
Eric Eyo Partner
The Law Commission’s final say on Electronic Trade Documents
In the current Environmental, Social & Governance (ESG) climate, the paper problem is clear. A single international trade transaction can require up to 20 or more documents, with each document running to several pages. Global container shipping generates approximately 28.5 billion paper documents each year.
Despite the sophisticated digital processes upon which international trade transactions are based, the current law of England & Wales does not recognise anything other than the physical possession of certain trade documents e.g. bills of lading.
In an increasingly digitalised world, the Law Commission’s view is that the English legal position on paper documents is archaic and in need of reform.
Electronic documents are inherently more traceable and transparent. For example, the metadata of such documents will often show from where the document originated and who has interacted with it. Documents in electronic format are also likely to reduce the instances of non-compliance due to human error.
Aside from reduced paper consumption, the use of electronic documents would circumvent the need for the transportation of physical trade documents and the carbon footprint associated with that exercise (e.g. air freight or international and domestic courier services).
Ancillary administrative processes may be bypassed which may, in turn, allow for the more effective allocation of a company’s resources.
After approximately two years, the Covid-19 pandemic’s grip on our freedoms appears to be easing somewhat. The pandemic did, however, cause havoc within the global logistics sector with the closure of sea ports and other onerous quarantine measures we have seen applied at other global logistics hubs. Paperless electronic trade could make the transportation sector more resilient to the type of delays caused by epidemics and pandemics by reducing the need for human to human contact.
It is perhaps somewhat misleading to suggest that document integrity is a disadvantage associated with the use of electronic documents. This is because electronic documents present a far more secure way to effect trade when compared to the use of paper documents.
It is perhaps more accurate to suggest that whilst electronic trade documents would offer greater security, especially if blockchain technology is used to underpin them, the system still would not be 100% totally secure.
Although the International Group of P&I Clubs has for many years provided cover for the use of e-bills, adoption by the industry has been far slower than initially envisaged. Six e-bill platforms have been endorsed by the International Group, such that any liability arising through their use would be treated in exactly the same way as if a paper bill had been used. It is imperative, therefore, that only one of the six approved e-bill platforms is used.
The e-bill ecosystem requires the collective adoption of e-bills by the entire shipping chain. This is perhaps why the wholesale adoption of e-bills has been slow. It only takes one player in the transport chain to insist on doing things “the old fashioned way” to cause the entire chain to revert back to the use of paper documents.
The world is becoming increasingly digitalised. Against that backdrop, it is inevitable that the use of electronic trade documents will eventually become “the norm”. The question is how quickly. The Law Commission’s eagerly awaited paper on the reform of English law to enable the use of e-bills is another inexorable step in that direction.
20-06-2022 / Maritime
On 25 November 2021, the UK Law Commission published its Advice to the UK Government on how English law currently applies to smart legal contracts. Subsequently, on 16 March 2022, the Law Commission published its report on electronic trade documents, together with draft legislation that would implement its recommendations to allow for the legal recognition of trade documents such as bills of lading and bills of exchange in electronic form.
14-06-2022 / Maritime
Paul Knapfield v. C.A.R.S. Ltd & others [2022] EWHC 1437 (Comm) Disputes under the Carriage of Goods by Road Act 1965, which incorporates the Convention on the Contract for the International Carriage of Goods by Road 1956 (CMR), do not come up very often. This decision is, therefore, useful in illustrating when and how the CMR applies. In this case, the Court found that the CMR limit of liability applied to the claimant’s claim, with the result that his losses far exceeded the amount he could ultimately recover from the carrier.
14-06-2022 / Maritime
BIMCO has recently published CONVERSIONCON, a new standard form contract for conversion projects. The authors of this article were honoured to be part of the drafting team tasked with developing and producing the first industry standard form contract for conversion projects.
10-06-2022 / Maritime
As we move past the vertex of a U-shaped dip in the global shipping sector caused by supply chain restrictions arising from the COVID-19 pandemic, it is worthwhile to look back at the UAE maritime industry’s growth, lessons learned, and development outlook. Although international maritime trade dropped by 4.1 per cent in 2020, the UAE made significant achievements during this period, ranking third globally in the Bunker Supply Index, and fifth globally as a key competitive maritime hub.
06-06-2022 / Insurance, Maritime
Piraeus Bank A.E. v Antares Underwriting Limited and others (The ZouZou) [2022] EWHC 1169 (Comm)
01-06-2022 / Maritime
Ince is growing its Piraeus office with the addition of three shipping litigators, three ship finance experts, and an additional mariner to the admiralty team.