The brave new world of electronic transferable trade documents

THE wheels of international trade have turned on paper documents for centuries. While physical commodities move from producer to consumer, it is the transfer of paper trade documents such as bills of lading that represent the transfer of possession, as goods are bought, sold, pledged or collateralised.

Billions of dollars change hands annually off the back of these documents – but they are also the Achilles heel of international trade, as recent cases have demonstrated the ease with which they can be manipulated, doctored or even photocopied to create the appearance of a trade. A transition from paper to electronic documents would go a long way to reducing such problems, yet the adoption of private electronic systems has been patchy.

This is in part because of uncertainty around the legal status of electronic documents such as electronic bills of lading (EBLs). Singapore has sought to address that market reluctance headfirst by amending its laws to give certain transferable documents like EBLs the same legal status as their paper counterparts. With the United Kingdom in the process of adopting similar laws, are we finally at the cusp of change of the centuries-old mercantile practice of exchanging paper documents?