International Group of P&I Clubs has issued a document in which it answers frequently asked questions regarding electronic bills of lading (e-bills).
#1 What is the exact legislation change?
On 20th September 2023, the Electronic Trade Documents Act (‘the Act’) came into force in the United Kingdom, giving legal recognition in English law to electronic trade documents, including electronic bills of lading (‘e-bills’). The Act reflects the recommendations of the Law Commission that the law should be reformed so that certain electronic trade documents, including e-bills, can be recognised as having the same legal recognition and functionality as their paper counterparts. This legislation follows the adoption by Singapore of similar legislation, in the form of the Singapore Electronic Transactions (Amendment) Act in 2021.
#2 Why has this change been introduced now?
As well as push and interest from industry in moving towards digital trade, the Model Law on Electronic Transferable Records (MLETR), a uniform model law adopted by the UN Commission on International Trade law (UNCITRAL) in 2018, provided the foundations for individual countries to adopt their own legislative framework.
#3 What is the significance of the Act?
Due to the prominence of English law and bills of lading subject thereto in international carriage and trade law, the Act is anticipated to be a major turning point in the uptake of e-bills and electronic systems.
#4 How does the Act change the legal position?
Until the Act came into force, e-bills did not have legal recognition in English law. Therefore, unlike a paper bill of lading to which UK COGSA 1992 applied, the rights and liabilities existing in the e-bill contract did not, as a matter of law, transfer to a third party to that contract upon a purported endorsement.
Furthermore, the legal rules governing paper trade documents, including bills of lading, were premised on the idea that they could be physically held or possessed. Possession is important as it determines the right to claim performance of an obligation such as delivery of goods. However, until the Act, possession was only associated with tangible assets and so e-bills, being intangible, could not be possessed in law, and could not therefore function in the same way as their paper counterparts.
#5 Has MLETR based legislation been widely adopted globally?
No. The legislation has not been widely adopted globally, but other jurisdictions are looking to adapt their own domestic legislation to recognise e-bills. Legal reform is gathering momentum with Singapore, UK and some US States already having relevant legal frameworks aligned.
The Group is advised that France, Germany, Japan are expected to have aligned legislation in 2024 with China, the Commonwealth, ASEAN and others expected to follow in 2025/6. Please refer to the ICC’s MLETR tracker.
