Songa v Gardsea Shipping: banking days clause did not extend ship sale payment deadline to Hawaii time

The Commercial Court has overturned an LMAA arbitration award on the construction of a ship sale payment clause, holding that the "Banking Days" definition did not extend the Buyers' payment deadline to midnight Hawaiian time.

Paul Stanley KC, sitting as a Deputy High Court Judge, delivered judgement on 23 June 2026 in Songa Product and Chemical Tankers IV AS v Gardsea Shipping Inc [2026] EWHC 1559 (Comm). Leave to appeal under section 69 of the Arbitration Act 1996 had been granted by Butcher J in November 2025, from a Partial Final Award in which a three-member LMAA tribunal had found in the Buyers' favour.

Background

In July 2022, the Sellers agreed to sell the MT Songa Coral to the Buyers for USD 25 million under a memorandum of agreement based on the Saleform 2012. Clause 3 required the balance of the purchase price to be released from a Norwegian escrow account not later than three "Banking Days" after notice of readiness was given. The contract defined "Banking Days" as days on which banks were open in a list of jurisdictions including the United States, Canada, the United Kingdom and Norway, among others.

Notice of readiness was given on 2 September 2022. After accounting for the Labor Day bank holiday in the United States and Canada on 5 September, the three Banking Days expired on 8 September. No payment had reached the Nordea Bank escrow account in Norway by midnight Norwegian time. At 00.09 Norwegian time on 9 September the Sellers served notice of cancellation. Midnight had not by then struck in the United Kingdom, Canada or the United States, and payment into the escrow account was made later in the Norwegian working day, when it was still 8 September in Hawaii.

The LMAA tribunal, comprising Mr Simon Gault, Sir Jeremy Cooke and Mr Jonathan Elvey, held in its Partial Final Award of December 2024 that the Buyers had until midnight Hawaii-Aleutian Standard Time before being in breach, reasoning that the Banking Days definition effectively extended each contractual day to its close in the most westerly relevant time zone. The Sellers appealed on a question of law.

The Commercial Court's reasoning

Paul Stanley KC rejected the tribunal's approach. The purpose of the Banking Days definition, he held, was not to define what constitutes "a day" or to fix when a day ends, but solely to identify which calendar days count for the purpose of calculating the contractual interval. The definition assumed the ordinary meaning of "day" as a calendar day and did no more than mark certain days as relevant or irrelevant for computing the period. It had nothing to say about when a day ended.

The judge found the tribunal's approach produced an incoherent result. On the Buyers' construction, each "Banking Day" would last 37 to 38 hours, spanning three different calendar dates in different parts of the world simultaneously, with successive "days" overlapping. Such a period could not sensibly be described as a calendar day.

Having established that the last calendar day for payment was 8 September 2022, the judge applied the common law principle that a contractual obligation must be performed before midnight at the place where it falls to be performed. The obligation to release funds from the Norwegian escrow account was unambiguously to be performed in Norway. The Sellers were accordingly entitled to cancel when midnight struck in Oslo.

The form of the order was reserved for further submissions from counsel.

Julian Kenny KC and Charles Connor (instructed by Mills & Co Solicitors Ltd) for the Claimant. Tom Corby for the Defendant.