Содержание
The buyers of a tanker failed to pay for the vessel by midnight in Norway, and nine minutes later the sellers served a notice of cancellation. An LMAA tribunal held the notice premature: on its reading, the payment day ran until midnight struck in Hawaii. The Commercial Court disagreed — this is an analysis of Songa Product and Chemical Tankers IV AS v Gardsea Shipping Inc [2026] EWHC 1559 (Comm) on when a deadline expressed in “Banking Days” actually expires.
The Background
In July 2022 the sellers agreed to sell the product tanker MT Songa Coral for USD 25 million. The Memorandum of Agreement (MOA) was based on Saleform 2012 — the most widely used standard form for ship sale and purchase — but with amendments: the parties agreed to settle through an escrow account.
An escrow account is an account held by an intermediary (the escrow agent) through which the transaction funds pass. In this deal the escrow agents were lawyers in Oslo (who, as it happened, were also the sellers’ own lawyers), and the account was held at Nordea Bank in Norway. Crucially, the balance of the purchase price remained at the order of the buyers alone: the escrow agents could release the money to the sellers only upon the buyers’ written instruction, concurrently with delivery of the vessel.
How Payment Was Structured
Payment under the MOA was structured in three steps:
- The deposit — 10% of the price — was paid into the escrow account.
- The balance — the remaining 90% — had to be in the same escrow account in advance: at least one “Banking Day” before the expected date of delivery of the vessel.
- Settlement on delivery, but not later than three “Banking Days” after notice of readiness (NOR) was given: the deposit was released to the sellers, while the balance of the price and all other sums payable on delivery were transferred from the escrow account to the sellers’ account at Nordea. This constituted full performance of the buyers’ payment obligations.
The entire dispute was about the deadline for that third step.
The parties defined “Banking Days” as follows:
“Banking Days” are days on which banks are open both in the country of the currency stipulated for the Purchase Price and in the place of closing, and in the United States of America, Canada, United Kingdom, Switzerland, Turkey, UAE, Greece and Norway.
The listed jurisdictions span time zones from the UAE (UTC+4) to Hawaii (UTC−10) — and that detail generated the whole dispute.
Midnight in Oslo and a Notice at 00:09
The parties proceeded on the basis that NOR was given on Friday, 2 September 2022. From there the calendar turned against the buyers: 3 and 4 September fell on a weekend, and 5 September was Labor Day, a public holiday in the United States and Canada when banks are closed. The Banking Days were therefore 6, 7 and 8 September. Even 8 September was contested — some banks in the Swiss canton of Geneva were closed for a local holiday that day — but the tribunal held it was a Banking Day, and that finding was not challenged on appeal.
So the third Banking Day was 8 September. The plan to preposition the funds failed: by midnight Norwegian time the money had not even reached the escrow account — which meant the release to the sellers required by clause 3 had not happened either. At 00:09 on 9 September the sellers served a notice of cancellation under clause 13 of the MOA: if the price is not paid in accordance with clause 3, the sellers may cancel the contract — the deposit, together with any interest earned, is then released to them, and if the deposit does not cover their losses, they may claim damages in excess of the deposit.
Midnight in Hawaii arrived when the working day of 9 September was already well underway in Norway — and by that point, as the judge understood it, the payment into the escrow account had been made. That was the basis of the buyers’ case: since in one of the jurisdictions listed in the “Banking Days” definition the calendar date of 8 September had not yet ended, the payment day had not expired either, and the notice of cancellation was premature.
What the LMAA Tribunal Decided
The dispute went to LMAA arbitration — the MOA provided for London maritime arbitration and English law. A tribunal of three distinguished arbitrators (Simon Gault, Sir Jeremy Cooke and Jonathan Elvey) found for the buyers in a Partial Final Award dated 9 December 2024.
The arbitrators described both interpretations as “plausible” and openly acknowledged that their own had “little commercial logic”. But in their view the contract language left no choice: reading the “Banking Days” definition into clause 3, the buyers could not be in default until 8 September had ended in every listed jurisdiction. The last of them was the State of Hawaii. The buyers therefore had until midnight Hawaii-Aleutian time — that is, until around noon on 9 September in Norway.
The sellers obtained permission to appeal on a question of law under section 69 of the Arbitration Act 1996. That is a rarity: unless all parties agree, such an appeal requires the court’s leave, and leave is granted only if a set of conditions is met — in particular, the tribunal’s decision must be either obviously wrong or, where the question is one of general public importance, at least open to serious doubt. Butcher J granted leave in November 2025.
The Parties’ Arguments in the Commercial Court
The appeal was heard by Paul Stanley KC, sitting as a Deputy High Court Judge. The arbitrators’ conclusion rested on no established market understanding or trade experience — it was a pure conclusion of law on the meaning of the contractual words. And in that situation, however eminent the tribunal, “in the final analysis the tribunal’s decision is either right or wrong as a matter of law” (Cottonex Anstalt v Patriot Spinning Mills Ltd [2014] EWHC 236 (Comm)) — the court must decide the question for itself.
The sellers argued that the “Banking Days” definition does not define what a “day” is or when it ends at all. It answers a different question — which calendar days count as Banking Days when computing the period. When the day itself ends is governed by the general law: a day ends at midnight, local time at the place where the obligation is to be performed. Here the obligation was the release of funds from an escrow account in Norway to the sellers’ Norwegian account, so the place of performance was Norway and the deadline expired at midnight Oslo time.
The buyers responded that the definition of “Banking Days” defines precisely “Banking Days” — and the word “Days” in that term does no less work than the word “Banking”. A day defined by reference to eight jurisdictions ends when it ends in the last of them. That reading, they insisted, delivers commercial certainty: no need to work out where each obligation is performed — just look at the clock in the westernmost jurisdiction. The “local time” presumption, buyers’ counsel said, was a “19th century legal presumption”.
Why the Court Disagreed with the Arbitrators
The judge held that the arbitrators’ conclusion was wrong as a matter of law: the time for performance of clause 3 expired at midnight Norwegian time, and from that moment the buyers were in default. On the timing question — the only one before the court — the 00:09 notice was not premature; any other possible objections to the cancellation remained outside the scope of the case.
The “Banking Days” Definition Filters Days — It Does Not Define “Day”
The starting point, common to both sides: Banking Days are calendar days. The purpose of the definition is not to explain what a day is or when it begins and ends, but to screen out the days that do not count when computing the period. Take a calendar date and ask: were the banks open in all the listed places on that date? If yes, it is a Banking Day — add it to the tally. If not, skip it and move on. That the banks in eight jurisdictions are not open simultaneously is irrelevant — what matters is that each of them is open on that calendar day.
The buyers’ construction, by contrast, turned a “day” into a stretch of 37–38 hours — from midnight in the UAE to midnight in Hawaii. While such a “day” runs, three different calendar dates succeed one another across the globe, and the next “day” begins before the previous one has finished, overlapping it. The judge observed that it would hardly occur to anyone to call such a period a “day” — and it is inconsistent with the agreed starting point that these are calendar days.
A Day Ends at Midnight — at the Place of Performance
Once the “Banking Days” definition has done its work and the last day for payment is fixed (8 September), the remaining question is: at what moment does that day end? The court’s answer is the same as for any other calendar day. The hour is midnight: the House of Lords confirmed as much in The Afovos [1983] 1 Lloyd’s Rep 335, where shipowners jumped the gun with a notice of withdrawal of the vessel from a time charter without waiting for midnight on the last day for payment of hire — and the notice was held premature. And the place whose midnight matters is the place of performance of the obligation: “the date of an event should normally be determined using local time at the place where the event happened” (Euronav NV v Repsol Trading SA (The Maria) [2021] EWHC 2565 (Comm)).
The principle is over a century and a half old, but, as the judge stressed, it has not aged a day. Back in 1858, in Curtis v March, the court dealt with counsel who arrived for a 10 a.m. hearing by the Dorchester town clock — only to discover that the judge, whose clock ran on Greenwich Mean Time, had already disposed of the case without him. The conclusion then was simple: “10 o’clock” means 10 o’clock local time unless the contrary is expressed. The same approach is visible everywhere today — departure times on an air ticket are stated in the local time of the airport, and nobody reads them otherwise. As the judge put it: if a business person promises “you will have the payment in Norway by Tuesday”, nobody understands that as “by Wednesday morning, while it is still Tuesday somewhere else”.
The place of performance in this case was beyond doubt: the funds were released from a Norwegian escrow account to the sellers’ Norwegian account. Everything happened in Norway — so midnight is Norwegian midnight.
Tellingly, before this judgment the question was open: the leading textbook on the Saleform (Strong & Herring, Sale of Ships, 3rd ed.) expressly noted the absence of authority on whose time counts as “midnight” and cautiously suggested that New York time might be relevant for US dollar payments. Practitioners now have a reference point: not New York, and not the westernmost jurisdiction in the definition, but — as a general starting point — the place of performance of the payment.
Practical Takeaways
For anyone buying or selling ships on Saleform terms — or dealing with contracts in which time periods are measured in Banking Days — the judgment offers several practical lessons.
The default position: midnight at the place of performance. However many jurisdictions a “Banking Days” definition lists, it only answers the question of which days count towards the period — it does not move the endpoint of the final day. Unless the contract provides otherwise, a day ends at midnight, and the time zone is that of the place where the obligation is to be performed. The judge stressed that this is a presumption, a starting point, not a rigid rule of law — but in Songa there was no doubt: releasing money from a Norwegian account to a Norwegian account happens in Norway.
If you need a different cut-off point — write it in expressly. As the judge noted, certainty is achieved by specifying one particular time zone, not by listing twelve. Wording such as “not later than 17:00 CET on the third Banking Day” removes the issue entirely. That is cheaper than two rounds of proceedings over a single contractual term.
For buyers: three Banking Days is less time than it looks. As the judge observed, a US dollar payment is likely to involve an American bank — and the time actually available on the last Banking Day may be squeezed. Add weekends and holidays: in this case, of the six calendar days after NOR, only three were Banking Days. Prepare the funds early — in this transaction the balance was supposed to be sitting in escrow a day before the expected delivery, and it was precisely that mechanism that failed.
For sellers: do not rush the cancellation. The sellers won the dispute over when the deadline expired because they identified the applicable local time correctly. Nine minutes past Norwegian midnight was enough for the notice — on the timing question — to no longer be premature; served before midnight, it would have been premature. The same problem of exercising a contractual right too early arose in The Afovos, where the issue was withdrawal of a vessel from a time charter for non-payment of hire — and it is equally familiar from cancelling clauses in charterparties.
Arbitrators’ errors can be corrected. Even a tribunal of the most respected arbitrators can err on a pure question of law — and the section 69 appeal, rare as it is, exists precisely for that. If an award rests on a construction of the contract that appears legally wrong, there may be a route of appeal, but you must move fast: section 70(3) of the Arbitration Act 1996 sets a 28-day time limit for the application, with the starting point depending on the procedural history of the case (in the basic scenario — the date of the award).
If you are facing a dispute under a ship sale and purchase agreement, over payment deadlines or contract cancellation — or want to assess the prospects of challenging an arbitration award — get in touch:
