SC rules in Amazon’s favour, holds emergency arbitration award enforceable

New Delhi, Aug 6: The Supreme Court, in a big relief to e-commerce giant Amazon, on Friday upheld the order of the Singapore emergency arbitrator restraining the Kishore Biyani-led Future group from going ahead with its Rs 24,713-crore deal with Reliance Retail.

A bench of Justices R.F. Nariman and B.R. Gavai noted the first question to be determined by this court is whether an emergency arbitrator’s award can be said to be within the contemplation of the Arbitration Act, and whether it can further be said to be an order under Section 17(1) of the Act.

The bench answered this question by declaring that full party autonomy is given by the Arbitration Act to have a dispute decided in accordance with institutional rules which can include emergency arbitrators delivering interim orders, described as “awards”.

“Such orders are an important step in aid of decongesting the civil courts and affording expeditious interim relief to the parties. Such orders are referable to and are made under Section 17(1) of the Arbitration Act,” said the judgment authored by Justice Nariman on behalf of the bench.

The bench said the emergency arbitrator’s order is enforceable in India and the Indian Arbitration laws also allowed it, as it declared Future Retails’s appeal against the Delhi High Court’s single judge order was not maintainable. The top court said the Delhi High Court’s single judge was right in upholding the emergency arbitrator’s October 25 order.

“An emergency arbitrator’s ‘award’, i.e., order, would undoubtedly be an order which furthers these very objectives, i.e., to decongest the court system and to give the parties urgent interim relief in cases which deserve such relief,” noted the top court, in its 103-page judgment.

The top court set aside the Delhi High Court division bench’s orders passed on February 8 and March 22, declaring that no appeal lies under Section 37 of the Arbitration Act against an order of enforcement of an emergency arbitrator’s order made under Section 17(2) of the Act. The bench emphasised that it is wholly incorrect to say that Section 17(1) of the Act would exclude an emergency arbitrator’s orders.

It stressed that no party, after agreeing to be governed by institutional rules, can participate in a proceeding before an emergency arbitrator and, after losing, turn around and say that the award is a nullity, when there is nothing in the Arbitration Act which interdicts an emergency arbitrator’s order from being made.

The bench declined to entertain Future group’s submissions that emergency arbitrator’s order is a “nullity” in absence of an arbitration agreement. “A party (the Future group) cannot be heard to say, after it participates in an emergency award proceeding, having agreed to institutional rules made in that regard, that thereafter it will not be bound by an emergency arbitrator’s ruling,” it added.

The top court added that having agreed to paragraph 12 of Schedule 1 to the Singapore International Arbitration Centre (SIAC) Rules, it cannot lie in the mouth of a party to ignore an emergency arbitrator’s award by stating that it is a nullity when such party expressly agrees to the binding nature of such award from the date it is made and further undertakes to carry out the said interim order immediately and without delay.

Amazon moved the top court challenging the Delhi High Court’s Division Bench’s March 22 orders that lifted the stay on the Future Retail-Reliance Retail deal. On March 21, the single judge held Future group Chairman Kishore Biyani and others guilty for going ahead with the deal and issued show cause notice to him and other directors of the Future Group as to why they should not be sent to prison, as sought by the ecommerce firm which is opposing the deal.