The dispositive section of an award is the part where the arbitral tribunal formally states its decisfions on the issues in dispute. It specifies the relief granted, such as monetary damages, declaratory relief or cost allocations, and confirms the finality and binding nature of the award. In Nigeria LNG Ltd v Taleveras Petroleum Trading DMCC and others [2025] EWCA Civ 457, the Court of Appeal provided guidance on the interpretation of arbitral awards. The issue before the court was this: were orders made by an arbitral tribunal limited to those contained in the final dispositive section of its award, headed ‘Award’, or were they also encompassed within an earlier section of the award headed ‘Analysis’, but not to be found in the final dispositive section? The Court of Appeal held that only the final dispositive section of an award constitutes the binding operative relief, unless expressly stated otherwise by the arbitral tribunal.
Background and Commercial Court decision
Nigeria LNG failed to deliver 19 cargoes of liquefied natural gas (LNG) to Taleveras, causing Taleveras to default on contracts with Vitol and Glencore. In a London-seated UNCITRAL arbitration, the tribunal awarded Taleveras an indemnity for liabilities incurred in the Vitol and Glencore arbitrations. While the dispositive section set out Nigeria LNG’s obligations, paragraph 607 of the reasoning stated that enforcement of the indemnity required endorsement by the Vitol and Glencore tribunals. Taleveras sought enforcement; Nigeria LNG resisted, arguing endorsement was a condition precedent. Taleveras argued it was not, because paragraph 607 was outside the dispositive section of the award.
At first instance, HHJ Pelling KC held that paragraph 607 was not part of the dispositive section and did not impose a binding condition precedent to enforcement. He accepted Taleveras’s submission that the dispositive section – introduced by ‘the Tribunal hereby DECIDES AND AWARDS as follows…’ – contained the tribunal’s comprehensive statement of relief. Reading the award as a whole, he found nothing to suggest that paragraph 607 altered or extended that section.
Court of Appeal decision
The Court of Appeal unanimously dismissed Nigeria LNG’s appeal. Giving the leading judgment of the court, Phillips LJ (pictured) explained that the key issue was whether the indemnity granted in the dispositive section was qualified by language in the reasoning section of the award. The judge went on to explain that the interpretation of an arbitral award should be done as a whole, and in a reasonable and commercial manner and, in circumstances where an award does not contain a dispositive section, it may be necessary to consider the award as a whole in order to ascertain the necessary paragraphs that can be characterised as dispositive of particular claims and issues.
Where an award does include a clear dispositive section that contains a comprehensive list of relief granted by the arbitral tribunal, that is highly likely to be determinative. The dispositive section of the award was similar to an English court order following trial. In the present case, Phillips LJ noted that the final section of the award was entitled ‘Award’ and began with the words ‘For the reasons set out above, the Tribunal hereby DECIDES AND AWARDS as follows…’. He held that this section of the award was intended to serve the same purpose as a court order that follows a reasoned judgment and sets out the formal orders made. This final section of the award was intended to be a self-contained and comprehensive statement of the relief granted by the tribunal. Phillips LJ also observed that, although the arbitral 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, and that had the arbitral tribunal wished to ‘signpost’ in this way, it would have done so clearly and expressly.
The decision in Nigeria LNG Ltd provides a helpful explanation and clarification of the approach English courts will take when interpreting arbitral awards. As the Court of Appeal confirmed, unless explicitly stated otherwise by an arbitral tribunal, the dispositive section constitutes the binding operative part of an arbitral award. While the tribunal’s directive phrasing in the reasoning section may appear authoritative, it does not override or qualify the dispositive section unless expressly referenced. This distinction safeguards the enforceability of awards, reducing the risk of interpretative disputes and ensuring that arbitral awards maintain their intended finality and binding nature.
Arbitrators should, therefore, take care in drafting a clear and comprehensive dispositive section and should review the whole of the award to ensure that there are no inconsistencies between the dispositive section and other parts of the award. The award should allow the parties and the courts to unambiguously ascertain the tribunal’s formal decisions and thereby avoid unnecessary challenges of the award at the enforcement stage, which has the undesired effect of increasing costs and delays for the parties and undermines the principle of finality in arbitration.
Masood Ahmed is an associate professor at the University of Leicester and a member of the Law Society’s Dispute Resolution Advisory Committee. Osman Mohammed BA (Political Science and International Relations), University of Birmingham, also contributed to this article
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