NEW DELHI, Jan.11 (Reuters) – For more than a year, Amazon.com Inc and India’s Future group have been locked in a complex legal impasse that has blocked the sale of Future assets for $ 3.4 billion to rival of American company Reliance Industries (RELI.NS) – with no end in sight.

Here is what the dispute, considered to be the key to deciding who takes the upper hand in one of the fastest growing retail markets, that’s all.

WHAT STARTED THE LITIGATION?

In 2019, Amazon and Future, number two in India behind market leader Reliance, became business partners when the US company invested $ 200 million in an Indian group’s gift certificate unit.

The deal, according to Amazon, came with certain non-compete clauses that prohibited Future from selling retail assets to certain rivals, including Reliance, run by one of India’s richest men, Mukesh Ambani. . The agreement also included clauses for the settlement of any disputes under the rules established by the Singapore International Arbitration Center.

But in 2020, Future – hit hard by the COVID-19 pandemic – decided to sell assets to Reliance.

Amazon then approached arbitrators in Singapore and managed to stop the sale. The two sides have also contested in lawsuits in Indian courts, including the Supreme Court, as the “seat of arbitration” remains in New Delhi and Indian law governs the procedure.

WHAT ARE AMAZON AND FUTUR SAYING?

Amazon argues that various deals signed in 2019 with Future gave it special rights to Future’s retail assets, some of which had also hoped to eventually own if India’s rules for foreign investors were relaxed. The potential Future-Reliance deal “destroys” the latter prospect, the US company said.

Future denies any wrongdoing, claiming that Amazon is illegally seeking control over Future’s retail operations. Future Retail (FRTL.NS) – the flagship retail branch of the group – says it faces liquidation and its more than 27,000 employees can be left out of work if the Reliance deal fails.

Both sides have deployed a battery of lawyers and India’s top law firms are involved in this high-profile case. Two attorneys who previously served as India’s Solicitor General have played key roles in defending Amazon and Future.

WHAT IS THE BIGGEST IMAGE?

At stake is whether Amazon can become a bigger force in a $ 900 billion retail market, with 1.3 billion consumers, than Reliance.

The Reliance conglomerate has operations comprising 1,100 supermarkets, while Future has more than 1,500. Both are growing rapidly in e-commerce, but the Future deal will immediately increase the business footprint of Reliance, which has attracted renowned foreign investors in business.

For its part, Amazon has invested $ 6.5 billion in India, which it considers to be a key growth market where it is a leading player in e-commerce. The Future partnership had already enabled Amazon to boost its portfolio of online grocery deliveries by integrating the Indian company’s stores on its website.

Keeping Future away from Reliance dovetails with Amazon’s efforts to tackle billionaire Ambani’s growth plans. In confidential legal deposit, Amazon said Reliance’s consolidated position with Future “will further restrict competition in the Indian retail market.”

HOW DID INDIA’S ANTITRUST AGENCY GET INVOLVED?

Future complained to India’s antitrust agency, the Competition Commission of India (ICC), that Amazon was making incorrect and conflicting observations about the intent of the 2019 deal.

Amazon said it never withheld any information, but last December the ICC suspended approval of the 2019 deal with Future, saying there was “a deliberate design on Amazon’s part to remove the actual scope” of the deal and its relevance to Future’s retail businesses.

While Amazon maintains that the ICC has acted beyond its powers, Future maintains that the American company no longer has the right to assert its claims because the 2019 agreement itself now lacks regulatory approval.

In a setback for the American giant, the High Court of Delhi this month has stopped Singapore’s arbitration proceeding between the two parties in light of the Indian antitrust ruling.

Arbitration has since been suspended, but Amazon has appeals decisions in Indian courts which have yet to hear the case.

Reporting by Aditya Kalra in New Delhi; Editing by Kenneth Maxwell

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