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Overhauling the Oceanic Trade Essentials-Will the World Accept Electronic Bills of Lading?

The gradual move in the direction of digitalization and automation in the Maritime & Shipping spectrum is not only speeding up but also gaining momentum and acclaim world over. Several digital resolutions and techniques are being employed to enhance competitiveness and achieve further operational efficiency. These are being implemented to bring the industry closer towards decarbonization and to achieve zero emissions from international shipping.

Along with the core Maritime Industry, the peripheral industries comprising of the cargo, customs, freight forwarders and both the consignor and consignee are revamping systems to stay up to date with the change of the analogue to the binary.

One of the most essential aspect of the Maritime Trade is the Bill of Lading. Fundamentally, a Bill of Lading is a contract documents issued by the captain of the vessel carrying the cargo, and establishes a relationship between the shipper of the cargo, in the first place, and cargo-carrier to carry the cargo under certain conditions and finally hand over the cargo to the consignee, subject to presentation of the original Bill of Lading issued by the captain to the shipper. A legal definition defines the Bill of Lading as “document of title acknowledging receipt of goods by a carrier or by the shipper’s agent; a document that indicates the receipt of goods for shipment and that is issued by a person engaged in the business of transporting or forwarding goods.” [1] A Bill of Lading inasmuch caters to three cardinal purposes; contract of affreightment; evidence of contract concluded; and evidence of title. Possession of the original Bill of Lading signifies the party interested in the goods, and where it is negotiable, aiding in the necessary transfer of title over the goods.

Per practice in the trade, Bills of Lading are issued in identical sets of three. The master acts by delivering against the first original presented for delivery of the cargo. This is well established in the phrase "the one of which being accomplished the others to stand void [2].” The issue of a set of three original bills provides or implies, by itself, that delivery will only be made against presentation. The practice traces back all the way to the sixteenth century and is molded to allow the shipper to retain one original, provide the second to the carrier and send the third to the consignee by different methods.

While in itself, the hard copy of the Bill of Lading didn’t prove to be an obstacle to trade but just as how all hardware upgrade the firmware requires an upgrade at the same time around too. In order for them to serve as evidence of contract and title, they must be physically transported together with the goods. In and of itself, this does not present any issues. Administrative hassles that accompany the issuing of this document are, however, severalfold. Such issues involve the time difference between collection of Bill of Lading and the actual sailing of the vessel. Therefore, most often than not the document often has to be separately sent to the consignee, which adds additional customs delays to the procedure. Another major technological advancement posed problem is that vessels are getting faster and the turnaround time of delivery of goods is quicker, other issues are port congestion and meticulous checking by banks.[3] Eventually, this lengthy process results in excessive demurrage charges since the cargo ends up arriving before the Bill of Lading itself. An indubitable alternative in today’s binary world is Electronic Bill of Lading (EBOL) and electronic signatures. Adopting the EBOL immediately resolves the dominating issue of delay as an electronic copy can be transmitted anywhere instantaneously. The Bill of Lading Electronic Registry Organization (“BOLERO”) scheme of 1999 was a bold attempt to incorporate and amalgamate the adoption and standardization of the EBOL. This was largely due to the Banks, at large, refusing to accept such adoption despite the document being authentic and genuine.

It cannot be neglected that for traditional jurists, The Carriage Of Goods by Sea Act,1992 considers bills of lading as a “document”[4], and sub clauses 5 and 6 state that information technology can be used to effect transactions involving bills of lading, but there is no specific provision saying that Bills of Lading, themselves can be intangible in nature. Some constant worries with respect to the EBOL are lack of confidence in the system, uncertainty on risks and liabilities, absence of single universal standard for electronic communications and absence of technical infrastructure in developing[5]

Adoption of the EBOL immediately brings to the table some of the most industry leading issues to rest, such as overcoming delays, avoiding paying of demurrage awaiting the Bill of Lading and faster clearance of cargo, an Electronic Bill of Lading hugely counters chances of frauds and forgery as it is encrypted and of course it cannot be denied that it would hugely save costs and improve administrative infrastructures.

EBOL definitely still have a long way to go for the adoption in the maritime industry. initiatives such as the Model Law on Electronic Transferable Records “MLETR” put forward by UNCITRAL and the Electronic Transactions Act, Amendment of 2021 in Singapore are both international and domestic attempts that prove that the Maritime Sector is on its way to adopting EBOLS on a growing scale. Despite this, it must be borne in mind that the MLETR is enabling in nature and does not supersede regulatory matters, which, eventually should be a domestic legislation of individual countries. The MLETR permits freedom of choice of third-party service providers, as well as of the type of services requested and of their technology because the expected developments in technology and business practice recommend a flexible approach when assessing the conduct of third-party service providers who provide the services of electronic bills of lading. However, with the advent of the Data Policies being revamped world over, what counter impact could be expected on EBOL is yet within its nascency and it is time that industries move towards centralisation rather than compartmentalisation to further the age old Sanskrit hymn, Vasudeiva Kutumbakam, The World is, but one family.

Refrences:- [1] Black’s Law Dictionary, 159 (7th Ed., 1999). [2] Llyods Law Reports [1933] Vol. 45 180 [3] Rouhshi Low, Replacing The Paper Bill Of Lading With An Electronic Bill Of Lading: Problems And Possible Solutions, 5 Int’l. Trade & Bus. L. Ann. 159, 163 (2000). [4] COGSA, §1 [5] Miriam Goldby, Electronic Documents in Maritime Trade, (2nd ed., Oxford, 2019).


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