Electronic Bills of Lading – 3

1. We had earlier published on Electronic Bills of Ladingⁱ(“eB/L”) and our intention in publishing this article is not to cover what has been stated earlier. We are happy to see that the number of service providers/platforms for eB/L’s continue to grow, and which does provide choice to users. This competition will spur continuous innovation to develop the best solution to deal with the transfer of Title. Some of the early providers eB/L’s have been approved by the International Group of P&I Clubs (“IG”)ⁱⁱ. This is indeed a significant advantage to these eB/L providers given that there is some security to the holder of these eB/L’s if issued by an Owner/Operator entered with a member of the IG. However, we believe that most of the Bills of Lading (“BL”) and for that matter eB/L’s would be issued by Carriers who may not be entered with the IG, given that they would either be Container Operators or NVO’s. This being the case, the risk of the use eB/L could be ameliorated by ensuring that they (eB/L service providers) are insured for their liabilities for an appropriate limit to safeguard the interests of users.
2. We recently caught up with Sunil Senapati, CEO of XDC Trade Network after they successfully launched a trade transaction using DocuTrade. One of the advantages of using XDC Trade Network is that they have partnered with TradeTrust and therefore it is possible to verify if the eB/L issued is genuine or not.  Sunil’s view is that paper documents are dead as by itself it does not tell anything except what has been stated in its contents. Unless the source of the documents are known, one would not know whether the document is genuine or not. In comparison, an electronic document is alive and can be verified to confirm that they are genuine or not, particularly if there are functionalities such as Trade Trust verification and which is of benefit to the Trade.
3. The ICC is promoting the NVOCC register to counter these issues by the use of IMB NVO Register. However, we have not endorsed thisⁱⁱⁱ register given that information is provided to parties who may not have the right to seek and further the register appears to be only targeted at NVO’s. The use of Trade Trust to verify eB/L’s may obviate the necessity completely to provide information to any non contractual 3^rd parties as the holder of the eB/L’s would be entitled to this information as of right.
4. We also met up with Amit Pareek of YodaPlus, developers of DocuTrade, during his visit to Singapore for the Fintech Festival. Given the various platforms already available, we had enquired on why the market should consider DocuTrade. He listed various points including compliance with ICC DSI and MLETR, Tokenization and Blockchain verification (full list can be viewed here).
5. eB/L’s provide the functional equivalence of paper documents, and which means that they also have the same warts present in paper documents.Frequently 3^rd parties (the endorsees of the B/L and therefore become the title holders) deny the entitlement of the Carriers to pursue them based on the provisions of the B/L given that they (3^rd partiers) were neither the original parties nor consented to any of the terms of the B/L. While the provisions of the English COGSA 1992/Singapore Bills of Lading Act 1992 deal with these issues, not all jurisdictions have similar legislation and therefore challenges remain on the validity of the various terms of the B/L. This being the case, we wondered whether the eB/L platforms could go one step further by seeking explicit confirmation from 3^rd parties at the time of transfer that they (3rd parties) have viewed the terms of the eB/L and agree to be bound by them. This, we believe would not only ensure that the 3^rd parties are aware of the provisions of the eB/L and should they not be comfortable with any of the provisions, they (3^rdparties) could always refuse to accept the transfer. We believe that this would be a welcome development and which would allow parties to focus on what they explicitly agreed on and thus avoid avoid unnecessary litigation.
6. The impact of eB/L’s till date has been limited given that the conversion from paper documents to eB/L’s is still in single digits. If eB/L’s should be the norm, we believe that they should not only be functionally equivalent to paper documents but must also provide additional benefits (such as verification and agreement of 3^rd parties) so that they become the preferred method to deal with the Title transfers.

^i. See our articles, Electronic Bills of Lading & Electronic Bills of Lading (eB/L) – Part 2.
^ii. We understand that 10 platforms/service providers eB/L’s have been approved. See also UK P&I Club Circular 01/23: Electronic (Paperless) Trading.
^iii. See our article, International Maritime Bureau NVO register.