English Law Commission Report on Electronic Trade Documents

The Law Commission of England and Wales has published a report on Electronic Trade Documents which it presented to the British House of Commons this week:

"The process of moving goods across borders involves a range of actors including transportation, insurance, finance and logistics service providers. We have estimated that global container shipping generates billions of paper documents a year. Across so many documents, the potential positive impacts of using electronic trade documents – including financial and efficiency gains, and environmental benefits – are vast (...)"

"Despite the size and sophistication of this market, many of its processes, and the laws underlying them, are based on practices developed by merchants hundreds of years ago. In particular, under the current law of England and Wales, being the “holder” or having “possession” of a trade document has special significance. However, the law does not allow an electronic document to be possessed. As a result, nearly all documents used in international trade are still in paper form."

"Over the past decade, the development of technologies such as distributed ledger technology has made trade based on electronic documents increasingly feasible. Without reform, the law will continue to lag behind, hindering the adoption of electronic trade documents and the significant associated benefits from being achieved (...)"

"The recommendations in our report, and the Bill that would implement them, are intended to enable trade documents in electronic form to be used in the same way as their paper counterparts. To achieve this, the Bill sets out certain “gateway criteria” that a document in electronic form must satisfy in order to qualify as an “electronic trade document”. We recommend that electronic trade documents (that is, documents in electronic form which satisfy the gateway criteria) should be capable of being possessed, and that this principle should be set out explicitly in statute."