Eric Eyo Partner
UK’s Electronic Trade Documents Bill progresses through Parliament
On 15 March 2022, the UK Law Commission published a report with draft legislation which 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.
Subsequently, on 12 October 2022, the Department for Digital, Culture, Media and Sport introduced the Electronic Trade Documents Bill to the House of Lords. Essentially, the Bill aims to put electronic trade documents (ETDs) on the same legal footing as paper documents.
Following a call for evidence requesting that interested parties provide their views on the proposed reforms, a Special Public Bill Committee considered the written evidence submitted, as well as taking oral evidence, during January 2023. On 20 February 2023, the Bill was reported from the Special Public Bill Committee without amendments.
The Report stage, which provides the House of Lords with a further chance to scrutinise elements of the Bill and make any changes, was scheduled to take place on 14 March 2023.
The next stage after that will be a third reading of the Bill in the House of Lords, following which there will be final consideration of the text of the Bill by both Houses of Parliament. If agreement is reached in both Houses, the Bill is given Royal Assent and becomes law. However, it will be up to the government to decide when the provisions of the Electronic Trade Documents Act come into force.
Nonetheless, given the progress that has been made so far, it is possible that the draft legislation will be passed and become law within 2023. This is encouraging, given the commitment shown within significant sectors of the global shipping community to transition to digitalised trade.
By way of example, on 15 February 2023, the Digital Container Shipping Association (DCSA) announced that its nine ocean carrier members had committed to 100% adoption of an electronic bill of lading (eBL) based on DCSA standards by 2030. The DCSA reported that switching away from the transfer of physical paper bills of lading could save US$6.5 billion in direct costs for stakeholders and enable US$30-40 billion in annual global trade growth. It would also improve sustainability. Among the DCSA’s members are MSC, CMA CGM and Maersk.
The DCSA has cited the report of McKinsey & Co dated October 2022, “The multi-billion-dollar paper jam: Unlocking trade by digitalizing documentation”. The report indicates among other things that trade digitalization is a multi-billion-dollar opportunity. According to this analysis, digitalising the bill of lading—which accounts for 10% to 30% of trade documentation costs—could unlock more than US$15.5 billion in direct benefit to the shipping ecosystem and up to US$40 billion in increased trade. The success of eBL providers, such as BOLERO and WAVE BL, proves that they work.
It is, therefore, anticipated that the legal recognition of ETDs in English law will result in costs savings and trade benefits for those concerned.
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