raising the question whether this unique function is replicated in the electronic bill of
lading.
27 The matter is elaborated below.
In past decades, several attempts have been made to digitize bills of lading
through such mechanisms as Bolero 6 and essDOCS.
28 However, electronic bills
of lading, except for blockchain-based ones, are not transferable because they are not
possessable. A negotiable document has to remain unique which is essential to
guarantee that the holder of that document is exclusively entitled to claim the
performance of the obligation, in the context of bills of lading, delivery of cargo.
29
This is difficult to fulfill by an electronic bill of lading because it can be copied to
create an indistinguishable duplicate.
30 Thus, transfer of a bill of lading is usually
effectuated by physical handover of it to the consignee. By its very nature, delivery
of a paper bill of lading is different from that of an electronic bill of lading.
31 The
negotiability of a bill of lading requires it to be “to order”. An electronic bill of lading
that is not driven by blockchain is usually transferred together with a separate thirdparty registry to identify the rightful owner of the cargo.
32 This mode requires
control over the registry carried out by a centralized party and a system to verify
the integrity of the electronic bill of lading. Such a bill makes reference to the
registry where the identity of the person with control of the cargo can be found.
However, that reference does not render the electronic bill of lading “a symbolic key
to the warehouse”
33 per se because it is not possessable; and therefore, its holder
cannot exercise constructive possession over the goods.
Being in the forefront of cutting-edge technology, blockchain applications to sea
carriage transactions enable possession of the document and the underlying goods
whereas other forms of electronic bills of lading are unable to do so. Simultaneously,
the function of the traditional bill of lading serving as a document of title is
maintained. A blockchain bill of lading, by using the techniques of timestamping
and cryptography, is able to identify an authorized transfer and invalidate subsequent
unauthorized transfers in the process. This makes blockchain bills of lading quite
unique in character. Moreover, the holder of a blockchain bill of lading, namely, the
person in possession of it, has at his disposal, the remedies arising from legal
possession as well as the contractual remedies arising from the right to control the
blockchain bill of lading. This being so, it is possible for a blockchain bill of lading
to replicate the practical as well as the legal objectives inherent in a paper bill of
lading.
34
27 UNCTAD Secretariat (2003).
28 See http://essdocs.com.
29 Takahashi (2016), p. 204.
30 Ibid.
31 Van Maanen and Regtien (2018).
32 Ong (2018), p. 4; Takahashi (2016), p. 209.
33 Sanders v. Maclean (1883), 11 QBD 327, at p. 341; See also Ong (2018), p. 12.
34 Ong (2018), p. 12.
Blockchain and Bills of Lading: Legal Issues in Perspective
423
lading.
27 The matter is elaborated below.
In past decades, several attempts have been made to digitize bills of lading
through such mechanisms as Bolero 6 and essDOCS.
28 However, electronic bills
of lading, except for blockchain-based ones, are not transferable because they are not
possessable. A negotiable document has to remain unique which is essential to
guarantee that the holder of that document is exclusively entitled to claim the
performance of the obligation, in the context of bills of lading, delivery of cargo.
29
This is difficult to fulfill by an electronic bill of lading because it can be copied to
create an indistinguishable duplicate.
30 Thus, transfer of a bill of lading is usually
effectuated by physical handover of it to the consignee. By its very nature, delivery
of a paper bill of lading is different from that of an electronic bill of lading.
31 The
negotiability of a bill of lading requires it to be “to order”. An electronic bill of lading
that is not driven by blockchain is usually transferred together with a separate thirdparty registry to identify the rightful owner of the cargo.
32 This mode requires
control over the registry carried out by a centralized party and a system to verify
the integrity of the electronic bill of lading. Such a bill makes reference to the
registry where the identity of the person with control of the cargo can be found.
However, that reference does not render the electronic bill of lading “a symbolic key
to the warehouse”
33 per se because it is not possessable; and therefore, its holder
cannot exercise constructive possession over the goods.
Being in the forefront of cutting-edge technology, blockchain applications to sea
carriage transactions enable possession of the document and the underlying goods
whereas other forms of electronic bills of lading are unable to do so. Simultaneously,
the function of the traditional bill of lading serving as a document of title is
maintained. A blockchain bill of lading, by using the techniques of timestamping
and cryptography, is able to identify an authorized transfer and invalidate subsequent
unauthorized transfers in the process. This makes blockchain bills of lading quite
unique in character. Moreover, the holder of a blockchain bill of lading, namely, the
person in possession of it, has at his disposal, the remedies arising from legal
possession as well as the contractual remedies arising from the right to control the
blockchain bill of lading. This being so, it is possible for a blockchain bill of lading
to replicate the practical as well as the legal objectives inherent in a paper bill of
lading.
34
27 UNCTAD Secretariat (2003).
28 See http://essdocs.com.
29 Takahashi (2016), p. 204.
30 Ibid.
31 Van Maanen and Regtien (2018).
32 Ong (2018), p. 4; Takahashi (2016), p. 209.
33 Sanders v. Maclean (1883), 11 QBD 327, at p. 341; See also Ong (2018), p. 12.
34 Ong (2018), p. 12.
Blockchain and Bills of Lading: Legal Issues in Perspective
423