Amazon.com NV Inv. Holdings LLC v. Future Retail Ltd., AIR 2021 SC 3723

Court: Supreme Court of India

Bench: B.R. Gavai and R.F. Nariman, JJ.

Date of Judgment: August 6, 2021

Relevant Provisions/Statutes: 

• Arbitration and Conciliation Act, 1996, § 2(1)(c) (defining “arbitral award”) and § 2(1)(e) (defining “arbitral proceedings”).
• Arbitration and Conciliation Act, 1996, § 9 (judicial intervention for interim measures).
• Singapore International Arbitration Centre (“SIAC”) Rules 2013, Arts. 30–32 (Emergency Arbitrator provisions).

Brief Facts:

Amazon. com NV Investment Holdings LLC (“Amazon”) bought a minority stake in Future Retail Ltd. (“Future Retail”), subscribing to equity under a Share Subscription Agreement (“SSA”) and a Shareholders Agreement (“SHA”). Both the SSA and SHA included an arbitration clause depending on the Singapore International Arbitration Centre (“SIAC”) Rules, which also had an emergency arbitration process to get provisional relief before the whole tribunal started. These arrangements gave the parties the preemptive and veto authority to protect Amazon’s investment from any asset transfers or structural changes.

Future Retail declared a composite scheme to sell its retail assets to Reliance Retail Ventures Ltd. in August 2020, which Amazon asserted breached its contractual rights under the SSA and SHA. After invoking the emergency arbitration provision and obtaining an order from the SIAC emergency arbitrator ordering Future Retail to maintain the status quo, Amazon filed a petition in the Delhi High Court under sections 9 and 17 of the Arbitration and Conciliation Act, 1996, seeking enforcement of the interim order domestically. Future Retail opposed the petition, arguing that the statutory framework of the Act excludes emergency arbitrators who instead function under contractual and institutional rules.

 It maintained that enforceable interim measures should come from a court under section 9 or an authentic arbitral tribunal created under section 17. Amazon appealed to the Supreme Court after the Delhi High Court initially offered only minimal relief but then declined to totally implement the decision of the emergency arbitrator. Under sections 2(1)(c) and 2(1)(e) of the Act, does an emergency arbitrator’s decision qualify as an “arbitral award” or as a part of “arbitral proceedings,” thereby rendering it enforceable in the country?

Issues:

1. Whether section 2(1)(c) of the Arbitration and Conciliation Act of 1996 defines an “arbitral award” under the SIAC Rules as an interim order made by an emergency arbitrator. With the exception of appointments made just under contract or institutional rules, this activates the requirement of the Act that rewards come from a tribunal set up under sections 10–13 and 16–30.
2. Whether the appointment of an emergency arbitrator starts “arbitral procedures” as outlined in section 2(1)(e), hence placing the process under the Act’s formal framework. The question is when any arbitral appointment is made or when the tribunal is formally constituted under section 21, beginning the proceedings.
3. Whether Indian courts have the power to execute these emergency directives as interim relief under section 9 or section 17 of the Act, or whether their enforcement is limited to court-ordered or appropriately founded tribular actions. At the center of these difficulties is the conflict between party autonomy, strict statutory interpretation, and the chance that legislation might be needed to provide for emergency arbitration.

Arguments:

Petitioner’s Arguments:

1.By specifically defining the Emergency Arbitrator’s judgment as an “award” and a necessary component of the arbitration procedure, the SIAC Rules comply with § 2(1)(c) and (e) of the A&C Act.

2. To uphold party autonomy and comity with international arbitration standards, the A&C Act’s broad definitions should be construed to cover all types of arbitral decision-making, including emergency arbitration.
3. With regard to arbitration, courts are given the authority under Section 9 to impose interim measures “pending the arbitral tribunal’s constitution,” which reasonably includes EA Awards that anticipate the establishment of the tribunal.

Respondent’s Arguments:

1. Because there is no court yet established, no deposit of payments has yet definitively established jurisdiction, and the proceedings take place ex parte without a thorough hearing; emergency arbitration in SIAC does not meet § 2(1)(e) as “arbitral procedures”.
2. Under § 2(1)(c), “arbitral award” is limited to judgments made by a duly constituted tribunal; unlike tribunal awards, EA Awards lack finality and procedural safeguards such reasons on the merits. 
3. Allowing EA Awards to bind parties in the absence of statutory authority would circumvent the legislative framework and disturb the statutory equilibrium between courts and arbitral tribunals, as Section 9 refers to “supplementary” relief from courts while awaiting arbitration.

Judgment:

The fundamental problem in this appeal is Amazon. Com NV Investment Holdings LLC’s attempt to get an emergency arbitrator’s provisional order against Future Retail Ltd. in India was upheld. In a share subscription agreement, the parties had agreed to settle disagreements under the Singapore International Arbitration Centre (SIAC) rules, which contain emergency arbitration clauses. Amazon’s demand for enforcement of an emergency order directing Future Retail to maintain the status quo was rejected by the Delhi High Court. The main problem before this Court is whether such an order is regarded as an “arbitral award” or falls under “arbitral proceedings” as defined by India’s Arbitration and Conciliation Act of 1996. The share subscription agreement clearly mentioned SIAC rules and created the role of an emergency arbitrator with the power to offer quick interim relief before the formation of a comprehensive tribunal.

Following the invocation of this clause, the emergency arbitrator issued a status quo order. Asserting that the order was enforceable either as an arbitral award or as a step in arbitral proceedings, Amazon then filed a case in the High Court under sections 2(1)(c) and 2(1)(e) of the Act. Future Retail countered that Indian legislation does not include emergency arbitrators in its legal framework. Under sections 2(1)(c) and 2(1)(e), an “arbitral award” is a determination on the merits made by a tribunal constituted under sections 10 through 13 and 16 through 30; “arbitral proceedings” are those started after a tribunal is officially appointed under section 21. Apart from these standards, the emergency arbitrator is chosen before the court is formed, so his decision does not meet either legal definition. Allowing anything else would need to twist the straightforward language of the Act, therefore weakening the legislative structure. Under the Act, there are two methods by which one can get interim relief. Demonstrating sovereign authority, Section 9 grants courts the power to order temporary remedies before or during arbitral proceedings; Section 17 enables a tribunal to do the same once it is established, thereby protecting party autonomy.

Emergency arbitrator orders are guided only by contract agreement and institutional rules; Section 9 and Section 17 have no influence over them. A strict textual analysis reveals that a tribunal created under the provisions of the relevant sections should provide the basis for an arbitral decision. The Act’s structure does not start arbitral processes with the appointment of an emergency arbitrator. Treating an emergency order as an arbitral award or as part of arbitral procedures goes against the Act’s framework and would cover up the distinction between interim remedies ordered by the court and the tribunal’s actions. Although it is the norm globally for getting rapid remedies, in India, judicial approval of emergency arbitration awards is not possible due to the lack of particular legal recognition. Judicial interpretation alone cannot introduce emergency arbitration into the domestic system, as it would encroach on Parliament’s only authority to amend the law. The legislative history of the Act shows a careful adjustment of arbitral and judicial power.

Allowing emergency orders to be enforced under section 9 would mix the court’s sovereign authority with private contractual procedures, hence unsettling the statutory equilibrium. Proper respect for this separation of powers stops judicial creativity in the absence of legislative changes. An interim order issued by an emergency arbitrator under SIAC rules, finally, neither starts arbitral proceedings as mandated by section 2(1)(e) of the Act nor is it an arbitral award as defined in section 2(1)(c). Because the Delhi High Court rightfully denied enforcement, this appeal is denied.

Ratio Decidendi:

The Supreme Court says that under the SIAC rules, an emergency arbitrator’s temporary decision neither qualifies as an “arbitral award” under section 2(1)(c) nor does it start “arbitral proceedings” under section 2(1)(e) of the Arbitration and Conciliation Act, 1996. According to the legal definitions, an award must originate from a court created under sections 10–13 and 16–30; proceedings can only start after formal appointment under section 21. Outside of these rules, emergency arbitrators are selected; so, their instructions are not covered under the Act and cannot be used as proceedings or rewards. The Court emphasised the difference between arbitral and judicial procedures.

Though established tribunals are given the power under Section 17 to demand solutions, courts are given the power under Section 9 to provide interim measures “prior to or during” proceedings. Emergency arbitration depends only on institutional rules and contractual agreements because there is no parliamentary sanction. Parliamentary change, rather than judicial extension of the Act, would be required to extend enforcement to emergency orders as this would mix the boundary between private arbitration and sovereign court remedy.

Obiter Dicta:

The Court observed that those who would like legally enforceable emergency relief in arbitration should either include such provisions in their arbitration agreements or campaign for legislative changes. It advised parliamentary debate on recognising emergency arbitration systems so that Indian arbitration law could be in line with international best practices.

Final Decision:

Ruling that the Arbitration and Conciliation Act of 1996 does not authorise enforcement of Emergency Arbitrator decisions reached in accordance with the SIAC Rules, the Supreme Court dismissed the Special Leave Petition.^[1]

^[1] References

1. Amazon.com NV Inv. Holdings LLC v. Future Retail Ltd., AIR 2021 SC 3723, Civil Appeal Nos. 4492–4493 of 2021 (India).
2. Arbitration and Conciliation Act, No. 26 of 1996, §§ 2(1)(c), (1)(e), 9, 17 (India).
3. Singapore International Arbitration Centre Rules 2013, arts. 30–32.