Background
In July 2022 the claimant Sellers agreed to sell the MT Songa Coral to the defendant Buyers for USD 25 million under a memorandum of agreement (“MOA”) based on the Saleform 2012 standard form. The MOA required the Buyers to release the balance of the purchase price from a Norwegian escrow account no later than three “Banking Days” after notice of readiness was given. “Banking Days” were defined as days on which banks were open in a list of jurisdictions spanning multiple time zones, including the United States, Canada, the United Kingdom, Switzerland, Turkey, the UAE, Greece, and Norway.
Notice of readiness was given on 2 September 2022. After accounting for a weekend and US/Canadian Labor Day, the third Banking Day fell on 8 September 2022. The full purchase price had not been released from the Norwegian escrow account by midnight Norwegian time at the end of 8 September. At 00:09 Norwegian time on 9 September, the Sellers served a notice of cancellation — but at that moment midnight had not yet arrived in the UK, Canada, or any US time zone, including Hawaii.
A distinguished three-member LMAA arbitration tribunal (comprising Sir Jeremy Cooke, Mr Simon Gault, and Mr Jonathan Elvey) issued a Partial Final Award in December 2024 holding, in favour of the Buyers, that the payment deadline did not expire until midnight Hawaii-Aleutian Standard Time — the most westerly of the jurisdictions listed in the Banking Days definition. The Sellers appealed to the Commercial Court under section 69 of the Arbitration Act 1996, leave having been granted by Butcher J in November 2025.
The Court’s Holding
Paul Stanley KC, sitting as a Deputy High Court Judge, allowed the appeal and held that the arbitrators were wrong in law. The definition of “Banking Days” in the MOA does not define what a “day” is or when it starts and ends; it merely identifies which calendar days count when calculating a time interval. A calendar day remains an ordinary 24-hour period identified by date, and the definition simply asks of any given date whether banks were open in all the listed jurisdictions — if yes, that date counts as a Banking Day; if not, it is skipped. The definition does not create a special 37-to-38-hour rolling period that begins at midnight in the UAE and ends at midnight in Hawaii.
Once the definition had done its work — identifying 8 September 2022 as the third Banking Day — the question of when that day ended for performance purposes was governed by ordinary principles. Applying the well-established common law presumption that time is assessed by local time at the place where the relevant act is to be performed (affirmed in Euronav NV v Repsol Trading Ltd (The Maria) [2021] EWHC 2565 (Comm)), and noting that the escrow release was squarely to occur in Norway, the court held that the payment obligation expired at midnight Norwegian time at the end of 8 September 2022. The Sellers’ cancellation notice served at 00:09 Norwegian time on 9 September was therefore valid.
The court rejected the Buyers’ argument that the Buyers’ construction promoted certainty, finding instead that treating the Banking Days definition as a definition of “day” itself produced an incoherent, overlapping 37-hour period that no reasonable commercial party would recognise as a “day.” The court confirmed it was not elevating the local-time principle into a rigid rule, but characterised it as a natural, reasonable, and workable starting point firmly grounded in modern commercial common sense.
Key Takeaways
- The “Banking Days” definition in Saleform 2012 (and materially similar ship-sale forms) functions solely as a filter to identify which calendar dates count when computing a time interval; it does not redefine when a calendar day begins or ends.
- Once the last permissible Banking Day is identified, the payment deadline is governed by local time at the place of performance — here, midnight Norwegian time, where the escrow account was held and the funds were to be released.
- Parties dealing with cross-time-zone dollar payments should not assume that a “Banking Day” deadline is automatically extended to the close of business in the most westerly jurisdiction listed; the place of performance (typically the account location) is the controlling reference point.
- An expert arbitral tribunal’s conclusion on a pure question of law receives no deference beyond the persuasiveness of its reasoning; the court must independently determine whether the construction is correct.
Why It Matters
Ship sale contracts based on Saleform 2012 routinely list several time zones in their Banking Days definitions, and transactions frequently involve dollar payments routed through US correspondent banks. This judgment authoritatively settles that listing US (or other westerly) jurisdictions in a Banking Days clause does not give buyers the benefit of an extended deadline stretching to the last midnight on earth. Sellers and buyers alike must understand that the critical clock is set to midnight at the place where the escrow or payment account is located, not to the most favourable time zone in the definition.
The decision also reinforces that appeals on questions of law from LMAA arbitrations under section 69 of the Arbitration Act 1996 remain a meaningful check on errors of construction, even where an eminent tribunal has reached a clear — if explicitly acknowledged to be commercially awkward — result. Commercial lawyers drafting or advising on Saleform-based transactions should now consider expressly specifying the governing time zone for payment deadlines to avoid any residual ambiguity.