Singapore Parliament Passes Law to Recognise Electronic Bills of Lading
Paper bills of lading have been used in maritime trade for centuries. Due to their nature, they can be forged. To prevent this, significant time and costs are incurred to process the documents and verify their authenticity. A single transaction may involve hundreds of pages of such bills and research has shown that document processing made up as much as 20% of the physical transportation cost of a shipment of goods1.
Electronic Bills of Lading
On 1 February 2021, the Singapore parliament passed the Electronic Transactions (Amendment) Bill2. The Bill adopts the UNICTRAL Model Law on Electronic Transferable Records (“Model Law”), with certain modifications. Amongst other things, the Bill enables the creation and use of an electronic bill of lading that is legally equivalent to a paper bill of lading.
Electronic bills of lading are able to overcome certain challenges traditionally posed by the use of paper bills of lading in the following ways:
- Instantaneous transmission of documents and reduction of time spent on verification and rectification.
- More security against forgeries due to digital authentication technologies.
- End consumers tend to benefit from the lower costs of legal documentation, transportation and trade financing. It has been estimated that US$4 billion will be saved annually if just half of today’s container shipping lines adopt electronic bill of lading.
- Promote environmental sustainability.
There have been attempts since the 1980s to introduce electronic bills of lading to replace traditional bills. While the adoption of electronic bills of lading was initially slow due to reasons such as the lack of understanding and skepticism of electronic bills of lading, the uptake of electronic bills of lading has been on the rise in recent times.
Although Singapore’s adoption of the Model Law is a step in the right direction, it remains to be seen if this will have any impact on current practices, given that parties may be more comfortable with using electronic bills of lading only if more countries adopt the Model Law. That said, the Covid-19 pandemic which has highlighted the practical limitations of paper bills of lading may well be the catalyst to accelerate the adoption of electronic bills of lading.
For more information on electronic bills of lading, Members may refer to the following publications by the UK P&I Club:
- Legal Briefing: Electronic Bills of Lading
- FAQs: Paperless Trading
- Legal Briefing: Contracts are Getting Smarter