Spain got one in 2014, Singapore in 2020, and now it seems England and Wales are going to get one in the next year – a law on the functional legal equivalence of electronic bills of lading, and other trade documents, to their paper counterparts.
On 16 March 2022 the Law Commission of England and Wales issued its report on Electronic Trade Documents, LC 405, which proposed a draft, six clause, bill, the Electronic Trade Documents bill creating functional equivalence for electronic trade documents with their paper equivalents. In May 2022 the government included the Electronic Trade Documents Bill in the Queen’s Speech in May 2022 setting out its legislative programme for 2022-23 session of Parliament and there is a good prospect of it becoming law in the next year.
The bill operates as follows.
Clause 1 defines the relevant paper documents as “…any paper document used in trade to which possession is relevant (as a matter of law or commercial practice) for a person to claim performance of an obligation, regardless of its precise legal nature.” The bill then lists examples of specific paper documents, including the bill of lading, that would constitute paper trade documents.
Amenability to exclusive control is a necessary criterion for an electronic equivalent to these paper trade document so as to qualify as an electronic trade document and the transfer of an electronic trade document must necessarily entail a transfer both of the document and of the ability to control the document. This is set out in the next clause.
Clause 2 provides that Electronic equivalents of those documents would be ‘qualifying electronic documents’ and would become “electronic trade documents” if
“ a reliable system is used to—
(a) identify the document so that it can be distinguished from any copies,
(b) protect the document against unauthorised alteration,
(c) secure that it is not possible for more than one person to exercise control of the document at any one time,
(d) allow any person who is able to exercise control of the document to demonstrate that the person is able to do so, and
(e) secure that a transfer of the document has effect to deprive any person who was able to exercise control of the document immediately before the transfer of the ability to do so (except to the extent that the person is able to exercise control by virtue of being a transferee).”
Clause 3 provides for full legal equivalence between electronic trade documents and paper trade documents, as follows:
(1) A person may possess, indorse and part with possession of an electronic trade document.
(2) An electronic trade document has the same effect as the equivalent paper trade document.
(3) Anything done in relation to an electronic trade document that corresponds to anything that could be done in relation to the equivalent paper trade document has the same effect in relation to the electronic trade document as it would have in relation to the paper trade document.
Legal equivalence will mean that the electronic bill of lading can operate as a document of title, and will constitute a bill of lading for the purposes of COGSA 1992 and COGSA 1971.
Clause 4 provides for change of form from paper document to electronic document, and vice versa.
Clause 5 provides for a list of excluded documents, currently (a) a bearer bond; (b) an uncertificated unit of a security that is transferable by means of a relevant system in accordance with the Uncertificated Securities Regulations 2001 (S.I. 2001/3755). The Secretary of State is empowered to add to, remove, or amend the list by statutory instrument.
Clause 6 provides for consequential amendments with the repeal of Sections 1(5) and 1(6) of COGSA 1992 and the insertion of “or to a bill or note that is an electronic trade document for the purposes of the Electronic Trade Documents Act 2022 (see section 2 of that Act)” at the end of section 89B(2) of the Bills of Exchange Act 1882 (instruments to which section 89A applies).
The Act extends to England and Wales only, comes into force at the end of the period of two months beginning with the day on which it is passed and does not apply to a document issued before the day on which the Act comes into force.
The bill is likely to prove uncontroversial, but will come up against 57 other legislative items fighting for space in the 22-23 session of Parliament. One hopes it makes it through.
 Under arts 262-266 of the Maritime Navigation Act 14/2014
 Under the Electronic Transactions (Amendment) Act setting out a legislative framework for Electronic Transferable Records (ETRs) based on the Model Law on Electronic Transferable Records (MLETR).]
2 thoughts on “Coming soon? Legal Equivalence for Electronic Trade Documents in England and Wales. ”
The bill initially proposed in the Law Commission’s report in March this year was limited to England and Wales. That has been changed to England and Wales, Northern Ireland and Scotland in the bill introduced into the House of Lords. Section 3(4) provides “An electronic trade document is to be treated as corporeal moveable property
for the purposes of any Act of the Scottish Parliament relating to the creation
of a security in the form of a pledge over moveable property” and applies only to Scotland.