The Electronic Trade Documents Act 2023 (ETDA) entered into effect in the United Kingdom on September 20, 2023. It can simplify global trade significantly. We take a look.
CONTENT
I What does the Electronic Trade Documents Act 2023 (ETDA) accomplish?
II Why is the Electronic Trade Documents Act 2023 (ETDA) a significant improvement?
III What kinds of paper may be scanned and stored digitally to serve as electronic trade documents?
IV What are the criteria that must be met for a document to be considered an electronic trade document?
V What exactly is meant by the term "reliable system" in the Electronic Trade Documents Act of 2023 (ETDA)?
VI Where do we proceed from here exactly with the Electronic Trade Documents Act of 2023 (ETDA) ?
I What does the Electronic Trade Documents Act 2023 (ETDA) accomplish?
The Act spells out the criteria under which trade papers may exist and be handled in electronic form under English law. This ensures that an electronic trade document has the same legal weight as a paper trade document that is similar in every other respect.
In accordance with the Electronic Trade Documents Act 2023 (ETDA), a person is permitted to hold, endorse, and part with possession of an electronic trade document, and any action made in connection with an electronic trade document has the same legal effect as it would have had in regard to an equivalent paper trade document.
II Why is the Electronic Trade Documents Act 2023 (ETDA) a significant improvement?
Before the Act, effectively, English law didn't allow businesses or individuals to hold electronic trade papers. This meant that important legal rules about trade documents, such as bills of exchange, couldn't be applied to electronic copies of these documents.
Because of this Act, many parts of the Carriage of Goods by Sea Act of 1992 and the Bills of Exchange Act of 1882 have been taken away because they were in conflict with each other.
III What kinds of paper may be scanned and stored digitally to serve as electronic trade documents?
The Electronic Trade Documents Act of 2023 (ETDA) says that a record must be protected if any of the following are true:
It is a type of document that is often used in at least one part of the United Kingdom for trading, transporting, or financing goods.
It is a legal or business custom, usage, or practise that a person must have such a document in order to prove that they have fulfilled an obligation.
This part of the Act was purposely constructed to identify the kind of document (a trade document where ownership is vital to its function) rather than identifying them all specifically.
This was done to guarantee that the Act was not too restrictive.
In spite of the fact that this naturally leaves some room for interpretation, it is helpful to keep in mind that the Act specifically names the following types of documents as potentially qualifying as electronic trade documents:
bills of exchange,
promissory notes,
bills of lading,
delivery orders for ships,
warehouse receipts,
receipts from mates,
marine insurance policies, and
certificates for cargo insurance.
IV What are the criteria that must be met for a document to be considered an electronic trade document?
It is possible to develop an electronic trade document that is governed by the Electronic Trade Documents Act of 2023 (ETDA) if a "reliable system" is used to perform the following:
It must be
able to be recognised and separated from copies,
protected against unauthorised alteration,
secured so that only one person is ever able to control it at any one time and permitted to prove it, and
created in such a way that once it is transferred, that person is no longer able to modify it.
All of these requirements must be met.
V What exactly is meant by the term "reliable system" in the Electronic Trade Documents Act of 2023 (ETDA)?
The authors who wrote the Electronic Trade Documents Act of 2023 (ETDA) chose to describe the results they wanted instead of prescribing and fixing a technology solution that would work. So, in order to keep their status as "technology neutralists," they didn't say what a "reliable system" is.
VI Where do we proceed from here exactly with the Electronic Trade Documents Act of 2023 (ETDA) ?
In the medium to long term, we think that the Act will significantly affect the processes that are involved in trade as well as trade finance. Until the governments of other major jurisdictions adopt similar legislation, it will be difficult to use and finance electronic trade documents in situations where there are links to jurisdictions that do not recognise them.
This will make it difficult to use electronic trade documents.
In the medium future, however, users of trade papers and suppliers of financing will need to identify and/or construct "reliable systems" and grow comfortable with the risks associated with them (for example, the bankruptcy of the technological solutions provider).
This will need them to identify and/or develop "reliable systems." However, it is just a matter of time, and the prospects for the future seem positive.
More Information & Links
Link to the legislation: https://www.legislation.gov.uk/ukpga/2023/38/contents/enacted
For more information on UK customs and global trade updates, please see our collection of updates, constantly updated here: https://www.customsmanager.info/all-news/categories/uk
For advice and support on the practical implementation of the Electronic Trade Documents Act of 2023 (ETDA), schedule a free call at www.customsmanager.org -> Book Expert Call (top right).
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Very nice overview! Thanks