Songa Product and Chemical Tankers IV AS v Gardsea Shipping Inc

In a contract referring to payment within a specified number of “Banking Days”, the definition ordinarily identifies which calendar dates count for calculating the period. It does not redefine a day as a period extending across the time zones in which banks are open. Unless the contract provides otherwise, the time at which the final day ends is determined by midnight at the place where the relevant contractual act is to be performed. Commercial certainty supports a practical construction based on ordinary meanings and the place of performance, rather than an artificial rule selecting the most easterly or westerly time zone.

The claimant appealed under section 69 of the Arbitration Act 1996 against a partial final award concerning the construction of a ship sale agreement based on Saleform 2012. The agreement required the balance of the purchase price to be released from a Norwegian escrow account no later than three Banking Days after notice of readiness. The parties agreed that 8 September 2022 was the third Banking Day.

The tribunal held that payment could be made until midnight on that date in the most westerly listed jurisdiction, Hawaii-Aleutian time. The issue before the court was whether the obligation instead had to be performed by midnight in Norway, where the escrow account and sellers’ account were located.

1. Appeal allowed in substance. The arbitrators’ conclusion was legally incorrect. The appropriate order was provisionally identified as varying paragraph BB of the partial final award by substituting an appropriate declaration, subject to submissions on the form of order.
2. “Banking Days” referred to calendar days. Its definition identified which calendar dates counted for calculating the contractual interval, by asking whether banks were open in the specified jurisdictions on each date. It did not define a special period lasting from midnight in the UAE to midnight in Hawaii, or otherwise determine when a calendar day began or ended (paras [20]–[24]).
3. Absent a contrary contractual provision, a day ends at midnight. The usual and common-sense approach is to identify the relevant locality by reference to where the contractual act is to be performed. This was a practical interpretive starting point, not an inflexible rule of law requiring clear words to rebut it (paras [25]–[27]).
4. The same approach applied to the beginning and end of the contractual period. Notice of readiness was treated as given on the calendar date at the place where it was given. The successive Banking Days were then counted by calendar date. Once the final date had been identified, the question whether payment had been made was determined by reference to the place of performance (paras [28]–[32]).
5. The core obligation was release of the purchase-price balance from a Norwegian escrow account to the sellers’ Norwegian account. It therefore had to be performed by midnight in Norway on 8 September 2022. Commercial certainty did not favour the buyers’ construction: a rule based on overlapping time-zone periods would be arbitrary and liable to produce greater uncertainty (paras [34]–[43]).

• High Court (Commercial Court): on an appeal under section 69 of the Arbitration Act 1996, the court held that the tribunal’s construction was legally incorrect and indicated that paragraph BB of the award should be varied.
• LMAA arbitration tribunal: in a Partial Final Award dated 9 December 2024, the tribunal declared that the buyers had until midnight in the most westerly listed jurisdiction, Hawaii-Aleutian time, before being in breach.