All electronic trade service providers are trying to promote their system/software aggressively in the hope that one particular system/software will take the lead from the rest and becomes an industry standard in the marketplace. This would mean a gold mine for the software developer. To be successful, the system/software must have the following key attributes: open, low cost, easy to use, suitable for SME as well as global conglomerates, accommodating different legislations, e.g. Common Law & Civil Law counties, and in case of disputes, providing evidences acceptable to electronic arbitral tribunal or courts.
As far as the maritime transport documents are concerned, we have players like BOLERO, TradeCard, CCWeb, SWIFTNet etc. However, none of these has yet become an industry standard up to this date.
To be more focused I have to narrow down to only an electronic maritime transport document used for presentation under a letter of credit (L/C) subject to the Uniform Customs and Practice for Documentary Credits 1993 Revision (UCP 500) which is applicable to paper trade. The version for electronic trade is the eUCP.
The eUCP is technology neutral. So any system or software may be used.
To avoid confusions, the term "document" used in UCP 500 is replaced by the term "electronic record" in eUCP.
If a letter of credit allows electronic presentation, it must state clearly that it is subject to eUCP. Then it is automatically subject to UCP 500. Presentation of paper document is also allowed unless specifically prohibited in the eUCP L/C. Presentation of a mix of electronic records and paper documents is also allowed unless otherwise stated. If an electronic record is presented, it will be examined for compliance with eUCP, which would override the provisions of UCP 500, if its interpretation creates a different result.
For an electronic maritime transport document, "shipped on board notation", if required by the eUCP L/C, must be stamped or superimposed electronically.
The electronic maritime transport document
- Must be capable of being authenticated as to the apparent identity of the sender and the apparent source of the data contained in it, and as to whether it has remained complete and unaltered after the transmission. Otherwise it is treated as not received.
- Must be capable of being examined for compliance with the terms and conditions of the eUCP L/C.
- Must be presented in the format specified in the eUCP L/C.
- Must identify the eUCP L/C under which it is presented. Otherwise it is treated as not received. Hence quoting the eUCP /C No. on the electronic record is the easiest way to meet this requirement.
Presentation of an electronic record may be done
- By sending it as an email attachment.
- By providing a hyperlink to an external system (such as a web page in a carrier website)
- By reference to an external system for examination purpose.
Failure of the indicated system to provide access to the required electronic record at the time of examination shall constitute a discrepancy that would trigger
payment dishonour. Hence it is important for a carrier to ensure that the server hosting the electronic record (e.g. electronic sea waybill) should never have down time or in case of failure, a standby server can take over immediately. Auxiliary power supply is also a must to ensure that there is no interruption during power failure.
Presentation of one electronic record is adequate even if the L/C calls for many originals and copies.
The date an electronic record appears to have been sent is deemed to be its date of issuance, when no issuing date is specified in the electronic record. If no other date is apparent, the date of receipt is deemed to be the date of sending.
If no date of shipment or dispatch is specified in an electronic record, then the date of issuance is deemed to be the date of shipment or dispatch, which can be overridden by a notation bearing date of shipment or dispatch.
A notation showing additional data content needs not be authenticated.
A corrupted electronic record must be re-presented upon receipt of such notice by the bank. If re-presentation is not made within 30 calendar days, the electronic record is treated as not presented. As a result, any deadline is not extended.
The bank is only responsible for checking the apparent authenticity of the electronic record, and is not responsible for the identity of the sender, source of information or its complete and unaltered character.
In the paper trade a bill of lading is assuming a very important function as a negotiable document of title to facilitate the commodity brokers to trade from one broker to another by endorsements, when the carrying vessel is still contemplating its voyage at the high seas. This unique feature is difficult to be duplicated satisfactorily in the cyberspace, although many attempts are made, such as the CMI Rules for Electronic Bills of Lading, but unfortunately not readily accepted in the marketplace.
The father of letter of credit, Bernard S. Wheble had an insight on this issue and had been heavily promoting the use of sea waybills to replace bills of lading. As a result, Article 24 is specifically provided in the UCP 500 for sea waybills upon the encouragement of Mr. Wheble, although its content is almost the same as Article 23 for marine/ocean bills of lading.
In fact, in North America, use of letters of credit is also reduced year by year but this irrevocable payment undertaking by a bank is still welcome as an important tool in international trade finance in Asia and the Middle East. This is part of the reasons why UCP 500 revision is now at full steam and I am fortunate to be able to represent Canada to provide my inputs as a Member of the UCP 500 Revision Consulting Group.
The eUCP is seldom used after its enforcement in 1 April 2002. The main reason is that traders are worried that in case of disputes, there are no effective electronic legislations to protect their rights and interests. We have more than 180 nations and it is a difficult task to harmonise their differences in electronic legislations.
To kick off, in the maritime transport trade, I would urge the early introduction of the eCOGSA (Carriage of Goods by Sea Act) and for the multimodal transport trade, the eRMTD (UNCTAD/ICC Rules for Multimodal Transport Documents).
It is important that close liaison should be established amongst bankers, carriers, insurers, traders and brokers to ensure that the different electronic rules and legislations would be mutually harmonised for effective application in the e-trade arena.
It is encouraging to see that a representative from the ICC Transport Commissions is now present at an ICC banking Commission meeting. This should be a good starting point.
T. O. Lee FAE, MCIArb, MITD
is an expert witness, consultant and trainer in letter of credit, bill of lading, chartering, multimodal transport, cargo insurance, Incoterms 2000, China trade and trade frauds. He is a Fellow and an Accredited Expert (Letter of Credit) of the Academy of Experts, Gray's Inn, London; Member of International Multimodal Transport Association; and a Columnist of Lloyd's of London "Maritime Asia/Intermodal Asia" magazine and the Hong Kong Economic Journal. Articles and highlights of dispute cases resolved can be viewed in this website.
