Fake BBC contract, siphoned millions: Singapore award upheld in India

Avitel faked a BBC contract, pocketed $60M from HSBC, lost arbitration in Singapore, then spent 10 years trying to block enforcement in India. This week, the Supreme Court said—no more.

The money trail was simple on paper. HSBC, through its Mauritius arm, wired US$60 million into Avitel India in 2012. The investment was based on one piece of paper: a contract with the BBC. The problem? The BBC contract was a fabrication. The money never reached any broadcaster. It was siphoned off, moved through shell accounts, and disappeared.

When HSBC discovered the fraud, it didn't file a case in an Indian court. It went straight to arbitration in Singapore, as the contract allowed. In September 2014, a three-member tribunal at the Singapore International Arbitration Centre (SIAC) handed down a US$60 million award in HSBC's favour. That should have been the end. Instead, it was the beginning of a decade-long legal war.

When the fake BBC deal unravelled

Avitel told HSBC it had secured a lucrative contract with the BBC to provide post-production services. HSBC, convinced by the deal's promise, invested US$60 million. The money was meant to scale operations. Instead, it was diverted.

HSBC's investigation revealed the BBC contract was a complete forgery. There was no deal. There was no BBC counterparty. There was only a carefully constructed fiction designed to extract money from a foreign investor. By the time HSBC realised what had happened, the funds had been moved through multiple entities and jurisdictions.

The Singapore arbitration was straightforward. The tribunal found Avitel guilty of fraudulent misrepresentation (lying about a material fact to induce someone to part with money). It ordered Avitel to repay the full US$60 million plus interest and costs.

The 10-year blockade begins

Avitel did not pay. Instead, it launched a multi-front legal assault to prevent the award from being enforced in India, where Avitel's assets were located. The strategy was simple: delay, object, appeal, repeat.

First, Avitel filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 (a provision that allows a court to order interim measures — like freezing assets — before or during arbitration). The Bombay High Court directed Avitel to deposit US$60 million. Avitel didn't comply.

Then Avitel tried to set aside the award under Section 34 of the Act (the provision for challenging a domestic award). The Bombay High Court dismissed that application in 2015 as not maintainable — you can't use a domestic challenge mechanism for a foreign award.

Avitel also approached the Supreme Court in an earlier round, arguing the dispute wasn't even arbitrable (capable of being resolved through arbitration). The Supreme Court rejected that argument in 2021, finding a strong prima facie case (a case that appears valid on first examination) in HSBC's favour.

When Avitel's directors still refused to comply with court orders, the Supreme Court sentenced them to imprisonment for contempt in July 2022. Even that didn't end the fight.

The bias argument that nearly worked

Avitel's final, most creative objection came during the enforcement stage. Under Section 48(2)(b) of the Arbitration and Conciliation Act, 1996, a court can refuse to enforce a foreign award if doing so would violate the "public policy of India" (the fundamental principles of justice and morality that underpin Indian law).

Avitel argued that the presiding arbitrator in Singapore had a conflict of interest. He was a director of a company connected to an HSBC subsidiary. This, Avitel claimed, meant the entire arbitration was tainted by bias, and enforcing the award would shock the conscience of the Indian court.

The Bombay High Court rejected this argument in April 2023, allowing enforcement. Avitel appealed to the Supreme Court.

What the Supreme Court said about bias

The Supreme Court bench — Justices Hrishikesh Roy and Prashant Kumar Mishra — delivered its judgment on March 4, 2024. The court made several things clear.

First, the public policy defence for foreign awards is razor-thin. The court relied on its own precedent in Renusagar Power Co. v. General Electric Co. (1994) and Vijay Karia v. Prysmian Cavi (2020) to hold that "public policy" under Section 48(2)(b) must be interpreted narrowly, consistent with international standards under the New York Convention, 1958 (the international treaty governing enforcement of foreign arbitral awards). Only violations of the most basic notions of morality and justice — those that "shock the conscience" of the court — justify refusal.

Second, bias can in principle be raised at the enforcement stage under the public policy ground. But the court imposed a heightened threshold. The alleged bias must be so severe that enforcing the award would be fundamentally unfair. Mere technical connections or peripheral relationships don't qualify.

Third, the alleged connection didn't meet the bar. The court examined the relationship under the IBA Guidelines on Conflicts of Interest in International Arbitration (widely accepted international standards for arbitrator disclosure). The connection between the presiding arbitrator and the HSBC subsidiary fell within the Green List — relationships that are so minor they don't require disclosure and don't create a conflict. It wasn't even close to the Red or Orange lists, which cover serious conflicts.

Fourth, Avitel's timing was fatal. The court noted that Avitel had ample opportunity to challenge the arbitrator before the Singapore courts — the "seat court" (the court of the country where the arbitration was legally based). Avitel didn't. It waited until the enforcement stage in India to raise the bias objection. The Supreme Court called this strategic delay impermissible. If you had a genuine bias concern, you should have raised it promptly in Singapore, not saved it as a last-ditch defence in India.

Why this matters for every cross-border deal

This judgment is a clear signal to anyone who thinks they can resist a foreign arbitral award in India by raising creative objections. The Supreme Court has drawn a very tight circle around the public policy defence.

For practitioners advising clients on cross-border investments, the message is: if you lose a foreign arbitration, don't expect Indian courts to re-litigate the merits. The grounds for refusal are narrow, and bias allegations will be scrutinised against international standards, not domestic sympathy.

For award holders, the judgment confirms that Indian courts will enforce foreign awards efficiently — provided the arbitration was conducted fairly and the award doesn't violate fundamental Indian values.

THE PLAY: If you suspect arbitrator bias, challenge it before the seat court immediately — waiting until the enforcement stage in India will almost certainly fail.

The fake BBC contract was discovered eight years ago. The money was gone. The arbitration was lost. And after a decade of litigation, the Supreme Court ended where the fraud began: with a fabricated deal and a US$60 million hole that Avitel must now fill.