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A Triumph of Business Common Sense: “Banking Days” as a Local Concept.

Songa Product and Chemical Tankers IV AS v Gardsea Shipping Inc

The High Court (before Mr Paul Stanley KC sitting as a Deputy High Court Judge) handed down its judgment on 23 June 2026, following Sellers’ s.69 appeal in relation to the interpretation of “Banking Days” of a ship sale contract based on the Saleform 2012.

Mills & Co. (Jonathan Green, Christopher Hellstrom-Bartram, and Laureen Wong) acted for Sellers in the successful appeal, providing clarity on the definition of “Banking Days” under the widely used Saleform 2012 for ship sales.

BACKGROUND

The parties (Sellers and Buyers) entered into a MOA for the sale and purchase of a vessel. According to clause 3 of the MOA, Buyers were to preposition the balance of the purchase funds to the agreed escrow account “not later than three Banking Days after the date that Notice of Readiness has been given”.  The escrow account was an account in Norway of the Norwegian lawyers acting for Sellers.

The NOR was served on 2 September 2022, and it is common ground that the third banking day was 8 September 2022.

No payment had reached the escrow account by midnight, in Norway, at the end of 8 September 2022. At 00.09, Norway time, on 9 September, the Sellers served a notice of cancellation to terminate the MOA.

So the question arises: were Buyers in breach of clause 3 at 00.09 Norway time on 9 September because the entire sum due had not been released to Sellers’ account, thereby entitling Sellers to cancel the MOA based on clause 13?

MEMORANDUM OF AGREEMENT

The key provision for payment was clause 3, which provided as follows:

“The Buyers shall minimum one (1) Banking Day prior to the expected date of delivery of the Vessel hereunder preposition the balance of the Purchase Price and any other amounts payable by the Buyers to the Sellers under this Agreement on the escrow account with the Escrow Agent. The balance of the Purchase Price remains at the order of the Buyers only and shall only be release[d] to the Sellers upon written instruction from Buyers concurrently with Delivery of the Vessel.

On delivery of the Vessel, but not later than three (3) Banking Days after the date that Notice of Readiness has been given in accordance with Clause 5 (Time and place of delivery and notices):

(i) the Deposit shall be released to the Sellers; and

(ii) the balance of the Purchase Price and all other sums payable on delivery by the Buyers to the Sellers under this Agreement shall be released from the escrow account [those words replaced the Saleform’s text ‘paid in full free of bank charges’] to the Sellers’ Account and shall constitute full completion of the Buyers’ payment obligations under this Agreement but without prejudice to provided herein.”

The term “Banking Days”, was defined under the MOA as follows:

“‘Banking Days’ are days on which banks are open both in the country of the currency stipulated for the Purchase Price in Clause 1 (Purchase Price) and in the place of closing stipulated in Clause 8 (Documentation) and United States of America, Canada, United Kingdom, Switzerland, Turkey, UEA [sic], Greece, Norway (add additional jurisdictions as appropriate).”

ARBITRATION 

Buyers commenced LMAA arbitration proceedings against Sellers alleging that Sellers were in repudiation of the contract as Buyers were not in breach of clause 3 at the time Sellers terminated the contract at 00.09 on 9 September 2022.

As to the question on when was the latest time by which the Buyers were required to ensure that the purchase price for the Vessel was paid to the Sellers under clause 3 of the MOA, Sellers maintained that the last day for that payment was by no later than midnight in Norway (i.e. the place where the payment to the Sellers had to be made).

By contrast, Buyers maintained that the last day for that payment was no later than midnight in the most westerly time zone in the list of countries in the definition of “Banking Days” in the preface to the Saleform 2012, which is Hawaii-Aleutian Standard Time.

The Tribunal held in favour of Buyers and concluded that Buyers were not in breach of the MOA because they should have until midnight Hawaii-Aleutian Standard Time on 8 September to proposition payment into the escrow account.

Whilst the Tribunal recognised that there was a prima facie rule that contractual obligations should be performed by the relevant time on the relevant day at the place of performance (i.e. Norway) unless the contract provided otherwise, they considered that the language of the definition of “Banking Days” had the effect of displacing that presumption. They said it was plain as a matter of the construction of that definition, and that they were “unable to see how the words used, when reading the definition of ‘Banking Days’ into clause 3, could properly be said to give rise to any other meaning”.

They accepted that this construction had “little commercial logic”, but thought that “odd results arose from either construction”. They found nothing useful in the other provisions of the contract in which “Banking Days” were referred to, and nothing in commercial considerations to undermine Buyers’ construction.

HIGH COURT APPEAL 

Sellers appealed the Award on the following question of law:

What is the latest time by which the buyers are required to pay the price of the ship?

Is it:

(as Sellers argue) on the last day for payment and by no later than midnight in the place where payment has to be made?

or

(as the Tribunal held) on the last day for payment and by no later than midnight in the most westerly time zone in any of the countries referred to in the definition of “Banking Days” in the preface to the Saleform 2012?

Leave to appeal to the High Court was granted, and following the hearing on 9 June 2026, Judge Stanley KC delivered his judgment. The Judge disagreed with the Tribunal’s decision.

High Court’s Judgment:

• The starting point is that “Banking Days” under the MOA refers to calendar days (i.e “the mean solar day, a period of twenty-four hours” (Prowse v McIntyre (1961) 111 CLR 264 per Windeyer J)
• The true construction of the “definition” of “Banking Days”, does not tell us what a day is, or when it starts or finishes, it simply tells us which calendar days (whenever they start or finish, for like any other calendar day they start and finish at different absolute times in different parts of the world, from Kiribati to American Samoa) count as Banking Days; that some calendar days are Banking Days, and other calendar days are not.
• To answer the question of when does a banking day end, the natural and reasonable starting point is to apply the local time presumption. By way of example, as a general observation of common practice, it is conventional for passengers to use local time to determine the departure and arrival times of planes.
• Therefore, the “time is a local concept” is a matter not of arcane legal presumption but of practical reality. If a business person says “I will make sure you have the payment in Norway by Tuesday”, they will not normally be understood to mean “by some time on Wednesday morning, which is still Tuesday somewhere else”: they will be understood to mean “by Tuesday in Norway”.
• Further, the Judge considered that Buyers’ construction would produce strange results but do not necessarily promote commercial certainty. By their construction, a “day” would last for 37 or 38 hours (depending on the time of year), starting at midnight in the UAE and ending at midnight in Hawaii. Over the course of such a “day”, the various contributing jurisdictions pass through three different calendar dates, so that a single “day” as so defined began at midnight in the UAE at the start of 8 September 2022 there (which was mid-afternoon on 7 September 2022 in Hawaii), and ended 37 hours later at midnight in Hawaii at the end of 8 September 2022 (by which time it was afternoon on 9 September 2022 in the UAE). Moreover, while this “day” was running its course a second and overlapping “day” will have already begun.

Accordingly, the Judge held that, on the true construction of clause 3, in the events that happened, the MOA required the balance of the purchase price to be released from escrow in Norway on 8 September 2022, and the Buyers were in default if that had not occurred by midnight Norway time at the end of that day.

SIGNIFICANCE: 

This decision helps clarify the construction of the “definition” of “Banking Days” under Saleform 2012, also known as Norwegian Saleform, which has long been, and remains, one of the world’s most widely-used standard forms for the sale and purchase of ships.

The decision also represents a triumph for commercial common sense and “cleaves more satisfactorily to ordinary conceptions of how time works”. The decision affirms the presumption that the latest time by which a contractual obligation must be performed is midnight at the place of performance. The full judgment can be found here: Songa Product and Chemical Tankers IV AS v Gardsea Shipping Inc - Find Case Law - The National Archives.