The UK’s Electronic Trade Documents Bill has received the royal assent, the Digital Container Shipping Association has reported, which means that it is now law. It enters into force in late September this year.
“The change ensures that an electronic trade document, such as a Bill of Lading, has the same legal status as an equivalent paper document. As the UK is the preferred legal jurisdiction for the majority of the Bills of Lading DCSA members issue, the royal assent paves the way for billions of dollars in savings for international trade, a better customer experience in shipping and more sustainable transport,” the DCSA said.
Trade law was set-up centuries ago and one of the key concepts was that documents could be “possessed” i.e. that a person would have a copy of the physical document in his / her possession. Bills of lading are particularly important as possession of the bill means that the possessor has the right to possess the goods.
The new Act defines what paper documents are covered and it includes bills of exchange, promissory notes, bills of lading, ship’s delivery orders, warehouse receipts, mate’s receipts, marine insurance policies and cargo insurance policies.
The Act states that anything which can be issued as a paper document can be issued as an electronic document (subject to various conditions), one of which is that a “reliable system” must be used to ensure the security of bills of lading. The Act also states that anything that can be done with a paper document can be done with an electronic document, which is said by Kennedys law firm to include endorsement, transfer and parting with possession.
Prior to the passing into law of the Electronic Trade Documents bill, the industry’s progress to a fully paperless system was being blocked.
Unfortunately, there is still some way to go because, as the DCSA notes, “While the UK ETD Act is essential for digitising global trade, there are a number of remaining barriers preventing or delaying the uptake of the eBL across the globe. In some countries, eBLs are not accepted as a matter of law in case of commercial disputes. In other countries there are elaborate requirements to ensure an eBL can be valid, leading to a negative business case compared to paper. In most countries, however, the use of an eBL might be possible, but it is not explicitly mentioned in legislation. This leads to uncertainty and workaround solutions”.
The DCSA adds that a variety of countries including France, Germany, and the United States, are working on reforming their laws and that the United Nations is working on driving the adoption of the Model Law on Electronic Transferable Records.
