The Electronic Trade Documents Act 2023: What Is It?

The Electronic Trade Documents Act 2023: What Is It?

The Electronic Trade Documents Act has recently received Royal Assent and become law. But, what exactly is it, and what are the expected impacts of it? The Shearwater Law team takes a look…

What is the Electronic Trade Documents Act?

For over 200 years, exporters and importers have been required to use paper documents to transfer the ownership of the goods they ship. It is a paper-based system that is costly and inefficient. In fact, it has been estimated that a single sector such as container shipping can generate billions of paper documents each year.

However, with the advent of digital technology, businesses both small and large have been calling for some time for the introduction of paperless trades - especially recently given the rapid development of electronic document technologies. 

Such became the clamour for digital paperless trade, that the Law Commission began to examine its feasibility. The result was a series of recommendations that would allow for the legal recognition of trade documents such as bills of lading and bills of exchange in electronic form. 

Core recommendations of the Law Commission included: 

  • The system used for retaining and transmitting electronic documents must be reliable. There were no particular technological recommendations, but it was stated that the system must ensure original documents can be distinguished from copies and that they are protected from unauthorised alteration. 
  • That the electronic document should be under the holder’s exclusive control. In order to prevent ‘double spending’, only one person (or persons acting jointly) should be able to exercise control over the document in electronic form at any one time.
  • The electronic document should be fully divested on transfer. The transferor should no longer be able to exercise control of the document when it is transferred.

The recommendations were implemented in the Electronic Trade Documents Act 2023, which came into force in September 2023. 

The Act provides that an electronic trade document has the same legal status as an equivalent paper document.

What are the benefits of the Electronic Trade Documents Act?

The UK Government estimates that the Electronic Trade Documents Act could realise a net benefit of £1.14 billion for the British economy over the next decade for UK businesses trading across the world. 

Furthermore, the International Chamber of Commerce (ICC) has estimated that digitalising trade documents could generate £25 billion in new economic growth globally by 2024, and free up £224 billion in efficiency savings. 

The Act has been welcomed by multiple trade groups and associations. Chris Southworth, the Secretary of the ICC, commented:

“The Electronic Trade Documents Act is a game changing piece of law not just for the UK, but also for world trade. The act will enable companies to finally remove all the paper and inefficiency that exists in trade today and ensure that future trade is far cheaper, faster, simpler and more sustainable. This presents a once in a generation opportunity to transform the trading system and help us drive much needed economic growth”.

According to a statement issued by the Department for Science, Innovation and Technology, ‘the act puts the UK ahead and in the lead of not only other G7 countries, but almost all other countries in the world. The UK is widely seen as a leader in digital trade and is setting out an approach which the rest of the world will seek to follow. The International Chamber of Commerce estimates 80% of trade documents around the world are based on English law, and this bill serves as the cornerstone to truly digitalising international trade’. 

Involved in a cargo or bills of lading dispute? 

Then you need Shearwater Law on your side. Our team understands that in the event of a cargo or bill of lading dispute, the top priority is a swift resolution. We take a direct, straightforward approach that keeps commercial considerations at the front of mind at all times.

Resolve your bill of lading dispute with Shearwater Law

Charles Patterson
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