Originality of Paper and Electronic Documents (Part 2)

In Part 1 of my article (Feb 2022 DCW 24), I analyzed various aspects of paper document presentation, issues of originality of paper documents, and ways of signing them. There are still some issues left to consider.

The world of traditional trade finance has recently started to move from paper documents towards more efficient electronic documents (records). Use of paper documents and electronic records largely overlaps nowadays and this will remain so for the foreseeable future. An electronic record can be printed and thus one creates a paper document from it. Conversely, a paper document can be scanned and made into an electronic document.

Paper documents are often intended to only be presented and utilized in such format. Electronic records made from these paper documents, such as scanned images, are often only used for repositing or back-up purposes. Similarly, many electronic records are only intended to be used in electronic format throughout
their whole life-cycle.

However, many authenticated paper documents might be, for certain reasons, converted into their official electronic equivalents and then used as authenticated electronic records. Likewise, authenticated electronic records can be converted into their paper equivalents and then these paper documents would be treated as original (authenticated) paper documents.¹ In many countries such “conversion” from paper to electronic form or vice versa is done by special authorized public entities who are empowered by a designated national authority to provide such services to ensure equal treatment of paper documents and electronic records in dealings between private and public entities. In private commerce, business entities often use electronic versions of paper documents, with or without such documents being officially converted by an authorized public (or state) entity.

In this Part 2 of my article, I will focus on presentation of electronic records from the perspective of ICC rules and relevant international standard banking practices (which are mostly yet to emerge). Due to the complexity of the issues, and above all the lack of established practices, I shall address only certain facets of electronic presentation. In future writing I intend to focus more specifically on presentation (or what needs to be done to effectively allow widespread use of electronic records) under documentary credits and guarantees, including standbys.

Electronic Documents

We all fully realize how much traditional paper has been replaced by electronic (digital) documents (records) in our lives. Some might think that such transition has thus far been negligible in the area of trade finance. However, after a closer look we realize that even in the sphere of traditional international trade finance where the paper still dominates, digitalization has reached high levels. The SWIFT messaging system was introduced in the 1970s and we have routinely issued documentary credits and guarantees in electronic SWIFT form in the decades thereafter. Even telex, which has been fully replaced by SWIFT, was a system of transmitting electronic documents (records). The same is true about the fax. We all use e-mails and are increasingly applying an electronic signature to them to ensure their authenticity. Various platforms have emerged which attempt to deliver a solution to provision of an electronic equivalent of documents of title, such as bills of lading.