Songa Product and Chemical Tankers IV AS v Gardsea Shipping Inc -The Songa Coral
DMC/SandT/26/13
England
Songa Product and Chemical Tankers IV AS v Gardsea Shipping Inc (The “Songa Coral”)
English Commercial Court: Paul Stanley KC, sitting as a Deputy High Court Judge: [2026] EWHC 1559 (Comm): 23 June 2026
Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Comm/2026/1559.html
Julian Kenny KC and Charles Connor (instructed by Mills & Co Solicitors Ltd) for Songa (Sellers)
Tom Corby for Gardsea (Buyers)
SHIP SALE & PURCHASE: MEMORANDUM OF AGREEMENT (“MOA”): SALEFORM 2012: MEANING AND EFFECT OF DEFINITION OF “BANKING DAYS”: WHETHER OBLIGATION TO RELEASE PURCHASE PRICE FROM ESCROW UNDER CLAUSE 3 EXPIRED AT MIDNIGHT IN NORWAY, WHERE THE PAYMENT OBLIGATION WAS TO BE PERFORMED, OR AT MIDNIGHT IN HAWAII, BEING THE MOST WESTERLY TIME ZONE WITHIN THE JURISDICTIONS IDENTIFIED IN “BANKING DAYS” DEFINITION: SELLERS’ RIGHT TO CANCEL THE MOA UNDER CLAUSE 13: SECTION 69 APPEAL ON A POINT OF LAW UNDER THE ARBITRATION ACT 1996
Summary
The High Court held that, where a ship sale and purchase memorandum of agreement (“MOA”) based on an amended SALEFORM 2012 required under clause 3 the balance of the purchase price to be released from an escrow account in Norway not later than three “Banking Days” after notice of readiness (“NOR”) had been given under clause 5, the payment obligation was required to be performed by midnight local time in Norway on the third Banking Day at latest.
The Court held on the facts that the Buyers were in breach of the MOA when the purchase price had not been released by midnight in Norway on the third Banking Day after the NOR was given, and so the Sellers had, therefore, been entitled, as they had done, to serve the notice of cancellation under clause 13 just after midnight local time in Norway on the expiry of the third Banking Day.
In thus finding for the Sellers, the Court allowed the appeal against the arbitral tribunal’s partial final award under section 69 of the Arbitration Act 1996, with the result that the Buyers were not entitled to claim damages for breach of the MOA and the Sellers were entitled to the Buyers’ deposit under clause 13.
Case note contributed by Alice Grant, BA Hons (Oxford), a future pupil barrister at Twenty Essex and International Contributor to DMC’s CaseNotes.
Background
The dispute arose from the sale of the MT “Songa Coral” on a MOA based on an amended SALEFORM 2012. The MOA provided for the sale of the vessel by the Sellers to the Buyers for USD 25 million, with the balance of the purchase price to be released, under clause 3 (fn.2), from an escrow account in Norway no later than three “Banking Days” after notice of readiness had been given under clause 5.
It was common ground that NOR was to be treated as having been given on 2 September 2022. However, payment had not been released by midnight in Norway at the end of 8 September.
The Sellers served a notice of cancellation at 0009 hours Norway local time on 9 September, pursuant to clause 13 (fn.1) of the MOA. At that time, it was still 8 September in parts of the United States, including Hawaii, and payment was subsequently made before midnight there.
The issue therefore arose as to whether the Buyers’ time for payment had expired at midnight in Norway, where the escrow account and the Sellers’ account were located, or at midnight in Hawaii, being the most westerly place within the jurisdictions identified in the definition of “Banking Days” (fn.4). If the former was correct, then the Buyers were in breach of clause 3 and the Sellers had been, on the face of it, entitled to cancel the MOA under clause 13.
The distinguished maritime arbitration tribunal had held that the Buyers had until midnight in Hawaii on 8 September, and thus were not in breach of their payment obligations pursuant to clause 3 of the MOA. The Sellers appealed against that final award to the High Court on a point of law under section 69 of the Arbitration Act 1996.
Judgment
(1) Construction of Clause 3
The Judge considered the central issue to be the proper construction of clause 3 (fn.2) of the MOA. Applying the orthodox principles of contractual interpretation, summarised in The Ocean Neptune (fn.3), the Judge rejected the tribunal’s interpretation for the following reasons.
(A) Meaning of “Banking Days”
The tribunal interpreted ”Banking Days” as determining both which calendar dates qualified as Banking Days and when each such day ended. The Buyers submitted that the arbitrators had been correct, and that the definition of “Banking Day” defined both what was meant by “Banking” and “Day” with the result that each such day ended at midnight in Hawaii.
The Sellers submitted that the words “Banking Day” assumed that a day was a day in the ordinary sense and provided a test to establish whether any given day was a Banking Day. It therefore did not itself determine whether the payment deadline expired at midnight in Norway or at midnight in Hawaii.
The Judge accepted the Sellers’ construction. His starting point was that Banking Days under the MOA referred to calendar days, relying on The Maria (fn.5). The Judge held that “Banking Day” did not define what was meant by a “day”, it only identified which calendar days counted for the purpose of calculating the contractual intervals. A calendar date qualified as a “Banking Day” only if banks were open in each of the places identified in the definition.
The Judge rejected Buyers’ construction because it would produce a ‘day’ lasting either 37 or 38 hours, beginning at midnight in the UAE and ending at midnight in Hawaii. The Judge considered such a result inconsistent with the parties’ common starting point that the word “day” meant an ordinary calendar day.
(B) Local Time and Place of Performance
The Judge then turned to consider when the relevant calendar day ended. Absent any contrary stipulation in the contract, the relevant time was midnight, and the usual approach was to identify the place where the contractual obligation was to be performed: The Afovos (fn.6). This was consistent with The Maria, where the starting point was that the date of an event should normally be determined using local time at the place where the event happened or was intended to happen.
The Judge emphasised the local-time approach was not a rule of law and did not require “clear words” to rebut it. It was instead a reasonable starting point, reflecting ordinary ways of thinking about time.
Applying the “local time presumption” to clause 3, the Judge held that reading the definition of “Banking Days” required that payment be made by release of the escrow account funds in Norway within three calendar days after NOR was given, discounting any day on which banks were not open in all of the specified jurisdictions in the “Banking Days” definition.
(C) Factual Background
The Judge also considered how the factual matrix informed the construction of “Banking Days”. Although the Buyers submitted that the place of performance of every obligation under clause 3 might not always be clear, the Judge held that the core obligation – the release of the balance of the purchase price from the escrow account – was to be performed in Norway.
The practical reality that an American bank would likely be involved in a US dollar payment was taken into account. However, it was held that commercial parties could be expected to make sure they would be in a position to meet the relevant deadline (such as three Banking Days), or to stipulate for additional time if that was foreseeably required.
(D) Commercial Logic and Certainty
The Judge finally considered the effect of the competing constructions in commercial practice. The Buyers submitted that their construction promoted certainty in ship sale and purchase agreements since it avoided questions concerning the place at which a contractual obligation was required to be performed. However, the Judge considered that commercial parties operated with a degree of practical common sense and could generally be assumed to use everyday words such as “day” in their ordinary sense.
Moreover, the Judge did not consider that Buyers’ construction in fact promoted commercial certainty. Using the most westerly jurisdiction to determine the end of a day and, conversely, the most easterly to determine its beginning, was considered to be arbitrary.
The Judge therefore held that the Sellers’ interpretation better reflected common sense and the ordinary conception of how time works.
(2) Conclusion
The Judge held that, on the proper construction of clause 3 and the definition of “Banking Days”, the Buyers were required to release the balance of the purchase price by midnight Norway local time on 8 September 2022. Therefore, the Buyers were in default when payment had not occurred by that time and that the arbitration tribunal’s conclusion was incorrect in law.
Accordingly, the Judge’s view was that the relevant paragraph of the partial final award should be varied by substituting an appropriate declaration, to reflect that the Buyers were in breach of clause 3 and the Sellers had been entitled to service notice of cancellation under clause 13 just after midnight in Norway on the expiry of the three Banking Days after the NOR had been given under clause 5.
Comment
This judgment is significant for ship sale and purchase transactions, and indeed for commercial contracts beyond SALEFORM 2012. First, it clarified the meaning and effect of “Banking Days” in the MOA as identifying which calendar days are to be counted when calculating time periods or intervals under the contract.
The second point of interest is the Court’s affirmation of the principle considered in The Maria: time as ordinarily a local concept. The Court had rejected the suggestion that this was merely an old-fashioned nineteenth-century legal presumption, regarding it instead as reflecting modern commercial common sense. Parties should be aware that absent any contrary contractual provision, the starting point is that a contractual day expires at midnight local time at the place where the relevant obligation is to be performed. Parties should therefore seek to ensure that any different time or time zone intended to govern the time for performance is stated expressly in the contract, if they wish to displace the normal presumption of calendars days and local time applying.
Importantly, the judgment reflects a practical approach to contractual deadlines in transactions spanning multiple jurisdictions. The judgment highlights that constructions which give effect to the ordinary meaning of the contractual language, and accord with commercial common sense, promote legal certainty.
Footnote 1:
Clause 13: Buyers’ Default
“Should the Purchase Price not be paid in accordance with Clause 3 (Payment), the Sellers have the right to cancel this Agreement, in which case the Deposit together with interest earned, if any, shall be released to the Sellers. If the Deposit does not cover their loss, the Sellers shall be entitled to claim further compensation for their losses and for all expenses incurred together with interest.”
Footnote 2:
Clause 3: Payment
“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 to the Sellers’ Account and shall constitute full completion of the Buyers’ payment obligations under this Agreement …”
Footnote 3:
Lukoil Asia Pacific Pte Ltd v Ocean Tankers Pte Ltd (The Ocean Neptune) [2018] EWHC 163 (Comm), [2018] 1 WLR 654 at [8]. See the judgment on BAILII: https://www.bailii.org/ew/cases/EWHC/Comm/2018/163.html
Footnote 4:
Definition of “Banking Days”
“‘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).”
Footnote 5:
Euronav NV v Repsol Trading Ltd (The Maria) [2021] EWHC 2565 (Comm), [2022] 1 Lloyd’s Rep 247, at [29]–[41]. See the judgment on BAILII: https://www.bailii.org/ew/cases/EWHC/Comm/2021/2565.html
Footnote 6:
Afovos Shipping Co SA v R Pagnan and F.lli (The Afovos) [1983] 1 Lloyd’s Rep 335 (HL).
