Trafigura Wins $36.9M Arbitral Award Enforcement Against Cnergyico
The award arose from disputes related to crude oil supply contracts.
In a significant legal development in Pakistan, the High Court of Sindh in Karachi has recognized and enforced a foreign arbitral award, transforming a complex dispute into an enforceable decree. The case, listed as J.M. No. 17 of 2025, involved Trafigura PTE Ltd, Cnergyico PK Limited (formerly Byco Petroleum Pakistan Limited), and Integrate Scope DMCC.
The underlying dispute stemmed from a previous case, Suit No. 466 of 2023, where Cnergyico PK Limited (the plaintiff in that suit) had challenged a foreign arbitral award dated February 22, 2023.
This award, issued by an Arbitral Tribunal constituted by the Dubai Financial International Centre-London Court of International Arbitration (DIFC-LCIA), had ordered Cnergyico to pay Trafigura PTE Ltd approximately USD 36,985,850/- under various heads, while dismissing Cnergyico's counter-claim for damages.
The dispute originated from crude oil supply contracts between the parties from 2019 and 2020, and a 2020 settlement and amendment agreement.
Cnergyico had sought a negative declaration against the award's enforceability, primarily on the grounds that its recognition would be contrary to Pakistan's public policy under Article V(2) of the New York Convention and Section 7 of the Recognition and Enforcement (Arbitration Agreement and Foreign Arbitral) Act, 2011 (REA, 2011).
Cnergyico argued that the arbitral tribunal had disregarded mandatory import document requirements set by the State Bank of Pakistan and legal frameworks for foreign remittances, which Cnergyico claimed would have "economically disastrous repercussions".
Trafigura, the defendant in the earlier suit, vehemently opposed Cnergyico's pre-emptive declaratory and injunctive suit, arguing that such actions are not maintainable under REA, 2011, or the New York Convention.
They asserted that objections to a foreign arbitral award could only be raised when the award-creditor initiates enforcement proceedings, citing consistent judicial practice in Pakistan and other jurisdictions like the USA, France, and Italy.
Adding another layer of complexity and interconnectedness to the relationship between these entities, Bloomberg reported in 2022 that Cnergyico Pk Ltd board of directors had approved the acquisition of a 57.37 percent majority stake in Puma Energy Pakistan Pvt Ltd.
Puma Energy, a subsidiary of Singapore-based Puma Energy Holdings Pte Ltd, is jointly owned by Geneva-based Trafigura and Angola’s state-owned Sonangol Group. This acquisition is set to position Cnergyico as the country’s second-largest fuel retailer.
The deal, reportedly valued at more than Rs4 billion ($23 million), significantly expands Cnergyico’s footprint, increasing its total number of petrol pumps from 440 to 982, and boosting its storage capacity with Puma Energy’s two terminals.
Market sources at the time suggested that Puma was reportedly frustrated by penalties and investigations following an oil crisis in June 2020, and Trafigura had also recently faced reports of defaulting on LNG supplies to Pakistan.
Despite the prior legal battle over maintainability, and against the backdrop of this significant business transaction, the parties in J.M. No. 17 of 2025 reached a resolution through a Deed of Settlement and Release. This settlement, meticulously detailed in the application and submitted with sworn affidavits, paved the way for a consensual path forward.
The High Court, finding no apparent impediments, granted the joint compromise application. The application was filed under Sections 3 and 4 of the Recognition and Enforcement (Arbitration Agreement and Foreign Arbitral) Act, 2011, read with Order XXIII Rule 3 and Section 151 of the Civil Procedure Code (CPC).
The joint prayer outlined several key declarations and actions:
Recognition and enforcement of the foreign arbitral award as binding.
Decree of the suit in accordance with the terms, rights, obligations, warranties, securities, and settlement claims specified in the Settlement Agreement.
Conversion of the current enforcement proceedings into execution proceedings against the defendant.
Adjournment of the execution proceedings indefinitely (sine die) to allow the defendant to fulfill its obligations under the Settlement Agreement.
Crucially, the agreement includes provisions for potential default. If the defendant fails to meet any conditions precedent or breaches any terms of the Settlement Agreement, the plaintiff retains the liberty to resume enforcement and execution of the award, at which point the adjournment of the execution proceedings would be lifted.
Conversely, if all conditions are met and the defendant honors the agreement in full, both parties are to jointly approach the court to dispose of the execution proceedings.
In its order, issued on June 5, 2025, the High Court disposed of J.M. No. 17 of 2025, declaring the foreign arbitral award, in conjunction with the compromise application and deed of settlement, as a binding and enforceable award.
The compromise application and settlement agreement have been granted as a judgment, now executable as a decree of the court. The case has been formally converted into execution proceedings under Order XXI Rule 10 of The Civil Procedure Code, 1908, and adjourned sine die as requested by the parties.