Electronic Bills Of Lading: Where We Are And Where We Need To Be

The query addressed in ICC Opinion TA.929 (January 2023) involved presentation of a bill of lading under a back-to-back letter of credit. In this query, an electronic bill of lading (eB/L), regarded as electronic trade document, was available and presented under the first LC issued subject to the eUCP, but the eB/L was converted to a paper B/L and presented under the second LC subject to the UCP (i.e., without the eUCP supplement). A B/L is essential in international trade. Transition from use of paper B/Ls to eB/Ls may bring trade parties together on one electronic platform to achieve more efficient and cost-effective results,¹ but existing laws and practices are generally written for parties using paper B/Ls and they may create uncertainty to the use of eB/Ls. Although the ICC eRules apply to eB/Ls, the ICC eRules neither mention eB/L in their texts nor provide any article detailing requirements for use of eB/Ls and their conversion from electronic to paper. Issues related to the use of eB/Ls under current laws and practice rules are complex and they deserve careful discussion.

Development of eB/Ls
A B/L can be issued and transferred by non-paper means. In the query posed in ICC Opinion TA.929, the eB/L was issued with the words “to bearer” on behalf of the carrier via an electronic document platform and was transferred to the shipper. The shipper then endorsed electronically on the back of the eB/L. On the electronic platform, the eB/L along with other trade documents were moved and exchanged. A B/L performs certain key functions, namely as a receipt, document of title, and contract of carriage. It evidences ownership of goods and by simply handing over a B/L, one can give the new holder a right to the goods described in the B/L. A bank may also obtain possession of a B/L pursuant to a valid transfer to become the holder and thereby have a possessory security over the goods relevant to the B/L. In the past, trade in transfer of goods was evidenced by paper B/Ls, but a B/L can be evidenced by a record consisting of information stored in an electronic medium. This eB/L otherwise satisfies the expectations of a paper B/L and is capable of performing the above three functions of a paper B/L. It may be issued and have the required information on an electronic platform. It can be encrypted and accessible by virtue of a password. An eB/L evidencing legal rights of goods can be more secure and reliable than its paper counterpart. Over time, it is inevitable that paper B/Ls will inexorably move towards to eB/Ls.