Amazon.com Inc. won a crucial court case to halt billionaire Mukesh Ambani’s planned $3.4 billion purchase of an indebted Indian retailer, a big boost to the global e-commerce giant’s ambitions of dominating the country’s $1 trillion retail market.

On Friday, a two-judge bench of India’s Supreme Court ruled that an emergency order by a Singapore arbitrator last year, which stopped Reliance from proceeding with the deal, is legally binding. Amazon had approached the arbitration court in the city-state, and the parties will now have to wait for the deliberations of that body before a final decision.

The Indian court’s verdict is the latest episode in a bitter battle over the cash-starved Future Retail Ltd. — the nation’s second-largest supermarket chain — which both Jeff Bezos-founded Amazon and Ambani’s Reliance Industries Ltd. want to control. The behemoths, owned by two of the world’s richest men, are fighting for a bigger slice of the only billion-people plus consumer market that’s still open to foreign firms.

The top court also upheld a previous ruling that ordered a freeze on assets of Future Group founder Kishore Biyani.

Reliance dropped 2.1 percent in Mumbai on Friday, the biggest intraday decline since June 25. Future Retail plunged by its daily limit of 10 percent, the most in more than four months.

For Seattle-based Amazon, adding Future’s Big Bazaar brand of stores to its assets would help expand its brick-and-mortar footprint across the country. Ambani announced his plans to buy Future’s assets almost a year ago to help aid his retail push. His oil-refining conglomerate has identified e-commerce and conventional retail as two focus areas, and roped in investors including Facebook Inc. and Alphabet Inc.’s Google in 2020.

“The court verdict puts a speed breaker on Reliance’s retail dominance in India,” said Devangshu Dutta, founder and chief executive officer of the Delhi-based retail consultancy, Third Eyesight. “It balances the competition with the larger American players, and gives Amazon a much-needed presence in physical retail.”

A spokesman for Amazon said “we hope this will hasten a resolution to the dispute.” A spokesperson for Reliance didn’t immediately comment on the ruling.

Future Retail said in an exchange filing Friday it will pursue all available avenues and legal remedies to conclude the deal and protect investors and workers.

Crucial Transaction

The verdict could be the death knell for Biyani’s retailer if its planned asset sale to Reliance falls through. Future Retail ran into a severe cash crunch when India went into a lockdown in March last year to curb the coronavirus outbreak. Future Group’s lawyers have argued in the courtroom earlier that the transaction is crucial for the retailer’s survival and an aborted deal may lead to bankruptcy and job losses.

Future Retail’s 5.60 percent $500 million January 2025 notes plunged 5.7 cents on the dollar to 66.3 as of 6:19 p.m. in Hong Kong. That’s the lowest level since Aug. 27, according to data compiled by Bloomberg.

The feud highlights the importance of the Indian consumer market. Amazon has pledged $6.5 billion of investment, while Walmart Inc.-owned Flipkart recently mopped up $3.6 billion in the country’s largest fundraising at a valuation of nearly $38 billion.

Contract Violation

Amazon owns a stake in an unlisted Future unit and has argued that it contractually has the first right of refusal to buy Future. It went to the Singapore arbitration court last year, accusing the Indian retailer under the Future Group of violating that contract when it agreed to sell its wholesale, warehousing, logistics and other retail assets to Ambani’s conglomerate.

Both Amazon and Future Group had consented to the Singapore International Arbitration Centre rules while being subject to Indian law, according to Faisal Sherwani, a New Delhi-based partner at law firm L&L Partners.

“By so doing, the parties consciously agreed to an emergency arbitration till the constitution of an arbitral tribunal,” he said. “It is a lesson in accepting the consequences of your choices.”

By Saritha Rai and Upmanyu Trivedi

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