Reliance Industries’ move to acquire the offline retailer Future Group has now hit a roadblock. In response to a plea filed by Amazon, an arbitration court in Singapore has told Future Group not to proceed with the sale and await the outcome of the arbitration process.

Amazon earlier this month approached the Singapore International Arbitration Centre about the 247-billion rupees (US$ 3.34 billion) Future-Reliance deal, saying it was a violation of its earlier contract with Future Group. The matter was heard on October 16 by former Singapore attorney general V K Rajah – the sole arbitrator in this case.

The US e-commerce giant last year picked up a 49% stake in Future Coupons, the promoter firm of Future Retail, for 14.3 billion rupees ($193 million). This gave Amazon a small stake in Future Retail, as Future Coupons owns 7.3% of the group’s retail arm. The contract also gave Amazon the first right of refusal, which meant Future Group could not sell its shares without Amazon’s approval, and Amazon has the first right to invest if it wants to sell them. There is also a non-compete clause, which prevents Future Group from approaching Amazon’s competitors.

The Future Group had contended that it had not sold any stake in the company, but was selling its assets and therefore had not violated any terms of the contract. It had entered into an agreement with Reliance Retail Ventures, a subsidiary of Reliance Industries, to sell its retail, wholesale, logistics and warehousing businesses. This included the sale of its supermarket chain Big Bazaar, premium food supply unit Foodhall and fashion and clothes supermart Brand Factory’s retail as well as wholesale units to Reliance Retail.

Welcoming the Emergency Arbitrator’s ruling, Amazon’s spokesperson said, “We are grateful for the order which grants all the reliefs that were sought. We remain committed to an expeditious conclusion of the arbitration process.”

Reliance Retail said it has been informed of the Singapore arbitrator’s order and claimed it has entered into the transaction with Future Retail in accordance with Indian law. “Reliance Retail intends to enforce its rights and complete the transaction in terms of the scheme and agreement with Future Group without any delay,” it added.

Future Retail said it is examining the communication and that the order will have to be tested under the provisions of the Indian Arbitration Act in an appropriate forum.

Future Group was under immense pressure from its lenders, led by the State Bank of India, to manage its debt. After India went through a two-month long Covid-19 lockdown, Future Group’s businesses came under severe stress with sales down to a trickle. Its promoter Kishore Biyani was on the lookout for a buyer, and Reliance Group stepped in as it was looking to further consolidate its footprint in the offline retail market.

Reliance Retail operates supermarkets, consumer electronics chain stores, cash and carry wholesale business, fast-fashion outlets and online grocery store JioMart. Looking to offload a 15% stake, it attracted a host of global investors, including TPG, GIC, Silver Lake Partners, KKR and Mubadala.