and therefore can be possessed and transferred in the same way as the paper bill of
lading.
As mentioned above, blockchain technology facilitates the utilization of smart
contracts which can be automatically implemented and performed provided certain
criteria are fulfilled. The criteria are coded into the contract and their existence within
the blockchain network precludes the need for any confirmation of the transaction by
an intermediary. They are thus self-implementing contracts. Within the context of
the present discussion, a bill of lading, commonly used to ensure the performance of
the carrier to release cargo to its holder, may fit the description of a smart contract
because it can be easily coded into programmed instructions. However, several legal
issues arise due to uncertainties regarding how smart contracts may be enforced
given that the performance is pursuant to codes inserted into the contracts compatible
with use through computers.
A major downside is that there may not be provision for dispute resolution
through arbitration in the event of a dispute given that performance is automatic.
Among other things, the basic elements of a contract, that is, offer, acceptance,
consideration and certainty, are not determinable which would constrain the functionality of a bill of lading portrayed as a smart contract.
25 This is elaborated in the
discussion on the legal framework of the traditional bill of lading and that of
blockchain and smart contracts recognizing the verity that with regard to the latter,
the legal implications must pertain to how the law evolves in light of the rapid
technological advancements.
5 Blockchain Bill of Lading and Other Electronic Bill
of Lading Compared
The principal challenge regarding the development of electronic bills of lading as
distinguished from the traditional paper bill of lading, is the replication of its
functions within a secure electronic environment simultaneously with the assurance
that electronic records and data messages have the equivalent recognition in law as
the original paper bill.
26 An important characteristic of the paper bill of lading is that
its holder has the exclusive right to take delivery of the goods covered by it. In other
words, physical possession of the original bill of lading is tantamount to physical
possession of the goods. Security in maritime trade was manifested in the bill of
lading being in a particular form, and when attached to an insurance policy or
certificate that merchants and bankers alike would consider as evidence of possession of the goods. Thus, the carrier and the underwriter bore liabilities that were
coterminous. Furthermore, the original bill of lading serves as a document of title
25 McKinlay et al. (2018).
26 UNCTAD (2017).
422
H. Liu
lading.
As mentioned above, blockchain technology facilitates the utilization of smart
contracts which can be automatically implemented and performed provided certain
criteria are fulfilled. The criteria are coded into the contract and their existence within
the blockchain network precludes the need for any confirmation of the transaction by
an intermediary. They are thus self-implementing contracts. Within the context of
the present discussion, a bill of lading, commonly used to ensure the performance of
the carrier to release cargo to its holder, may fit the description of a smart contract
because it can be easily coded into programmed instructions. However, several legal
issues arise due to uncertainties regarding how smart contracts may be enforced
given that the performance is pursuant to codes inserted into the contracts compatible
with use through computers.
A major downside is that there may not be provision for dispute resolution
through arbitration in the event of a dispute given that performance is automatic.
Among other things, the basic elements of a contract, that is, offer, acceptance,
consideration and certainty, are not determinable which would constrain the functionality of a bill of lading portrayed as a smart contract.
25 This is elaborated in the
discussion on the legal framework of the traditional bill of lading and that of
blockchain and smart contracts recognizing the verity that with regard to the latter,
the legal implications must pertain to how the law evolves in light of the rapid
technological advancements.
5 Blockchain Bill of Lading and Other Electronic Bill
of Lading Compared
The principal challenge regarding the development of electronic bills of lading as
distinguished from the traditional paper bill of lading, is the replication of its
functions within a secure electronic environment simultaneously with the assurance
that electronic records and data messages have the equivalent recognition in law as
the original paper bill.
26 An important characteristic of the paper bill of lading is that
its holder has the exclusive right to take delivery of the goods covered by it. In other
words, physical possession of the original bill of lading is tantamount to physical
possession of the goods. Security in maritime trade was manifested in the bill of
lading being in a particular form, and when attached to an insurance policy or
certificate that merchants and bankers alike would consider as evidence of possession of the goods. Thus, the carrier and the underwriter bore liabilities that were
coterminous. Furthermore, the original bill of lading serves as a document of title
25 McKinlay et al. (2018).
26 UNCTAD (2017).
422
H. Liu