The International Chamber of Commerce (ICC) has published new rules for digital trade transactions to establish a commonly-accepted set of global principles.
The rules aim to address the uncertainty associated with digital trade transactions.
These include how electronic records are presented to show a sale or a payment obligation for goods, how electronic data relating to digital trade transactions must match, and what happens if it does not.
Work on the Uniform Rules for Digital Trade Transactions (URDTT) began in December 2018, with six drafts that took into account over 1,500 comments from national committees.
The Paris-headquartered ICC said the rules would “serve as an overarching framework for digital trade transactions, thereby providing global standardisation, consistency and conformity, a collective understanding of terms and definitions, whilst promoting and supporting the usage of electronic records/documents/data”.
Trade disputes remit
A business group linking chambers of commerce in more than 100 country members, the ICC has a remit that includes resolving trade disputes and rule setting.
Some ICC rules, such as those on Incoterms and UCP 600 for Letters of Credit, have legal force in a court of law, with others applied on a voluntary basis.
Not all national committees, including the US, were in favour of adopting the final version of the URDTT, saying they were not yet ready for commercial application and may not be consistent with market demand.
The ICC says the next stage is implementation and commercialisation, with a group established to provide educational support to encourage and accelerate market adoption.
The ICC Banking Commission has already approved and issued electronic rules to advance the digitalisation of trade finance practices. However, these establish rules for electronic records, such as scanned images, that are not fully digitalised whereas the URDTT envisages transactions that are totally digitised.
Pandemic driving digital
According to JD Supra legal news, the Covid-19 pandemic has increased the appetite of market players to “go digital” and replace reliance on paper that has historically resulted in payment delays and disputes arising from the mishandling of physical documents.
In May, the G7 called on businesses to ready themselves for digital trade documentation or risk being left behind, as covered in the IOE&IT Daily Update.
It has agreed a framework to promote the adoption of the UN’s Model Law on Electronic Transferable Records (MLETR), which will make the use of electronic documents easier.
Data from the Digital Container Shipping Association (DCSA) shows that currently only 0.1% of bills of lading are issued electronically.
BBVA reports that an end-to-end digitisation process in global trade is not exempt from risks and challenges but says “digitisation is a path of no return that provides great opportunities for all those involved”.