Sat. Sep 30th, 2023
    Challenges and Considerations for the Commercialization of Electronic Bill of Lading Systems

    The road to commercialization for Electronic Bill of Lading (E.B/L) systems faces several challenges that must be addressed to achieve widespread adoption. One critical factor in this process is obtaining full international buy-in, both commercially and legally. Without global acceptance, these systems may struggle to gain traction in the shipping industry.

    Another crucial aspect that will influence the commercialization of E.B/L systems is the role of Protection and Indemnity (P&I) Clubs. These clubs play a vital role in insuring and indemnifying maritime risks. Before endorsing E.B/L systems and embracing blockchain technology, P&I Clubs need to ensure that electronic bills of lading can fulfill the three essential functions of a traditional paper bill of lading. These functions include serving as a receipt, a document of title, and a contract of carriage with necessary defenses and liability exclusions for carriers.

    The International Group of P&I Clubs currently approves ten E.B/L systems. They anticipate that this number will increase significantly once the Electronic Transactions and Documents Act (ETDA) comes into effect. This demonstrates the growing interest and recognition of electronic trade documents in the industry.

    Nevertheless, users of E.B/L systems must align their contractual arrangements, such as charterparty clauses or bill of lading terms and conditions, with the terms of use and capabilities of the respective E.B/L system. This alignment ensures clarity and avoids potential disputes.

    However, the reliability of E.B/L systems may become a point of contention in the future. It is essential to anticipate challenges that could raise doubts about system reliability. How will reliability be determined, especially if the system developer is not involved in arbitration between a carrier and a cargo receiver?

    To encourage the adoption of electronic trade documents, a robust regulatory or industry framework must address reliability concerns. Achieving this will require international consensus and cooperation among stakeholders. Interoperability between various electronic systems facilitating international trade is crucial. Developing trust among existing and new stakeholders is vital, as any digital islands formed due to self-interest could hinder progress.

    Establishing confidence in identifying reliable E.B/L systems will enable providers and users to fully embrace the benefits of the ETDA. However, reaching the tipping point for general usage of electronic trade documents is challenging to predict. It will depend on securing full international buy-in both from a commercial and legal perspective.

    – International Group of P&I Clubs Circular, dated 12 September 2023.