Songa Product and Chemical Tankers IV AS v Gardsea Shipping Inc [2026] EWHC 1559 (Comm) explores the meaning of “Banking Days” in an international contract, where banks in different jurisdictions and time zones were included in the definition of “Banking Days” in the contract.
Background facts
The case centred around a contract concerning the sale of a ship for $25m. The final balance of the purchase price was to be released from an escrow account in Norway not later than three “Banking Days” after Notice of Readiness had been given.
“Banking Days” was defined as “days on which banks are open both in the country of the currency stipulated for the Purchase Price ... and in the place of closing stipulated in Clause 8 ... and United States of America, Canada, United Kingdom, Switzerland, Turkey, UAE, Greece, Norway…”
Notice of Readiness was given on Friday 2 September 2022. It was not in dispute that Saturday 3 and Sunday 4 September 2022 were not “Banking Days”, nor was 5 September 2022 as it was Labor Day in the USA and Canada.
As a result, 6, 7 and 8 September 2022 were “Banking Days” under the contract. By midnight on 8 September 2022 in Norway, payment had not reached the escrow account.
The issues
At 00.09 Norway time on 9 September 2022, the sellers served a cancellation notice. They could cancel if the balance had not been paid in accordance with the contract.
The buyers contended that the sellers’ notice had been served prematurely and that the sellers had no right to cancel.
The buyers argued that, when the notice was served, 8 September 2022 had not yet ended in the UK, Canada or the USA, each of which was listed in the definition of “Banking Days”. In Hawaii, midnight struck well into 9 September 2022, by which point the payment had reached the escrow account.
The issue was whether the buyers had to release the funds by midnight on 8 September 2022 in Norway, or by midnight in the last jurisdiction covered by the contractual definition of “Banking Days”.
The decisions
The parties referred the dispute to adjudication. The adjudicators accepted that both rival interpretations were plausible but preferred the buyers’ construction because they considered this was the effect of the definition of “Banking Days”.
The sellers appealed to the High Court.
The High Court allowed the appeal. The Judge recognised that the adjudicators comprised an expert and distinguished tribunal; however, ultimately the Court said that the adjudicators’ decision was not based on any established market understanding or any assessment that commercial logic or commercial trade experience that the ship sale market dictated.
The High Court held that the “Banking Days” definition identified the calendar days which were relevant for calculating time intervals. It did not define what a “day” is or when it starts and ends. Once 8 September 2022 was identified as the relevant date, the question was whether payment had been made before midnight local time in the place of performance, namely Norway. Treating the deadline as ending at midnight in the place of performance was more consistent with ordinary concepts of how time works.
The Court considered it extremely unlikely that the parties intended to create a “day” which starts at midnight in the UAE and ends at midnight in Hawaii, therefore lasting 37 or 38 hours (depending on the time of year) and spanning multiple time zones and calendar dates (for example, midnight in Hawaii on 8 September 2022 would be the afternoon on 9 September 2022 in the UAE).
Implications
Definitions of “Banking Days” are common in international contracts. This decision is unusual and noteworthy because it addresses how such a definition operates against a background involving multiple jurisdictions and time zones.
The outcome also illustrates the importance of appeal rights. If the parties had agreed that the adjudicators’ decision would be final and binding, the result would have been different. That highlights the risk of agreeing to be bound by a decision, sometimes made by a single decision-maker, without any right of appeal.