Law firm Clyde & Co, along with the ICC Banking Commission, have launched a report regarding the legal status of electronic bills of lading. The report analyzes whether the law reflects the technological change that is taking place in the international trade sector.
For centuries the main document in international trade has been the bill of lading (B/L). However, there are many negatives behind this traditional documentation, such that it is time consuming.
To solve this, the concept of replacing paper shipping documents with electronic documents was born. The report analyzes this concept, covering ten countries:
- UK;
- USA;
- Germany;
- Netherlands;
- UAE;
- China;
- Singapore;
- Brazil;
- India;
- Russia.
E-Bills of lading challenges
Theoretically, electronic shipping documents can save time and cost, as well as reduce errors. However, progress has been slow, mainly because of three main difficulties:
- The development of technology to enable electronic records to be transferred safely and securely;
- The adoption of such technology in many different countries by a wide variety of participants;
- Uncertainty over the legal status of the electronic transferable records. This problem is particularly evident in relation to eB/Ls.
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Currently, there is a number of technologies in place, but widespread adoption has been slow. According to the report, this may be due to conservative attitudes among long-established participants and a desire to wait which systems will gain the most support. However, legal uncertainty is a significant factor.
Namely, most of the ten countries have some form of legislation which allows contracts to be created and signed electronically. Nevertheless, only the US has a specific law to support eB/Ls.
What is more, in some cases it may be possible to establish rights according to an electronic acknowledgement, but there is no clear pattern on how far a holder could depend on such an acknowledgement; especially due to the lack of the contractual relationship between the holder and the carrier.
In addition, the legal status of a paper B/L that has been converted from an eB/L is also uncertain. In many of these countries there was support for recognising such a document as equal to a traditional paper B/L.
However, the report mentions that there ares still questions whether the effective date of the document is the date the eB/L was originally issued or the date of the conversion remains in doubt.
Currently, the systems which can operate with eB/Ls are the “Club” systems. These systems are based on contractual arrangement agreed in advance between the parties.
Finally, in order to mitigate some of these issues, the United Nations Commission on International Trade Law (UNCITRAL) has published a model law to govern the use of electronic transferable records, such as bills of lading and bills of exchange.
This is a positive step forward, but it does require governments to adopt the model law into national legislation.
The report believes.
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