’s investment, which expressly stipulated that the investment would flow down to FRL. The entire purpose and objective of the transaction would be fundamentally undermined if any of the legs were compromised.".It was further found that the terms of the agreements, as well as the facts of the case, clearly show the parties’ intention to bind FRL to the FCPL SHA Arbitration Agreement.On the observations made by the Delhi High Court that were cited by FRL to challenge the tribunal's jurisdiction, it was held,"In the Tribunal’s view, those prima facie findings do not bind this Tribunal, and this Tribunal must make its final ruling based on the submissions and evidence before it. Moreover, the Tribunal notes that the 8 February 2021 Interim Order has been set aside by the 6 August 2021 Supreme Court Judgment, and accordingly can have no bearing on these proceedings.".Thus, the tribunal found that FRL is bound by the FCPL SHA Arbitration Agreement such as to make it a proper party to the arbitration invoked by Amazon. Further, the FCPL SHA Arbitration Agreement extends to disputes under the FRL SHA and SSA, the tribunal concluded..Amazon was represented by P&A Law Offices, AZB & Partners are WongPartnership LLP. Senior Advocates Gopal Subramanium, Gourab Banerji, Amit Sibal and Nakul Dewan led the arguments.FRL was represented by Naik, Naik & Company, who instructed Senior Advocates Harish Salve, Darius Khambata and Ritin Rai.The other respondents were advised by Agarwal Law Associates. Senior Advocates Iqbal Chagla, Vikram Nankani and Senior Counsel from Singapore Abraham Vergis appeared for them.