World Wide Trade, a manual affair. A study of the current position of the electronic bill of lading

Sammanfattning: The most well known and developed sea transport document is the bill of lading, a legal institution of its own with many advantages, but it is also known to be a main contributor to high costs of trade due to delayed arrival of original documents, inaccurate or insufficient information and fraudulent issuance of incorrect or forged bills of lading. The trade community’s response to the problems associated with the bill of lading has been to develop the concept of the electronic bill of lading. This work began as early as 1970 but still has not gained commercial momentum. The purpose of this thesis is therefore to investigate whether electronic bills of lading are legally valid and if such documents can be submitted and accepted as evidence in a court of law and if there are such legal obstacles, to investigate international and/or national initiatives aimed at resolving the situation. A secondary purpose is to investigate how electronic bills of lading are used today and how their functionality is perceived by the trade parties. The traditional bill of lading is a document of title granting right to control of the goods to its holder. It is by Swedish law not clear if an electronic bill of lading qualifies as such a document of title meaning that a buyer of goods that is being transported under an electronic bill of lading may not have the right to control of the goods. Delayed arrival of original bills of lading cause carriers to deliver goods against letters of indemnity instead of surrender of bills of lading, hereby exposing themselves to risk and loss of P&I cover. Paper bills of lading are considered secure but are still subject to fraud and forgery. Electronic alternatives are considered equally or more secure, much thanks to the use of electronic signatures. World trade is increasing, in part due to the introduction of ICT systems that minimizes manual intervention and allows for free flow of information between concerned parties. Current offerings of electronic bills of lading are integrated in such information systems. Existing, such as the American, and proposed, such as the Rotterdam Rules, legislation that promotes the use of electronic bill of lading applies the principle of equivalence, whereby it is the functionality, not the media, which defines the legal qualities of a transport document. The document of title functionality is achieved by applying the principle of singularity, according to which, only one party may control the transport record, which is the functional equivalence of being the holder of a traditional bill of lading. Such laws do not yet exist in Sweden, leaving it unclear whether holders of electronic transport records have the same right to control of the goods as do holders of traditional paper bills of lading. Key conclusions of the thesis are that legislation based on the functional equivalence principle would eradicate the legal obstacles to the use of electronic bills of lading and that such legislative action combined with the current trend of implementing ICT systems in the shipping industry would serve to overcome the “traditional inertia” that has characterized the industry for so long, and ease the transition in to modern document management systems that will serve to eradicate the problems caused by the paper bill of lading.