E-bills of Lading – will we eventually see the end of paper bills?

E-bills of Lading – will we eventually see the end of paper bills | BDM Blog | BDM Law

In the era of Blockchain and Bitcoin, it seems odd that many cargoes are still delivered using pieces of paper.  E-bills have been around since the 1980’s but have remained on the sidelines.  By e-bills we are talking not about scanned paper bills, but about purely electronic bills which are created, transferred and checked electronically much like a SWIFT transaction.

E-bills use digital signatures, the authenticity of which is preserved through encrypted transmission to another party. They also ensure a complete record of transactions, sometimes via Blockchain, allowing title to be traced through multiple parties.

The case for e-bills is obvious and persuasive. They save administrative costs and when used correctly should reduce the risks of error and fraud. So what are the stumbling blocks?

The main obstacle is inertia. For e-bills to be effective, all parties in a chain need to agree to use them, including shippers, carriers, banks and receivers. This works where big shippers can demand that their carriers use e-bills, but there is still considerable scepticism and it only takes one dissenter to break the chain to take everything back to paper bills.

Many ship owners are actually comfortable with e-bills, as are the International Group P&I Clubs, who have endorsed a variety of platforms. Hapag-Lloyd is now offering e-bills, other big carriers are developing their own platforms to rival those of BOLERO (one of the early proponents of e-bills) and BIMCO continues its work on a universal e-bill to ensure compatibility between platforms.

The more fundamental issue is universal recognition of the legal validity of e-bills. E-bills are associated with the movement of goods across many different jurisdictions governed in many cases by very different laws. To truly work, there needs to be confidence of the legal validity of e-bills as documents of title entitling the digital holder to demand delivery of the goods.

There are moves to solve this. Singapore recently joined Bahrain and Abu Dhabi in incorporating the UNCITRAL Model Law on Electronic Transferable Records which gives legal equivalence between e-bills and paper bills. English law may follow. In 2021 the Law Commission consulted on draft legislation for electronic documents to be recognised legally as documents, having due regard to the UNCITRAL Model Law.

To sum up, it seems the shipping industry is moving towards e-bill dominance but it will still take time to get there. Whilst the list of those who need to embrace e-bills is a long one, profit is still the fundamental driver of change, and e-bills are cheaper, safer and more convenient. We expect to see them move to dominance at some point in the 2020’s. It’s probably a safer bet than Bitcoin becoming the universal global currency!

Will Copping - author profile
Will Copping
BDM is a specialist shipping law firm offering high quality legal advice and representation at a reasonable price. Please follow us on social media by clicking below.

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