Supreme Court settles law on arbitrability of fraud and holds institution of criminal proceedings on same subject matter to be insufficient to render dispute non-arbitrable

Brief Facts

Avitel Post Studioz Ltd. (“Appellant”) and HSBC PI Holdings (Mauritius) Limited (“Respondent”) entered into a Share Subscription Agreement (“SSA”), pursuant to which the Respondent undertook an investment of USD 60 million to acquire 7.8% of the Appellant’s paid-up equity capital. The arbitration clause of the SSA stipulated resolution of disputes by arbitration at the Singapore International Arbitration Centre, with Singapore as the seat of the arbitration.

The Respondent invoked arbitration, along with filing a criminal complaint, after discovering that the  Appellant’s representation regarding negotiating and executing a contract with the British Broadcasting Corporation was fraudulent and a set up to induce the Respondent into executing the SSA. Interim awards were passed by emergency arbitrators, inter alia, permitting the Respondent to approach financial institutions to freeze the Appellant’s accounts.

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