In US Trinity Energy Services v. Southeast Directional Drilling [1], the United States Court of Appeals for the Fifth Circuit had to decide whether an arbitration award may be vacated on the grounds of excess of authority by the arbitral tribunal if the excess is claimed on the grounds of manifest disregard of the law. The Fifth Circuit concluded this is not a valid ground for vacatur, aligning its approach with the Eighth and Eleventh Circuits. 

Background

Trinity Energy was a general contractor for the construction of gas pipelines from western Pennsylvania to the Delaware River. 

In early 2020, Trinity Energy entered into a subcontract with Southeast Drilling, under which Southeast Drilling would perform a portion of the project requiring horizontal directional drilling (“Subcontract”). The subcontract included provisions that required Trinity Energy to reimburse Southeast Drilling’s stand-by costs and expenses, incurred when Southeast Drilling was ready to perform the contract but could not. The contract also allowed parties to file a suit in courts or to initiate arbitration of all disputes and claims arising under or in connection with the agreement. 

Southeast Drilling’s works had been subject to multiple temporary stops caused by various occurrences. First, permits were necessary for Southeast Drilling to perform its work. However, the investor, responsible for obtaining permits, procured them with a delay. Second, there had been issues with the drilling caused by mud perforating the formation. On these occasions, the investor directed Southeast Drilling to halt its work temporarily. Third, the works had been stopped due to COVID-19 regulations prohibiting non-essential work in Pennsylvania. 

The investor and Southeast Drilling settled their dispute arising from the delays (“Settlement”), but the settlement did not encompass claims between Trinity Energy and Southeast Drilling. 

In these circumstances, a dispute arose between Trinity Energy and Southeast Drilling regarding the liability for the stand-by costs. As a result, in May 2021, Trinity Energy initiated arbitration proceedings seeking a declaration of non-responsibility for the stand-by costs. In response, Southeast Drilling filed a counterclaim for compensation of these costs. 

The arbitral tribunal concluded that Trinity Energy was liable for the stand-by costs and awarded Southeast Drilling USD 1,662,000 of stand-by costs from Trinity Energy. 

District Court proceedings

In June 2023, Trinity Energy filed a motion with the United States District Court for the Northern District of Texas to vacate the arbitral award, relying on §10(a)(4) of the Federal Arbitration Act (“FAA”). This section of the FAA allows the court to vacate an arbitral award if the arbitration tribunal exceeded its authority. Southeast Drilling filed a cross-motion to confirm the award.

On October 2, 2023, the District Court denied Trinity Energy’s motion to vacate the arbitration award [2].

The District Court reasoned that:

• Under §10(a) of the FAA, a party may seek to vacate an arbitral award on four grounds. Out of those four, parties often rely on subsection 4, which allows vacatur if the tribunal exceeded its authority. 
• However, even serious errors of law or fact would not be enough to vacate the award, as long as the tribunal made a good-faith attempt to interpret the parties’ contract. Factors such as the tribunal’s identification that they needed to interpret the contract, citing the contract in the award, and framing conclusions in the contract terms indicate that the tribunal interpreted the contract. And this is sufficient to satisfy the requirements for the award’s survival of the vacatur motion. 
• In Trinity Energy’s case, the tribunal referred to the Subcontract and the Settlement in the award. Several pages in the final award cited and analyzed the Subcontract. This shows that the arbitral tribunal understood its task of interpreting the relevant contract and determining, under its terms, the right to stand-by costs.

First appeal and confirmation of award

Trinity Energy appealed to the Fifth Circuit.

However, on August 9, 2024, the Fifth Circuit dismissed this appeal for lack of jurisdiction [3], as the order denying vacatur of the arbitral award was not a final decision. There was still the outstanding issue of the confirmation of the arbitral award. As such, the appeal was premature. 

Following this, on September 4, 2024, the District Court granted Southeast Drilling’s cross-petition to confirm the arbitral award, relying on the same reasoning as in the 2023 order [4].

Trinity Energy appealed again, alleging that the arbitral tribunal exceeded its authority and acted with manifest disregard of law. 

Second Fifth Circuit proceedings

On April 28, 2025, the Fifth Circuit affirmed the District Court’s decision, finding no grounds to vacate the award [5].

The Fifth Circuit reasoned that:

• In the Fifth Circuit, the judicial review of an arbitral award is “extraordinarily narrow,” and doubts must be resolved in favor of upholding the arbitral award. Section 10 of the FAA provides exclusive statutory grounds for vacating arbitral awards. 
• To find an excess of authority under §10(a)(4) of the FAA, convincing a court of an arbitrator’s error, even if it is grave, is not enough. Only if the arbitrator acted outside their contractual authority and decided the case based on their “own notion of economic justice” rather than based on the contract, an award may be vacated.
• In the current case, the record showed that the arbitral tribunal referred to the Subcontract and the Settlement, and discussed them on several pages of the award. This was sufficient to show that the tribunal did not exceed its authority. 
• Trinity Energy argued that the grounds for vacatur under §10(a)(4) of the FAA should include the “manifest disregard of law.” 
• The Fifth Circuit has not decided this issue explicitly before. However, it would be inappropriate to consider the manifest disregard of law a judicial glossing over Section 10 of the FAA. The opposite conclusion would create tension with the Supreme Court’s holding in Hall Street v. Mattel [6], as it would stretch the interpretation of §10(a)(4) of the FAA. Congress did not intend to create a backdoor to seek judicial review of the tribunal’s interpretations of the contract or law when the FAA was enacted. 
• As such, the court “cannot substitute a court panel’s judgment in place of an arbitration panel’s decision by recognizing ‘manifest disregard of the law’ as a basis for vacatur embedded within § 10(a)(4).”[7]

Takeaways

Until U.S Trinity Energy Services, the Fifth Circuit had not addressed whether the “manifest disregard of law” doctrine could be applied as a judicial gloss on §10(a)(4) of the FAA after Hall Street. By rejecting this doctrine, the Fifth Circuit aligned its position with the Eighth [8] and Eleventh [9] Circuits. 

The decision brings welcome clarity for arbitration users in the Fifth Circuit: arbitral awards cannot be vacated for legal error alone if the tribunal acted within its contractual mandate. The ruling reinforces the Fifth Circuit’s pro-arbitration stance and confirms that courts will not second-guess arbitral reasoning under the guise of “manifest disregard.”

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[1] U.S. Trinity Energy Servs., L.L.C. v. Se. Directional Drilling, No. 24-10833 (5th Cir. 2025).

[2] U.S. Trinity Energy Servs., L.L.C. v. Se. Directional Drilling, No. 4:23-MC-8-Y (N.D. Tex. 2023).

[3] U.S. Trinity Energy Servs., L.L.C. v. Se. Directional Drilling, No. 23-11071 (5th Cir. 2024) (per curiam).

[4] U.S. Trinity Energy Servs., L.L.C. v. Se. Directional Drilling, No. 4:23-MC-8-Y (N.D. Tex. 2024).

[5] U.S. Trinity Energy Servs., L.L.C, No. 24-10833.

[6] Hall Street Assocs., L.L.C. v. Mattel, 552 U.S. 576 (2008).

[7] U.S. Trinity Energy Servs., L.L.C, No. 24-10833, at 10.

[8] Medicine Shoppe Intern., Inc. v. Turner Invest., Inc., No. 09-2179 (8th Cir. 2010).

[9] Frazier v. Citifinancial, No. 08-15709 (11th Cir. 2010).