Introduction
In Nigeria LNG Ltd v Taleveras Petroleum Trading DMCC, the Court of Appeal confirmed that only the final dispositive section of an arbitration award constitutes the binding operative relief, unless expressly stated otherwise.
Background
Nigeria's primary liquefied natural gas (LNG) producer, Nigeria LNG Limited ("NLNG") and Taleveras Petroleum Trading DMCC ("Taleveras"), were parties to a Master LNG Sales Agreement and a spot confirmation notice for the delivery of 19 LNG cargoes. NLNG's failure to deliver led Taleveras to default on onward sales to two major commodity trading houses, Vitol and Glencore, triggering arbitrations with both.
In a UNCITRAL arbitration seated in London, Taleveras successfully obtained an award against NLNG on 30 January 2023, pursuant to which it was awarded (inter alia) lost profits and an indemnity in respect of liabilities incurred in the Vitol and Glencore arbitrations, which amounted to more than USD380 million. The dispositive section of the award clearly set out NLNG's obligations, including the indemnity, and the mechanism for Taleveras to claim payment.
However, paragraph 607 of the prior reasoning section of the award included language stating: "The Tribunal further orders that the terms of this indemnity be drawn forthwith to the attention of the tribunals [in the Vitol and Glencore arbitrations], and that any eventual enforcement of this indemnity be subject to the endorsement of those tribunals as to its applicability [...]".
When Taleveras sought to enforce the indemnity after a final award in the Vitol arbitration, pursuant to s.66 of the Arbitration Act 1996 (the "AA"), NLNG disputed liability on the basis that the required "endorsement" had not been obtained, or if later obtained, was invalid because the tribunal in the Vitol arbitration was functus officio.
High Court and Appeal Outcomes
At first instance ([2024] EWHC 1847 (Comm)), HH Judge Pelling KC rejected NLNG's position, holding that paragraph 607 was not part of the dispositive section and thus did not impose a binding condition precedent to enforcement. On appeal ([2025] EWCA Civ 457), the Court of Appeal unanimously upheld that ruling.
The Court dismissed NLNG's arguments that paragraph 607 introduced additional binding obligations. Key to Phillips LJ's reasoning (with which Warby and Zacaroli LJJ agreed) was the structure and form of the arbitral award:
- Where an award does not contain a dispositive section, it may be necessary to comb through the award in order to find the paragraphs that can be described as dispositive of particular claims and issues.
- However, where (as here) an award does include a dispositive section, clearly marked as such and containing a comprehensive list of relief granted, that is highly likely to be determinative. That was particularly so given the award had been prepared by legally trained arbitrators, using a conventional format which was designed to draw a line between reasons and formal orders. The dispositive section of the award was akin to an English court order following trial.
- Even though the tribunal had used directive language ("The Tribunal further orders that [...]") in the earlier analysis section of the award, that did not imply that the reader had to refer back to that section. Had the tribunal wished to "signpost" in this way, it would have done so expressly.
The Court of Appeal noted that although it was perhaps unfortunate that the tribunal had used "loose wording" in paragraph 607, that did not come close to undermining the clear structure of the Award, and in particular the meaning and comprehensive effect of its dispositive section. It was plainly intended to be a self-contained statement of the relief being granted by the tribunal, and the judge had been correct to find that there was nothing to suggest that what appeared in the analysis section should augment what was set out in the dispositive section.
Moreover, while the endorsement requirement served a function when dealing with consent awards (where the reasonableness of any settlement terms needed to be approved), the Vitol award was not such an award, and there was no commercial utility in requiring endorsement for contested awards. Any disputes over the scope and effect of the indemnity would need to be addressed as between the original contracting parties (NLNG and Taleveras) – if necessary by a fresh reference to arbitration – rather than by a third-party tribunal.
Commentary: Finality and Form in Arbitral Awards
The judgments reinforce a principle of real practical value in arbitration: form matters.
Where arbitrators deliberately adopt a structured format separating reasons from dispositive orders, only the latter should be treated as operative. Other parts, even if framed as directions, are not binding unless expressly cross-referred to in the dispositive section.
The decision also upholds a sensible commercial approach. Imposing an endorsement condition for contested awards would add unnecessary complexity, contradicting the purpose of the indemnity and potentially delaying enforcement. It was relevant in this context that NLNG was only resisting enforcement of the indemnity under s.66 of the AA; there was no challenge to the award on grounds of serious irregularity (under s.68 of the AA) or appeal on a point of law (under s.69 of the AA).
The case serves as a reminder to parties drafting or reviewing arbitral awards to treat the dispositive section as the definitive record of relief. For those enforcing awards, the judgment supports a robust and pragmatic application of s.66 of the Arbitration Act 1996.
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