Electronic Bills Of Lading

With the inclusion of an electronic bills of lading clause in the latest iteration of the NYPE form, as well as the International Group of P&I Clubs' approval of 3 electronic trading systems, we discuss some of the possible advantages and disadvantages of such systems to international trade. Are the benefits that such systems are purported to bring too great to be ignored?

The bill of lading

Paper bills of lading have been used throughout the world to document and effect international trade for centuries. Yet whilst the world has become increasingly digitalised the paper bill of lading has, on the whole, remained a constant feature of global trade. Its continued use is mainly due to its combination of three legal characteristics that it has developed over time: (i) it is a receipt of the goods carried; (ii) it provides evidence of the terms of the contract of carriage; and (iii) it is a document of title to the goods. It is these characteristics that have, until relatively recently, foiled attempts to replace the paper bill of lading with an electronic equivalent. However, with the inclusion of an electronic bills of lading clause in BIMCO's NYPE 2015 time charter form, as well as the International Group of P&I Clubs' approval of the coverage of three electronic trading systems1, the dominance of the paper bill of lading may well be coming to an end.

Issues with the paper system

Whilst the paper bill of lading has been used for centuries it is not without its faults, the principal problems being that:

Carriers are obliged to discharge the goods carried on production of an original bill of lading: this is particularly problematic today given both the speed of transport and the fact that the cargo may be sold multiple times during carriage. As a result of this the bill of lading is often not delivered to the consignee in time, and the carrier is often required to accept a letter of indemnity. This indemnity does not, however, remove the carriers' liability under the bill of lading and creates an additional administrative burden and cost to the trade. The paper system is hugely expensive (such cost is estimated to be between 5 - 10% of the value of the goods carried each year2). A paper bill of lading may be forged with relative ease and carriers are liable for misdelivery against a forged bill of lading3. Benefits of an electric bill

The electronic bill of lading or e-bill, in theory, addresses many of the flaws of the paper system, bringing...