The Law Commission of England and Wales has published draft legislation to enable electronic trade documents to be used in the same way as their paper counterparts.
Under English law, being the “holder” or having “possession” of a trade document has special significance.
However, the law only allows for tangible items to be possessed and electronic documents are considered intangible, reports GTR Review.
The Law Commission says this prevents firms from switching to fully paperless trade and claims that reform could “revolutionise global trade and bring the processes into the 21st century”.
In September 2020, it was asked by the Department for Digital, Culture, Media and Sport (DCMS) to make recommendations that address the problem associated with “possession” and prepare draft legislation to implement the recommendations.
A consultation opened last April and saw numerous stakeholders respond including academics, businesses, financial institutions, law firms, the judiciary, and industry bodies such as the Bankers Association for Finance and Trade.
The Commission’s draft legislation proposes that electronic versions of trade documents will have the same legal standing as their paper counterparts – as long as they meet certain criteria.
Electronic documents should:
- contain the same information as paper equivalents
- must be susceptible to exclusive control
- must be distinguishable from any copies
- should be capable of being possessed
The draft bill has now been laid before parliament and the UK government will decide whether to implement the recommendations.
Momentum for trade documentation to go digital is growing. Earlier this month the IOE&IT launched a new report, Trade Data and Digitalisation, setting out the opportunities and challenges of digitalising trade, asserting that full digitalisation of trade data could add more than 1% to UK GDP, worth £25bn.
Meanwhile the WTO and ICC partnered in producing a toolkit to help companies and government agencies adopt standards for the digitalisation of trade processes.
The Digital Container Shipping Association (DCSA) estimates that 16 million original bills of lading were issued by ocean carriers in 2020, and only 0.3% were in electronic form.
Trade's 'most significant issue'
In launching the IOE&IT's report on 15 March, Marco Forgione, director general of the IOE&IT said:
“Digitalisation of trade is the most significant issue in international trade today. This report sets out a clarion call for governments, intergovernmental organisations and businesses to really seize the opportunities of the digitalisation of trade information.”
“When we talk about the digitalisation of trade, we are not referring to a scanning and emailing PDFs; it is about a proper integration of trade and customs data. This will mean the speed at which goods are transported and processed will increase and there will be fewer delays at borders.
"The flows of documentation involved in the transportation of goods and services haven’t really been impacted by the digital revolution yet.
“Globally over 2.5 quintillion bytes of data are produced each day. To give a sense of scale, the Milky Way is 1 quintillion metres wide. Any change which speeds up the transfer of data has the potential to make a huge impact. In the UK alone, the full digitalisation of trade data, stands to add over 1%, some £25bn, to UK GDP.”