- Differences of a Bolero Electronic Bill of Lading to a traditional paper Bill of Lading.
2.1 Bolero
The first attempt to create an electronic bill of lading similar to the traditional have not been very successful. In 1980’s we had the seadocs which were used mainly by oil traders and involved only one bank, Chase Manhatan, which was the main reason of their failure. The Seadocs are not in existence any more. Then we had the CMI rules. The carrier issued a private key to the shipper and when there was a change then that private key would be cancelled and a new one would be produced. Electronically it is like putting all the information on the carrier. So you have to trust him and confidential issues have risen again. However, they still exist.
Bolero International Ltd. Was established in 1998 by SWIFT and TT Club and started off as an EU sponsored pilot project to explore ways of using encryption and electronic signatures in a commercial way. More than 500 companies were involved together with lawyer doing feasibility studies etc. Bolero is an independent commercial organisation and they have a role of a trusted 3rd party.
2.2 Differences
The first difference is that the Bolero function is based on the exchange of Electronic Data Interchange (EDI) messages between a central registry known as the ‘registry’ and the users. They will also be able to exchange messages between themselves. This is designed for importers, exporters who would like to reduce, if not eliminate, the paper and hard copy documentation bringing considerable cost savings and diminishing the possibility of fraud. There is no need for physical pieces of paper to be produced to activate certain procedures as the traditional bill of lading. Also these messages are kept at the Core Message Platform (CMP) in case a dispute arises.
Another difference based on the central registry is that Bolero is a closed system where everyone’s identity is known to the Bolero registry. On the contrary, at a traditional bill of lading you may never find out the real identity of the person you are dealing with. If someone wishes to use Bolero must become a user/member and all of them agree to comply with the rulebook. It is a multilateral contract and everyone agrees to use it as contracted. None of the members could perform otherwise than stated in the rulebook.
Furthermore, under Bolero there are strong security controls and procedures to protect the integrity and prove the authenticity of electronic messages which do not and could not exist under the traditional bills of lading. The particular important security feature is the use of digital signatures. Digital signatures are made by private keys and are verified by public keys through which the messages are encrypted. Verification proves that the signed data has remained intact and that the private key has created the signature. All messages in the Bolero system are signed, tracked, acknowledged and monitored. These messages are routed through the CMP and instruction are sent to the Title Registry Record.
Additionally, the transactions based on the Bolero bill of lading do not face the problem of late arrival of documents at the port of discharge. When for example the voyages were not long enough for the traditional bill of lading to complete the whole chain or where many subsequent sales took place (especially in the oil trade) the goods might arrive at the port long before the bill of lading did. The bolero bill of lading is transmitted electronically, instantly and through the CMP it is always possible to have the bill sighted by the parties in at every stage of the transaction. Late arrival of traditional bill of lading has created “The Delfini” problem where the bill of lading arrived 11 days after the goods did and was extinguished and another problem is that goods are delivered against indemnities giving rise to many disputes “Lickbarrow v. Mason”.
Also, the traditional bill of lading was issued in 3 or 6 originals. This problem of conflicting bills which was faced in the “Glynn, Mills Curri v. East and West India Dock Co.” and “Sander v. Maclean” will not be a problem under the Bolero bills of lading since the Title Registry controls the transactions and thus no problem with forged bills of lading will exist.
Moreover, the Bolero system does not create a single electronic document to fulfil the same functions as that of the bill of lading, instead the paper bill of lading is replaced by series of electronic messages, instructions and data records in the Title Registry which are combined in order to fulfil the functions. So the Bolero bill of lading is not a transferable document but a system set up designed to achieve equivalent result. Hence, all the functions must be created by contract between Bolero users bound of course by the Rulebook.
In addition, the new holder of the bolero bill of lading obtains the opportunity to inspect the electronic documentation before accepting it, and if he does not accept it he does not obtain any right of control and transfer over the goods, those rights remaining in the seller just as is the case if a paper bill of lading is rejected.
Finally, there is a different approach of the Bolero bill for transferring the constructive possession, rights and liabilities of the contract of carriage as opposed to the paper bill of lading. First we have the transfer of constructive possession through attornment. An attornment is the transfer by the bailor of its rights in the bailed property. As for the transfer of rights and liabilities of the contract of carriage, in Bolero it is achieved by novation. Novation being the re-making of the contract with a different party. For this purpose Bolero acts as agent.
- The extent of legal recognition of Bolero Electronic Bill of Lading
The Bolero Bill of Lading derives its authority from the Bolero Rulebook, via contract rather than statute but it is based on basic legal doctrines of statutes and international conventions. In order for the Bolero Electronic Bill of Lading to receive the same legal recognition and achieve the same legal effects as a traditional bill it must fulfil the basic functions of the traditional bill already stated in the introduction.
The Bolero Bill of Lading must be considered by the members of the Bolero society and by the other merchants, shippers, shipowners and generally all the people involved in the international trade that thinking of joining this new concept as a receipt, as evidence of the contract of carriage, as a document of title and as the contract of carriage.
Being a brand new and revolutionary concept there have been created certain questions that could unstable this new effort and destroy its legal recognition. For example a technical malfunction in the communication system could cause financial loss to any of the users, whether a carrier, bank, sellers or purchaser of goods. Not every people involved in the Bolero project has a contractual relationship with each other and the fault might be of the hardware so who is responsible in order for the party that lost vast amount of money to sue? There is a gap in the available insurance cover.
Another problem that could delay the Bolero Bill of Lading from being legally recognised is that the users/member must be a large number. If the courts realise that the majority of people involved in trade is a member of Bolero then they will be obliged to accept it and attribute to it the same legal effects of a traditional bill of lading.
Furthermore, Bolero bill of lading phases the question of whether the digital signature can be considered a signature under law and if this e-message is equivalent to a written document. It seems most unlikely that the common law would recognise as a document of title something which has no physical presence and common law also requires a document of title to be signed. However, English statute and English judges do recognise other means of conveying information than written documents. This seems natural if we point out the fact that Britain is one of the few countries with legislation on computer misuses – the Computer Misuse Act 1990 showing that the English law is prepared to treat modern technology as performing the same function as paper documents.
Another point that could establish the legal recognition of the Bolero Bills of Lading is that there is no reason why the banks could not hold the private keys in the same way they formerly held the bill of lading. After all the provision of the private key is intended to have the same effect as the transfer of rights of control and transfer under bill.
Finally, the most important problem that the Bolero bill of lading users should be concerned is that although the Carriage of Goods by Sea Act 1992 s. 1(5) provides for regulations to make provision for the application of the Act when “information technology” is used for effective transactions of the kind governed by the Act, no such regulations have been made. Maybe Bolero is largely thought to be equivalent to the traditional bill of lading and English courts favour this direction but when it comes to different jurisdiction there is a problem. The attitude of jurisdictions requiring physical endorsement and delivery seems to be an obstacle that is why a set of rules must be incorporated in the Carriage of Goods Act 1992 where after all it is predicted to do so. Of course, Bolero has foreseen this situation and they have relied on the estoppel rule but maybe this will not be enough for a global recognition of Bolero’s legal substance by all people involved in the trade
- Conclusion
Merchants are increasingly using computers to facilitate international transactions and there are not few that believe that electronic commerce is becoming a reality. Because EDI is both quick and efficient the shipping industry is expected to benefit greatly from its adoption and particularly in the are of bill of lading. Unfortunately, numerous legal and technical obstacles have risen.
Although English courts are prepared to accept the electronic bill of lading it does not yet have a legal framework and depends purely on the Rulebook. Even though there are many people that support the project of electronic bill of lading there is still lack of international confidence because there is not an international legal framework that supports this new concept. Also in addition to the buyer and the seller, contracts of carriage may involve banks in different countries, insurance companies, forwarders, port and custom authorities who may not be yet Bolero member. Also much will depend upon the recognition that Bolero will have world-wide.
However, the concluding assumption for Bolero bill of lading is that it is the beginning of what looks like a bright future. Whether major trader will adopt Bolero depends heavily on its efficiency, effectiveness and sense of security and Bolero has shown till now that it can fulfil these requests. For Bolero, it seems the technical product is sound and the time is right. An Australian has observed that “there is such a tremendous demand for something like Bolero that it can hardly fail to be a success”.
- Bibliography
Books:
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Carr, I. Principles of International Trade Law, Cavendish Publishing Limited, 2nd edition, London 1999
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Carr, I. And Kidner, R. Statutes and Conventions on International Trade Law, 3rd edition, Cavendish Publishing Limited, London 2000.
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Osborn’s Concise Law Dictionary, 9th edition, Sweet & Maxwell Limited, London 2001.
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Todd, P. Bills of lading and Banker’s documentary credits, 1998, L.L.P.
Articles:
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Bradgate, R. & White, F. The Carriage of Goods by Sea Act 1992, 1993, The Modern Law Review 188.
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Clarke, M. Transport documents: their transferability as documents of title; electronic documents, 2002, Lloyd’s Maritime and Commercial Law Quarterly 356.
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Faber, D. Electronic bills of lading, 1996, Lloyd’s Maritime and Commercial Law Quarterly 232
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Lloyd, Sir A. The bill of lading: do we really need it?, 1989, Lloyd’s Maritime and Commercial Law Quarterly 47
Websites:
Sections 1 and 4 of the Carriage of Goods by Sea Act 1992
An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person, or to a bearer. (Osborn’s Concise Law Dictionary, 9th edition)
[1990] 1 Lloyd’s Rep. 252
“Electronic Documentation” by Todd Paul pp 152-169, p. 158
“Electronic bills of lading” by Diana Faber, [1996] L.M.C.L.Q. 232, p. 234
“Principles of International Trade Law” by Indira Carr, 2nd edition
“Transport Documents: their transferability as documents of title; electronic documents” by Malcolm Clarke, 2002 L.M.C.L.Q. 356, p. 360
Rule 2.2.2.: users undertake not to contest the validity of a BBL on the ground that it is not in writing