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Amazon's feud with Reliance over India's second largest retailer

Amazon's feud with Reliance over India's second largest retailer

According to a report by Reuters on March 2, Amazon Inc. plans to initiate criminal court proceedings against its Indian partner Future Retail.

This development comes after a long-running legal battle between Amazon and the country’s second largest retailer over the latter’s increasing association with Reliance Industries– a major rival of Amazon.

Future Retail, which is behind stores like Big Bazaar, has been under financial stress for a long time and is undergoing a takeover by Reliance with over 500 of its stores already rebranded as Reliance outlets.

Amazon has filed a series of lawsuits against Future Group withholding it from a $3.4 billion asset sale to Reliance Industries. Amazon has cited a violation of the terms of a 2019 deal, where it had invested $200 million in part of Future Retail.

It has further claimed that Future Retail concealed information and transferred leases to Reliance despite an order from a Singapore arbitrator blocking the transfer or disposal of assets. Amazon’s position has also been backed by Indian courts.

Future in its turn argues that it has been unable to pay its lenders due to Amazon’s litigations, which has led to Reliance taking possession of its leased stores. It also claims that Amazon is unduly interfering in its business affairs.

It’s a tricky situation. And it makes you wonder how businesses can defend themselves against such lawsuits.

Usually, a Director’s and Officer’s (D&O) Liability Insurance policy provides such protection. It helps businesses cover legal expenses for the wrongdoing or misconduct of a top executive/board member during the ordinary course of their decision making.

However, no such policy would cover cases that have culminated into a criminal lawsuit. Moreover, if it is established that Future Retail’s decision makers knowingly violated their contractual obligations, any D&O policy taken by them would become invalid.

The fight over Future Retail’s assets is part of a larger battle between Amazon and Reliance over supremacy in India’s booming retail industry.

Further reading

Learn more: What is D&O Insurance?