The first workshop of the University of Aberdeen’s research project ‘Digital Assets in Scots Private Law: Innovating for the Future’, funded by the Royal Society of Edinburgh (RSE), was held on February 29, 2024 to examine implications of electronic trade documents (ETDs) law reform for Scotland.
The participants from academia, the Law Commission of England and Wales (LCEW), legal practice, and industry focused on Scottish perspectives on the Electronic Trade Documents Act 2023 (ETDA), and offered insights into its application in practice. The ETDA applies across the UK and gives certain electronic trade documents the same legal recognition as their paper equivalents.
The discussion started with the importance of documents in trade and issues associated with the use of paper documents. It continued with reference to the LCEW’s work resulting in the draft ETDs Bill and the Bill’s subsequent expansion to Scotland before being passed by the UK Parliament as the ETDA.
Attention was paid to the inter-relationship between the ETDA’s treatment, in section three(4), of an ETD as corporeal moveable property for the purposes of any act of the Scottish Parliament concerning the creation of a pledge (security), and the Moveable Transactions (Scotland) Act 2023 (MTA), permitting a pledge to be created over corporeal moveable property by delivering a bill of lading.
The participants discussed whether section 3(4) of the ETDA was necessary for bills of lading given the content of the MTA or for other trade documents, and if alternative wording would have improved its meaning.
The participants then discussed the legal application of the ETDA in shipping/transport, trade finance, and international trade. They noted that, despite their advantages, there is a very low volume of electronic bills of lading, partly due to the lack of a legal framework. The enactment of the ETDA is therefore welcome despite concerns around security (including the risk of hacking or disabling platforms), interoperability, and the ‘reliable system’ elements referred to by the ETDA.
Regarding trade finance, the participants noted that the ETDA can facilitate electronic versions of a considerable volume of documents and their presentation for payment or finance purposes. Saving time and cost is a significant benefit in digital transactions, as demonstrated by a digital promissory note that is believed to be the first digital trade transaction completed under the ETDA. However, there is still a need to address an apparent lack of trust in participating in digital transactions. Policy and customs-related issues require to be overcome, and adequate in-house capabilities or procedures for banks are necessary for digital transactions.
For international trade, the participants discussed opportunities for Scotland and Scottish businesses in creating digital trade corridors utilising electronic trade documents and blockchain, which can link in with more direct trade lanes and support supplies of critical minerals to help achieve green energy and net zero targets.
To read the workshop report, learn more about the project and register for news and updates, please visit the project website.