Thread by @barandbench

Delhi High Court begins hearing Future Retail's plea against Amazon in relation to the emergency arbitrator award stalling its deal with Reliance Retail.

#FutureRetail #Amazon #Reliance

Matter is listed for hearing before Justice Mukta Gupta.

Senior Advocate Gopal Subramanium (for Amazon) will respond to the rejoinder submissions by Future Retail.

Yes, Mr Salve wanted 5 mins : Court

He wanted time after Mr Subramanium: Adv Ameet Naik

Why after? : Court

He's before Orissa High Court : Naik

Mr Khambata' submissions are flawed because they overlook the premises of Arbitration law- he used the word Jurisdiction: Senior Adv Gopal Subramanium begins

Arbitration is founded on consent of parties. Hence an agreement: Subramanium

The agreement contemplates party autonomy. Parties can choose what are going to be the rules of engagement: Subramanium

Rules of engagement can vary but parties can still choose. That is the freedom. What have the parties chosen here? They have chosen SIAC Rules: Subramanium

If parties agree to SIAC rules, the implication is that they agree to the entire gamut of the rules: Subramanium

The SIAC rules themselves contemplate an Emergency Arbitrator. That contemplation in the rules by virtue of on provision in our law becomes a scared agreement between the parties : Subramanium

This provision was omitted by Mr Khambata. That provision is most vital. It is section 2(8) of the Act. It says very clearly that when parties choose rules of engagement, that would be part of agreement itself : Subramanium

Words of Arbitration agreement will have rules of engagement as part of itself. Argument of inherent lack of jurisdiction is thus flawed : Subramanium

What is meant by inherent lack of jurisdiction? That the jurisdictional fact is absent for assumption of jurisdiction. What is the fact needed here for emergency Arbitrator? It is consent, agreement: Subramanium

All Arbitrations are founded on consent. When consent exists, there cannot be inherent lack of jurisdiction: Subramanium

There is a third principle which was overlooked. It applies to courts and Arbitrators. Courts and Arbitrators can determine their own jurisdiction: Subramanium

Both under section 16 Part I and SIAC rule, the Emergency Arbitrator can determine a jurisdictional challenge: Subramanium

To claim the award is a nullity because there is inherent lack of jurisdiction is contrary to part I and the SIAC Rules: Subramanium

When the plaint starts with a contention that FRL is not bound by this Arbitration agreement because it is not a signatory and urges it before the Arbitrator, it is inviting a finding in exercise of jurisdiction: Subramanium

That is why there exists this difference between exercise of jurisdiction and inherent lack of jurisdiction: Subramanium

You tell the Arbitrator that this concept of emergency Arbitration cannot be read into Part I. That is alos an invitation to exercise jurisdiction: Subramanium

You also say that don't grant interim relief. A case for emergency relief is not made out. That again is an invitation: Subramanium

An Emergency Arbitrator is no less than an Arbitrator under SIAC Rules except that he is for a limited duration: Subramanium

There is nothing in Part I.. there is no mandatory provision to disempower an emergency Arbitrator: Subramanium

In definition in Part I, the expressions Arbitration, Arbitration Agreement are very wide bodied. Emergency Arbitrator is actually an Arbitrator for certain limited purposes by consent of parties: Subramanium

After responding to all possible challenges, the matter proceeded on merit before the Emergency Arbitrator. He is fully exercising his jurisdiction under law: Subramanium

The provisions in Part I that were cited have no bearing on whether SIAC rules apply. The courts have to act in aid ot Arbitration: Subramanium

I just want to take the court through 2-3 provisions and a few cases, that's all : Subramanium

There is a note by the Plaintiff and what does it say. FRL does not seek to challenge the order of the emergency Arbitrator but says the order has no efficacy in law since Indian law does not recognise it. I don't see the word nullity. This is collateral challenge: Subramanium

Subramanium reads the prayers in suit.

They say Amazon could have come under Section 9. Ashok Traders judgement has no applicability here : Subramanium

The case doesn't say that only and only under section 9 you could get a relief. Issue involved in the case is different. When I have a remedy under the agreement .. : Subramanium

In the prayer is he says you can't go to court, you can't go to the Arbitrator, you can't go to any authority.. : Subramanium

To say that emergency Arbitration is foreign to Part I is completely misconceived: Subramanium

Justice Lokur (in a judgment) said that it is autonomous.. there were two sets of Arbitrators in a proceedings: Subramanium

If FRL is prima facie bound due to group of companies doctrine... jurisdiction exists : Subramanium

Subramanium refers to Part I Arbitration Act.

Subramanium reads the definition of Arbitration under section 2.

They say Part I doesn't have transient Arbitration.. I've not heard that term: Subramanium

Subramanium reads definition of Arbitration Agreement.

An emergency Arbitrator by consent of parties can be a sole Arbitrator : Subramanium

Please kindly see section 2(6) : Subramanium reads

Subramanium reads section 2(8).

If someone were to say that DIAC Rules will apply to domestic arbitration. Those rules provide for emergency Arbitrator. The parties can agree : Subramanium

What is being endeavoured in the suit is what is proscribed under section 5 and 8: Subramanium

There are two ways of adjudication. Either through courts or Arbitration.. : Subramanium reads section 5.

There is an Arbitration agreement here. How can a court be invited in the face of section 5 to say that the agreement can't be worked out : Subramanium

Subramanium refers to Surpreme Court judgment on agreement of parties on number of Arbitrators.

Consent is paramount under Part I : Subramanium

If in Arbitration agreement the parties agree to an emergency agreement, there is no inherent lack of jurisdiction: Subramanium

This Arbitration clause is not in dispute. They want an injunction against the Arbitration process. Under section 21 and SIAC rules, the moment notice is issued.. Arbitration process has started in this case : Subramanium

The emergency Arbitrator got jurisdiction by consent. They don't allege any usurpation: Subramanium

They cited the Singapore Arbitration Act..even in England there is no emergency Arbitrator defined in their law. But London Centre can appoint an Emergency Arbitrator. They don't say Arbitrator includes Emergency Arbitrator. It is by consent: Subramanium

Subramanium reads Section 9.

If by consent I can have a remedy of an interim measure, even an application under section 9(3) will not ab maintainable: Subramanium

Emergency Arbitrator is not an alien creature under Part I and we don't need to amend the Act: Subramanium

He reads section 11(2).

What is there to say you cannot appoint an Emergency Arbitrator? Nothing. A prohibition is sought to be read.. : Subramanium

Please see section 15(1) : Subramanium

If parties agree to SIAC rules, by agreement of parties the mandate of Emergency Arbitrator will go after the Tribunal is constituted: Subramanium

Subramanium asserts that the Emergency Arbitrator could rule on his own jurisdiction exactly like section 16.

After having failed there, they are here. The suit is filed after the award was rendered: Subramanium

They consciously appeared before the Emergency Arbitrator..since he has the power to determine his own jurisdiction, they appeared before him. This interim order is supported by Section 17: Subramanium

The 1996 Act gives the arbitral tribunal the powers of the court. Please see section 17(2): Subramanium

Then law contemplates that even an interim order, even by the emergency Arbitrator, will have the efficacy of the court: Subramanium

Part I is to act is aid of Arbitration. That is why when section 9 was not available to Part II Arbitration, the Parliament intervened: Subramanium

The award is deemed to be in Delhi . The emergency Arbitrator has done that : Subramanium

Subramanium refers to relevant SIAC Rules..

In schedule I there is emergency relief.lets see the powers of emergency Arbitrator: Subramanium

Does the emergency tribunal have the power to rule of its own jurisdiction? Let's see Rule 30.2 : Subramanium

Under SIAC rules, Emergency Arbitrator is treated as an Arbitrator: Subramanium

Subramanium reads Rule 1 on how Emergency Arbitration can be initiated.

Subramanium reads the subsequent Rules.

Can anybody say it is nullity after having agreed to the SIAC Rules? : Subramanium continues to read the Rules.

Emergency Award is binding on the parties subject to a challenge. Until to get it set aside, it is like an order of the court. Suppose the order was against me then this order would be with jurisdiction: Subramanium

Under Rule 10, Emergency Arbitrator can determine his own jurisdiction: Subramanium

The plaintiff argued Jurisdiction before the Arbitrator and it is decided: Subramanium

Let us see the law on inherent lack of jurisdiction. It is not easily urged. It is founded on Jurisdictional incompetence. It is a concept in law and not a plea : Subramanium

An Arbitration agreement means that an Arbitrator is jurisdictionally competent: Subramanium

Inherent lack of jurisdiction can be of three kinds - barred due to subject matter or court lacks pecuniary jurisdiction or territorial jurisdiction: Subramanium

Subramanium refers to a judgment on inherent lack of jurisdiction.

Subramanium reads the judgement.

This entire argument of inherent lack of jurisdiction is completely unfounded : Subramanium continues to read.

Although this is a judgment of some antiquity, it is gold : Subramanium

Subramanium reads another judgement.

Which is the jurisdictional fact that is missing in thie case? There is an agreement, there is a dispute and procedure agreed to was followed : Subramanium

Subramanium continues to read.

I alleged breach of agreement before the Arbitrator. It was certainly within the Arbitration Agreement. There is a facie finding that there is breach. He thus considered whether emergency relief could be granted : Subramanium

Subramanium reads another judgement.

At attempt to stultify Arbitration is entirely misplaced: Subrmanium

How much more time? : Court

Two more things then I'll deal with Mr Salve's: Subramanium

Subramanium reads another judgement on consent of parties to submit to Arbitration.

Please look at Mr Gary Born's book: Subramanium reads the portion from the book.

Subramanium reads another judgement.

Let's continue after recess: Court

Hearing to resume at 2.20 pm.

Hearing resumes.

Subramanium continues.

All defendants except for Reliance were party to the Arbitration: Subramanium

5/10/2020 was the notice of Arbitration: Subramanium

They've all sought time to reply. It ends tomorrow: Subramanium

Defendants 2-13 ie the promoters were represented before the Emergency Arbitrator and did not question the Jurisdiction at all. : Subramanium

To say at Amazon is not interested in sustaining FRL is contrary to the record: Subramanium

It's not necessary to get into it but much was said. The Emergency Arbitrator after examining all correspondence said that Amazon was interested in finding a solution: Subramanium

Very prejudicial comments were made : Subramanium

But Amazon cannot do anything beyond 10%: Court

But we brought another investor: Subramanium

Amazon has invested 6.5 billion dollars all over India. Some comments were made which were misplaced. What was being argued that it was some greedy entity. We created 9 lakh jobs: Subramanium

Let's keep the rhetoric aside: Subramanium on Amazon being called East India Company.

Who is controlling this company? Biyanis. Emergency finds that moving spirit is the Biyanis whether it is FRL or FCPL: Subramanium

They made us believe that they were engaging in the assistance being provided by us. There is an impression that there is a one way street : Subramanium

In fact , there are two schedules to FCPL SHA..there is another list called company barred person. This very restricted person is also a company barred person. Even I cannot sell my shares to this person (Reliance): Subramanium

If this is a valid contract, it has been breached. This is the agreement made with consent: Subramanium

Please see the FCPL SHA : Subramanium b

Subrmanium reads the provision on restriction on transfer.

Subramanium reads Schedule on company barred persons.

Please see transfer by investor: Subramanium

There was an agreement between the parties which was consciously made. FCPL is a wholesale company dealing with coupons and gift vouchers. It had some relation with FRL : Subramanium

All these agreements were executed roughly at the same time: Subramanium

FRL SHA was executed only after FCPL SHA : Subramanium

Subramanium reads the clause on effective date for FRL SHA.

There is a disclosure by FRL to the regulator : Subramanium

Why is that FRL and FCPL SHA are referred to in the shares subscription agreement? The promoters Biyanis were controlling FCPL and FRL and they said they had certain rights.. that FRL retail assets will not be sold without FCPL's consent: Subramanium

But this consent could not be given for restricted persons: Subramanium

The 9.82% shares of FCPL in FRL would be meaningless if the retail business is gone : Subramanium

Promoters and FCPL entered into the agreement on payment of consideration: Subramanium

Those are the rights which was guaranteed to me under the agreement.. that we will never sell the assets, certainly to a restricted person: Subramanium

There is a reference to FRL SHA in my SHA and it cannot be wished away : Subramanium

Please see prohibition to restricted persons: Subramanium

Whatever may be said today is different. Consideration was received which lead to a downstream investment in FRL: Subramanium

Subramanium reads the provisions in the SHAs.

You take up any investor protection matters, consent of the investor is necessary. FRL SHa says FCPL SHA and FCPL SHA says my consent: Subramanium

Both these agreements have virtually common causes. A common set of promoters was driving these companies. This is not an MoU. Corporate entities have signed the agreements: Subramanium

22 Dec 2019 is the SSA. It says why shares were subscribed. It expressly says that monies will be made over by FCPL to FRL : Subramanium

What was being projected that I'm a listed company (FRL) and I don't care where the money is coming from is not correct: Subramanium

You have two Defendants who dictate the companies. Promoters are controlling the company: Subramanium

They said it violated FEMA. This is actually one of the defences before the Arbitrator. They say if it is an integrated transaction, it falls foul of FEMA: Subramanium

FEMA has two schedules. Second schedule is portfolio investment of less than 10%. They say we ought to have invested through this route. We could have but we opted for another route ie goverment route: Subramanium

I invested in 49% shareholding , 25% voting shares in FCPL under schedule I of FEMA. It was wholesale trading company by virtue of 15.1 of schedule. Biyanis have majority: Subramanium

Once it is Indian owned and controlled, even downstream investment of my money is not foreign investment. It is neither direct nor indirect foreign investment in terms of the definition : Subramanium

There is no violation of FEMA : Subramanium

Subramanium refers to the Warranty clause.

All that was argued here is in the teeth of this clause: Subramanium

What is important is that same appears in FRL SHA : Subramanium

It does not contravene any law. None of them contravene any law : Subramanium

So much is said about FEMA and FDI policy: Subramanium

The arguments was that you did not have the capacity to invest anymore and FRL needed to be saved: Court

If you read the two agreements as giving him control, that will violate the law : Senior Adv Harish Salve for FRL.

We were geniunely finding a solution. We were the ones attempting to help: Subramanium

Subramanium refers to the FEMA Rules.

Subramanium reads the definition of FDI..

Subramanium reads the definition of FPI.

Subramanium reads the other Rules.

My investment is perfectly legitimate under Schedule I. Please come to Rule 23. What goes from FCPL to FRL is not foreign investment at all : Subramanium

Subramanium continues to read.

There is no dispute that FCPL is Indian owned and controlled company. Question of indirect foreign investment will not arrive. Application of FEMA does not arise: Subramanium

Let's see what is control. It is right to appoint the majority of directors, control management etc.. I'm saying I don't have this right.. I'm saying that my consent is required for certain matters. This is not control: Subramanium

Subramanium reads the definition of indirect foreign investment.

FCPL does not fulfill this criteria. This investment which flowed down to FRL was not to violate any law at all : Subramanium

Let us look at the FDI policy.: Subramanium

FDI policy has an illustration to explain how it will be considered: Subramanium

Subramanium reads how counting of investment is to be done.

Subramanium reads and explains the illustration.

There is nothing to show violation of FDI, FEMA if these agreements are read together. It is completely incorrect: Subramanium

Subramanium reads a judgement.

The case concerns challenge to an award on account of the agreement being allegedly violative of FEMA.

In the two agreements, the obligations are mutual.. these are points of defence to be taken in Arbitration. It can't be taken in a suit : Subramanium

We introduced Samara, an investor. A term sheet was offered to solve the problems: Subramanium

Improvements are being attempted in this plaint.. promoters made us believe that they are interested in Samara but we got to know that they have chosen to go with a restricted person : Subramanium

Arbitrator recorded that there are no board minutes, there is no consent. Arbitrator considered everything and said there was prima facie breach : Subramanium

What have I done before the statutory authorities? I said there is an award. What plaintiff is doing is self judgment: Subramanium

We have not heard a word on beach of contract ..: Subramanium

Taking consent is not control. I'm not controlling your day to day management: Subramanium

Managing Director controls the company. It is the promoter : Subramanium

The promoters may be directors but companies have signed the agreement. FRL is conscious of the FCPL SHA. How can directors now rely of fiduciary duties to justify breach of contact: Subramanium

They claim in the suit that I should not approach the statutory authorities. Before the Arbitrator, they said make representation to SEBI : Subramanium

They are moving on an assumption that the transaction is untainted..: Subramanium

Tortious interference in contract presupposes that there is a legal contact. In this case, it is a product of breach. There is no tort in this matter : Subramanium

This suit is not the occasion to establish a new case. It is not to introduce documents without authenticity: Subramanium

58 documents were filed but no document of consent of produced: Subramanium

You are considering interim relief for a party who has not showing anything: Subramanium

Rhetoric doens't take the case that far: Subramanium

Subramanium objects to the filing of certain documents by FRL.

This suit is vexatious and barred. When there is Arbitration agreement, it is prima facie not maintainable: Subramanium

Mr Khambata says why don't you enforce it. It's not needed when authorities only have to take cognizance not the award : Subramanium

There was nothing on admission of culpable behaviour before the CCI: Subramanium

Everything is disclosed.. FRL SHA, FCPL SHA: Subramanium

In this application before CCI, all agreements are disclosed. All rights are disclosed. There is an analysis of all the sections : Subramanium

What is the admission, supersession here? : Subramanium reads the disclosure

Subramanium reads the agreement on transfer of retail assets of FRL.

This very point on restricted persons is disclosed to the CCI : Subramanium

Now suddenly they say it is anti competitive. CCI saw all this and gave approval: Subramanium

Subramanium continues to read the disclosure.

Let's wind up with who is on control. It will be examined in Arbitration proceedings: Subramanium

The entire subject matter does not have a legitimate frame in law: Subramanium

It is so unnecessary that they have agreed to file a reply by tomorrow before the Arbitrator: Subramanium

This is not a case where any case for interim relief is made out : Subramanium

Senior Advocate Vikram Nankani for promoters.

Certain factual corrections..We've challenged the jurisdiction of the emergency Arbitrator: Nankani

correction: Nankani appears for FCPL.

Consent is as hopeless as all other points. Person giving consent is saying it's there.. only East India Company is jumping up and down : Salve

Section 2(6) Arbitration Act is destructive of his case : Salve

You cannot have an agreement for two Arbitrators.. : Salve reads the section.

The Indian act has an express provision under section 17, to which there is no reply : Salve

Arbitrator is sole Arbitrator or panel : Salve

An Arbitrator is one who is entitled to decide the dispute. Emergency Arbitrator cannot act as an Arbitrator: Salve

Emergency Arbitrator thus cannot be an Arbitrator under the Act : Salve

This larger argument on persons entering into contract overlooks section 26 Contract Act..: Salve

We say this award has no existence in Indian law. That's all that I need to show : Salve

That's the whole game.. to be mischievous on the basis of the award: Salve

We told from day 1 that there was no concept of emergency Arbitration. But out of respect, we appeared: Salve

In first para, he noted the jurisdictional objections: Salve

My friend made a passing reference to UK Act.. he re characterised my argument and Mr Khambata's: Salve

If agreements are kept separate, there is no FEMA violation. Amazon's consent creates a problem: Salve

They come into India, tell CCI that investment was for FCPL.. now he is pointing out clauses from FCPL. If FCPL invested in FRL, there is no problem. There is no control even on FCPL, no problem: Salve

My submission was that two agreements as we understood was that he had interest at the door. Govt is not allowed FDI in multi-brand retail. That's the ecosystem: Salve

To make sure that FCPL doens't trip the 10%, the investment was calibrated in such a way.. the problem arises when he says that FRL cannot sell without Amazon's consent : Salve

He says parties agreed. I agreed with FCPL that I would not transfer. FCPL has no issues.. Amazon has to be content with its investment in FCPL : Salve

Now he wants the right to destroy : Salve

Today the endeavour of East India Company is against competition: Salve

The absence of any mention of Amazon in FRL SHA is what he wants to wish away : Salve

I didn't cite the FDI policy because it has transformed itself. The policy puts an FDI to his case..please see what he did not read : Salve

If you start reading the rights of Amazon in FRL, it trips FEMA : Salve

Salve reads the relevant FEMA policy.

Meaning of the word control destroys my friend's argument: Salve

FEMA rules make it worse for him : Salve

If you conflate the two agreements, there is a serious problem: Salve

Salve deals with Amazon's stand that FRL's reliance on RNRL case was misplaced.

Amazon has an agreement with FCPL. Then he says controllers are common. obligation of promoter to Amazon cannot be attributed to company, I am not bound by the commitment made by promoter to third party : Salve

Salve deals with Amazon's reliance on violation of warranty clause.

You are saying read the agreement my way, else there is violation of warranty: Salve

When it comes to FRL, although there are back to back agreements, the promoters are not to act in concert: Salve

Natives will act on the directions of East India Company !: Salve

You should look at your conduct Mr Amazon before you throw bricks at others : Salve

There is no question of taking advantage. For me, FRL has not received a dollar from you. I got it from FCPL and it has no objection. You can scream at Biyanis: Salve

So Biyani must jump when we ask him to but we have no control.. that is what was argued. This native has to act as per the East India Company: Salve

Salve deals with a judgement.

They say with govt permission, there is no absolute prohibition (on investment) : Salve

Salve reads relevant RBI policy.

Salve reads a judgement.

Money has come in through automatic route. Please do not construe it in a manner to make it illegal: Salve

2-3 small points and I'm done : Salve

He's right that I told the emergency Arbitrator that there was no need for an interim emergency relief: Salve

Without prejudice basis, we appeared before him: Salve

All judgements on inherent jurisdiction are not needed : Salve

Why doesn't he enforce the award? If it's an award, you enforce it. My suit is to stop him from making representation: Salve

I said what you told CCI is consistent with the stand that you have no rights in FRL : Salve

Biyani is my slave and he will run it on my command.. this is what was argued : Salve.

Finally, if courts notes these 2-3 pages: Salve

If court*

Amazon has no right to control any voting in FRL. Its representations are false and need to be injuncted : Salve

Okay. Thank you very much: Court

Parties can file written submissions by Monday : Court

Arguments heard in interim application. Judgement reserved: Court

Hearing over.