Bills of Lading – Electronic and Switch

During the recently concluded ICMA XXIII, many papers were presented by the participants including the two papers below (we thank both Ms. Kimarie Cheng of WFW & Mr. Charles Debattista of 36 Stone for giving permission to publish the same in our website):

1. From Paper to Platform: Attornment and Electronic Bills of Ladingⁱ:
   1. While we are all for the increased use of EBL’s, overwhelming majority of BL’s issued are Paper BL’s (“PBL”) and with EBL’s still in single digits. This being the case, there still appears to be resistance to the usage of EBL’s and perhaps, this can be explained that most of the EBL’s have not captured the essence of PBL’s. A search on the types of EBL’s reveal that they are either
      1. Blockchain Based Platforms such as Cargo X, Wave BL, IQAX, Trade Go, DocuTrade.
      2. Centralized/Traditional Platforms such as Bolero, essDocs, edox Online and eTEU.
   2. If you look at PBL’s, the transfer is done by endorsement to another, and which is only known to the Carrier once a party comes forth for delivery. There is no platform / intermediate party who is aware of the transfer of the shipment. However, some of the eBL’s require that this information be available with them and while the successive party is not liable till such time, he comes forth to take delivery, the issue is whether the successive party is comfortable in providing this information.
   3. Accordingly, it appears to us that a Peer-to-Peer EBL’s are more closely aligned to PBL’s such that they appear, at least in our opinion, to have the best chance of acceptance by trade. Only time will tell how the trade progresses given that there appears to be resistance to change. In any event, the progression from PBL to EBL will allow for the easy visibility across the chain for all participants and also bringing costs.
2. To switch and how to switch – Switch Bills of Lading, carriers, traders and banksⁱⁱ:

1. 1. Switch BL’s are commonly issued when a cargo interest wishes to mask some of the information to their counterparties. There may be legitimate reasons for masking this information.
   2. While, in the absence of contractual agreement, there is no duty on the Carrier to issue a Switch BL, we submit that, if the Carrier agrees to issue a Switch after receiving a duly endorsed Bill of Lading, they have a duty of confidentialityⁱⁱⁱ i.e. they must not provide information related to the the earlier parties.
   3. One of the questions asked during the presentation of the paper was whether an eBL could be switched? Given that eBL’s are supposed to be functional equivalent to PBL, we believe that the eBL’s could be easily switched with the Switching party approaching the Carrier by accomplishing the first set of BL’s and seeking a Switch.

^i. See our earlier articles, Electronic Bills of Lading, Electronic Bills of Lading – Part 2, Electronic Bills of Lading – 3, Electronic Bills of Lading -4, Bills of Lading – Electronic/Blockchain or Traditional methods?, Bills of Lading – Title to Sue.
^ii. See our earlier articles, Switch Bills of Lading – Revisited,  Of Switch Bills of Lading, Bills of Lading – Issues and the paper of Dr Miriam Goldby on Managing the risks of Switch Bills of Lading.
^iii. See our earlier article, Should Customer’s / Shipment Information be provided to 3^rd parties?