Is momentum growing for the wider adoption of electronic bills of lading? Is BIMCO's new electronic bills of lading clause for charterparties a big step forward? This article looks at why such clauses are required and explains how the clause works.
The concept of electronic bills of lading has been around for at least thirty years, but until now they have not been widely adopted. One of the key obstacles the e-bill has faced is the sheer success and longevity of the traditional paper bill of lading. English law as regards the traditional paper bill has developed over more than 200 years and the upshot is that people know that paper bills work and can therefore be safely relied on. Finding an electronic solution acceptable to owners, charterers, cargo interests, insurers and banks that fulfils all of the functions of paper bills has proven to be a daunting task.
Nevertheless, e-bills must surely one day replace good old paper and their time is increasingly coming. With the law still to catch up and, in the absence of adequate international rules, it has fallen to the market (perhaps no bad thing) to devise the necessary legal framework. Two primary alternative systems, Bolero and essDOCS, now offer subscribers an integrated contractual solution for the creation, transfer and surrender of electronic bills.
The BIMCO clause
The new BIMCO electronic bills of lading clause has been driven by demand from the shipping community for a charterparty clause clarifying the conditions under which owners will issue electronic bills. Below we set out (in italics) and explain the wording of the draft BIMCO clause.
(a) At the Charterers' option, bills of lading, waybills and delivery orders referred to in this Charter Party shall be issued, signed and transmitted in electronic form with the same effect as their paper equivalent.
- Why do charterers and owners need to agree that electronic bills may be issued?
At present, English law is premised on the issuance of paper bills. For example, the legislation dealing with the transfer of rights of suit to third party lawful holders of a bill of lading (COGSA 1992) only applies to paper bills of lading. As a result, the consignee under an electronic bill of lading will not, as a matter of law, obtain rights of suit and will not therefore be able to pursue a cargo claim against the carrier.
Further, at common law, an electronic bill of lading is incapable of acting as a document of title, given...