Part II Trade Finance Technology, 11 Implementation and Implications of the UNCITRAL Model Law on Electronic Transferable Records in Trade Finance »
Alan DavidsonFrom: Trade Finance: Technology, Innovation and Documentary Credits
Edited By: Christopher Hare, Dora Neo
The Model Law on Electronic Transferable Records (‘ML-ETR’) aims to enable the legal use of ‘electronic transferable records’ (‘ETRs’) domestically and internationally. The ML-ETR applies to ETRs that are functionally equivalent to transferable documents or instruments, notably trade-finance instruments, including bills of lading, bills of exchange, promissory notes, and warehouse receipts. Their availability in electronic form will improve the speed and security of trade finance and will facilitate the development of ‘smart contracts’. ETRs are relevant for a wide range of businesses, such as transport and logistics and finance, and are significant for developing countries interested in establishing markets for electronic warehouse receipts to facilitate farmers’ access to credit. ETRs are fundamental to a paperless trade environment, thereby facilitating trade. The ML-ETR builds on the core principles of non-discrimination against electronic means of transacting, the functional equivalence of paper-based and electronic transactions and instruments, and technology neutrality that accommodates the use of all technologies and of all models, such as registries, tokens, and distributed ledgers (like blockchain). Control of the ETR represents the functional equivalent of the possession requirement applicable to transferrable paper-based instruments. ‘Control’ is established with respect to an ETR when a ‘reliable method’ is used to establish both the exclusive control of that electronic transferable record by a person and the identity of that person.