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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Nigeria LNG Ltd v Taleveras Petroleum Trading DMCC [2025] EWCA Civ 457 (16 April 2025) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2025/457.html Cite as: [2025] EWCA Civ 457 |
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ON APPEAL FROM THE BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
HIS HONOUR JUDGE PELLING QC, SITTING AS A JUDGE OF THE HIGH COURT
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE WARBY
and
LORD JUSTICE ZACAROLI
____________________
NIGERIA LNG LIMITED |
Claim No.CL-2024-000011 Appellant/Claimant |
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- and – |
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TALEVERAS PETROLEUM TRADING DMCC |
Respondent/Defendant |
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And Between: |
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TALEVERAS PETROLEUM TRADING DMCC |
Claim No.CL-2024-000117 Respondent/Claimant |
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- and – |
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NIGERIA LNG LIMITED |
Appellant/Defendant |
____________________
Neil Kitchener KC and Ruth Byrne KC (instructed by King & Spalding International LLP) for the Respondent
Hearing date: 18 February 2025
____________________
Crown Copyright ©
Lord Justice Phillips:
The essential facts
The Award
"605. Accordingly, the Tribunal determines that Taleveras is entitled to declaratory relief to the following effect:
(1) NLNG shall (by way of damages) indemnify Taleveras in respect of its established liabilities to Vitol and Glencore arising from the 18 Cargoes identified as Nos. […], including, but not limited to:
1. any amounts awarded by way of damages, compensation, interest or similar as well as legal costs and expenses, to Vitol in relation to Arbitration proceedings brought by Vitol against Taleveras on 26 January 2021 (and any further Arbitration proceedings Vitol brings against Taleveras with respect to the same cargoes);
2. any amounts awarded by way of damages, compensation, interest or similar as well as legal costs and expenses to Glencore in relation to Arbitration proceedings brought by Glencore against Taleveras on 31 March 2021;
3. Taleveras' legal costs and expenses relating to the Vitol and Glencore proceedings described above.
606. NLNG shall make payment of any liabilities described in (1) above within 21 days of the presentation by Taleveras of final award(s) in the Vitol and Glencore proceedings or order(s) by consent reflecting terms of settlement approved as reasonable by the arbitral tribunal seised of the proceedings and signed statement(s) from Taleveras' lawyers confirming Taleveras' costs of defending those proceedings.
607. The Tribunal further orders that the terms of this indemnity be drawn forthwith to the attention of the tribunals seised of 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 in the context of any award and, in particular, any consent award, made in either of those proceedings."
"For the reasons set out above, the Tribunal hereby DECIDES AND AWARDS as follows:
1. NLNG shall pay Taleveras damages in the amount of US$24,000,000.00 (US$ twenty-four million) in respect of its claim for lost profits on the 19 Cargoes 30, 46, 84, 86, 110, 152, 162, 140, 187, 163, 105, 227, 243, 251, 257, 57, 277, 318 and 320.
2. NLNG shall indemnify Taleveras in respect of any amounts awarded to Vitol by way of damages, compensation, interest or similar as well as its legal costs and expenses in relation to Arbitration proceedings brought by Vitol against Taleveras on 26 January 2021 (and any further Arbitration proceedings brought by Vitol against Taleveras with respect to the same Cargoes). To the extent that any such amount is the subject of an award or order by consent reflecting terms of settlement between Taleveras and Vitol, such terms shall be approved as reasonable by the arbitral tribunal seised of the proceedings.
3. NLNG shall indemnify Taleveras in respect of any amounts awarded to Glencore by way of damages, compensation, interest or similar as well as its legal costs and expenses in relation to Arbitration proceedings brought by Glencore against Taleveras on 31 March 2021. To the extent that any such amount is the subject of an award or order by consent reflecting terms of settlement between Taleveras and Glencore, such terms shall be approved as reasonable by the arbitral tribunal seised of the proceedings.
4. NLNG shall indemnify Taleveras in respect of its invoiced and paid legal costs and expenses relating to the Vitol and Glencore proceedings respectively and certified by Counsel for Taleveras.
5. NLNG shall make payment of any liabilities described in (2, 3 and 4) above within 21 (twenty-one) days of the presentation by Taleveras of final award(s) in the Vitol and/or Glencore proceedings or orders(s) by consent reflecting terms of settlement approved as reasonable by the arbitral tribunal seised of the proceedings and signed certificate(s) from Taleveras' lawyers confirming Taleveras' costs of defending those proceedings.
6. Taleveras shall forthwith draw the terms of the indemnities ordered at 2 and 3 above to the attention of the tribunals seised of the Vitol and Glencore Arbitrations respectively.
7. NLNG shall pay interest on Taleveras' lost profit damages at the rate of LIBOR + 2% per annum, compounded quarterly, from 24 October 2020 until the date of this Award.
8. NLNG shall pay interest to Taleveras at the rate of LIBOR + 2% per annum, compounded quarterly, on all sums due and payable by NLNG pursuant to this Award to Taleveras by way of damages, including pre-Award interest thereon and costs, from the date of this Award until the date(s) of payment. Any sums payable by way of an indemnity hereunder shall bear interest at the post-Award rate from the due date for payment until actual payment.
9. NLNG shall pay Taleveras US$1,756,514.82 and UK£521,357.40 in respect of its legal fees and expenses.
10. The Costs of the Arbitration in the amount of UK£605,956 shall be borne equally by the Parties.
11. All other claims of whatsoever nature are hereby dismissed."
"(x) in the opinion of the Tribunal, the terms of paragraphs 605, 606, and 607 and the terms of Section XVIII (2) to (6) inclusive of the Final Award are both clear and clearly intended to refer to any final determination (or consent award(s) or final settlement(s) approved by the Vitol and/or Glencore tribunals…"
The Judge's reasons
"(c)onventionally, in England, the dispositive part of an award is introduced by the words 'We award and adjudge'. That, in England, is the arbitral equivalent of a judgment or order by a Court of law, as opposed to the reasons for it. No doubt other words may be used to serve the same purpose."
"a reasonable person with all the relevant knowledge available to the parties would conclude at least as a starting point that a section at the end of the Award that expressly states that what follows is what [the Tribunal] "…DECIDES AND AWARDS…" was intended by [the Tribunal] to set out what it was deciding."
"23. Finally, while it is possible to see utility in an endorsement requirement in relation to consent awards and orders, there is no such utility where what has been awarded results from a decision of the Vitol Tribunal following a contested process resulting in a reasoned final award. If there is a dispute as to the applicability of the indemnity as between the parties to the Vitol Arbitration (however unlikely that may be in practice), that would be resolved by the Vitol Tribunal as part of that contest. If there is a dispute between Taleveras and NLNG as to the obligation of NLNG to indemnify Taleveras then that would have to be resolved by a new reference under the arbitration agreement between them."
"27… In considering these submissions in my judgment they should be approached bearing in mind the point identified by Carr J, as she then was, in paragraph 44 of her judgment in Obrascon Huarte Lain SA (t/a OHL Internacional) v Qatar Foundation for Education, Science and Community Development [2019] EWHC 2539 (Comm); [2019] 2 Lloyd's Rep 559:
"As a matter of general approach, the courts strive to uphold arbitration awards. They do not approach them with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults. The approach is to read an award in a reasonable and commercial way, expecting, as is usually the case, that there will be no substantial fault"
This principle leads to the conclusion that in determining "… whether an award is internally inconsistent, courts should assume that the arbitral tribunal intended to make a coherent decision and use every effort to interpret the award's provisions in a consistent manner…" – see Professor Gary Born, International Commercial Arbitration, at 25.05. Generally, it will not be appropriate to permit language used in the narrative reasoning section of an award to contradict the language used by the tribunal in the part of the Award that is intended to be its final order. This leads me to conclude that particular care must be taken when construing commercial arbitral awards by focussing on particular words and phrases used in awards to make sure they are read in their correct context – that is in the context of the paragraph in which they appear, read as a whole, in the section of the award that paragraph appears, read as a whole and in the context of the award and in particular the structure of the award in which it appears read as a whole."
29. I reject NLNG's submission essentially for the reasons already set out above. In my judgment the earlier section of the Award on which it relies was and was intended by [the Tribunal] to be narrative reasoning and the conclusions that the tribunal intended to draw and in fact drew from the reasoning and conclusions set out in the earlier section of the Award and the orders it intended to make were set out exclusively in Section XVIII of the Award. Had the tribunal intended to go further than in fact it did in Section XVIII, there is no reason why it would not have said so expressly in Section XVIII, as it did with all other elements of the narrative concerning the scope and effect of the declaratory indemnity. The dispositive makes sense when read as a whole and each element serves a practical purpose if (as it is) the final sentence of Paragraph 3 is limited in its effect to consent awards and orders. This is so because it focusses attention on the reasonableness of any consent settlement terms not the applicability of [the Indemnity] to the Vitol Award, which is an issue that would arise only between Taleveras and NLNG and could only be resolved in the manner I have described - that is by a new reference under [the arbitration agreement in the MSA].
30. No practical purpose would be served by requiring the Vitol Tribunal to endorse the applicability of a non-consensual indemnity to any award that it made in the absence of a challenge by one of the parties to the Vitol Tribunal (indeed the practical lack of utility is revealed by the nature and scope of [the Addendum]). Ultimately, any issue as to the scope and effect of the indemnity was likely to arise only as between Taleveras and NLNG…"
NLNG's arguments on appeal
The applicable principles
"a) The Court will certainly give real weight to the question of substance and not merely to form….
b) Thus, one factor in favour of the conclusion that a decision is an award is if the decision is final in the sense that it disposes of the matters submitted to arbitration so as to render the tribunal functus officio, either entirely or in relation to that issue or claim…
c) The nature of the issues with which the decision deals is significant. The substantive rights and liabilities of parties are likely to be dealt with in the form of an award whereas a decision relating purely to procedural issues is more likely not to be an award….
d) There is a role however for form. The arbitral tribunal's own description of the decision is relevant, although it will not be conclusive in determining its status…
e) It may also be relevant to consider how a reasonable recipient of the tribunal's decision would have viewed it…
f) A reasonable recipient is likely to consider the objective attributes of the decision relevant. These include the description of the decision by the tribunal, the formality of the language used, the level of detail in which the tribunal has expressed its reasoning…
g) While the authorities do not expressly say so I also form the view that:
i. A reasonable recipient would also consider such matters as whether the decision complies with the formal requirements for an award under any applicable rules.
ii. The focus must be on a reasonable recipient with all the information that would have been available to the parties and to the tribunal when the decision was made. It follows that the background or context in the proceedings in which the decision was made is also likely to be relevant. This may include whether the arbitral tribunal intended to make an award…"
Form and substance
The utility of the endorsement requirement
The Interpretation Decision
Ambiguity
Conclusion
Lord Justice Warby
Lord Justice Zacaroli