CIFFA Report
e-Logistics and Its Legal Implications
MThough largely unnoticed, a major clash has occurred between the old and new world of logistics document management. The old world is one with which we are all familiar: a signed contract, an oral agreement or contract between two parties, stamped and signed documents, the endorsement of a Bill of Lading, or a signed Airway Bill. The list goes on and on. It was an established legal relationship between buyer and seller, carrier and freight forwarder, that was not only taken for granted, but recognized in courts worldwide.
Enter the new world of e-Logistics. Suddenly these relationships have become more difficult to manage. Information has become de-materialized – communicated and stored electronically, with no paper record. Additionally, most electronic communications have no recognizable individual or signatory. The printout of such documents say little about the reliability of their contents. Although a systems operator can explain how a message originated, and the business procedure that led to its creation, this does not confirm its contents. More importantly, the lack of personal knowledge concerning such documentation can form the basis for an objection in a court of law under the rule of hearsay evidence.
In order to address these legal shortcomings, the United Nations General Assembly adopted new legal principles applicable to the use of data messaging in 1996. The term was defined as information generated, sent, received or stored by electronic, optical or similar means. These principles, known as the UN Model Law on Electronic Commerce, were the result of a long and arduous process by UNCITRAL – the UN Commission on Trade Law. The Model Law includes various articles applicable to the transport of goods. It incorporates a complete code for the transportation industry and governs such contentious issues as notice of terms and conditions of transport, the effectiveness of data messaging, and the electronic equivalent of the negotiable Bill of Lading or Airway Bill as a document of carriage. If a country adopts the Model Law, its principles modify existing national laws, without the necessity of changes to the laws themselves.
It is interesting to note that the Model Law emphasizes the reliability and integrity/security of the computer system that initially generated the record. Attention does not focus on the status of the printout, but rather on whether the system is set up to accurately record data and maintain it without alteration by tampering or corruption until it is submitted into evidence. Taken to its logical conclusion, the best legal evidence in the receipt of electronic documents are the bits and bytes retained in the computer’s memory banks. A printout under Model Law is viewed as secondary evidence in the case of an electronic message.
| “Most laws require a signature to validate information, either for evidence in court proceedings or for submission to a government authority.” | ||
Most laws require a signature to validate information, either for evidence in court proceedings or for submission to a government authority. Undoubtedly, this represents the biggest single legal drawback for effective use of electronic communication. After all, if a document must be legally produced in each instance, what is the real value of expensive software? To overcome open-ended legal issues such as what constitutes a legally binding electronic ‘signature’ and what does not, UNCITRAL has developed a draft Model Law on Electronic Signatures. This however, has yet to be ratified. Another on-going challenge is the digital divide that exists between the lesser and more technologically developed countries. The existence of legal, economic and cultural obstacles will remain problematic in the foreseeable future.
To counteract these shortcomings, an important initiative has taken place – the creation of Bolero.net. This initiative has its roots in the trade finance instruments that guarantee many of today’s cross-border transactions. The Bolero.net web site was set up by SWIFT, (the bank-owned network) and The Through Transport Mutual Club (the transport insurance mutual). It provides a means for companies and their banks to securely exchange electronic documents when performing trade transactions. For example, the bill of lading is a contract of carriage, but also a title to the goods themselves and, as such, an original document is always required. Bolero.net has solved this problem by making it possible to exchange ownership of goods online by means of an internationally agreed rulebook, a title registry, and the use of digital signatures that secure the transfer.
Banks, trading houses, large shippers, carriers, freight forwarders, insurance companies and whole industry groups are subscribing to Bolero.net. It maximizes the effectiveness and security of electronic documents, while providing users with the ability to safely make use of the e-commerce marketplace. We recommend you sign on and do the same.