Monday, May 03, 2021

English Law Commission Consultation Paper on Electronic Trade Documents

The Law Commission of England and Wales has issued a Consultation Paper on Electronic Trade Documents:

"The process of moving goods across borders in order to get them from the seller to the buyer typically involves a large multiplicity of actors including transportation, insurance, trade and/or supply chain finance and logistics service providers. One transaction typically involves 20 entities and between 10 and 20 paper documents, totalling over 100 pages."

"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, international trade still relies to a large extent on a category of documents called 'documentary intangibles'. Documentary intangibles are unique because transfer of the document can be sufficient to transfer the right to claim performance of the obligation which the document embodies, whether that is an obligation to pay money or an obligation to deliver goods. For example, simply handing over a bill of lading can be sufficient to give the new holder a right to the goods described in the bill."

"The legal rules governing these documents are premised on the idea that they are physical documents which can be physically held or 'possessed'. The current law in England and Wales does not recognise the possibility of possessing electronic documents; possession is associated only with tangible assets. Industries using these documents are therefore prevented by law from moving to a fully paperless process. To give a sense of the enormous amount of paperwork global trade generates, consider that the world’s largest containerships can carry 24,000 twentyfoot containers at any one time on any one voyage. For each one of those cargoes a paper transport document is issued, and has to be processed manually to go from the shipper of the goods to the ultimate buyer at destination, sometimes through numerous intermediaries. This needs to be done using paper because the buyer is required to present the paper document when claiming the goods at the port of discharge. It has been estimated that the international trade industry generates four billion paper documents per year."

(...)

"In this consultation paper, we set out provisional proposals for law reform to allow for electronic trade documents to have the same legal effects as their paper equivalents, provided that they meet certain requirements to enable their possession in a digital context."

The consultation closes on 30 July 2021. 

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posted by Michel-Adrien at 6:54 pm

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