also refers to the hash value of a previous block. The chain is therefore built up
through this consecutive process. Each block so created is permanent as any attempt
to alter the hash in a block can be detected by all previous blocks and be rejected.
6 Legal Implications of Blockchain Bill of Lading
6.1 General Legal Framework
Some of the challenges faced when seeking to replicate the legal functions of a paper
bill of lading in an electronic bill of lading, relate to the document of title function of
the bill. Being a document of title, the bill of lading has embedded in it, elements of
both property and contract law. Possession of a paper bill of lading indicates that the
holder is a party to the relevant contract evidenced by it and therefore has the right to
enforce it to gain physical possession of the cargo underlying the paper instrument.
But where the contract is evidenced by an electronic intangible instrument which,
strictly speaking, cannot be physically possessed, laying claim to the goods underlying it becomes a serious problem in the circumstances. Added to this notional
difficulty, there is also the problem of replicating the signatures of the parties
concerned. Signatures primarily serves the purpose of confirming that the contents
of a document are true and authentic as made by the parties to the agreement. They
also serve as assurance of the consent of the parties committing themselves to
comply with the conditions stated therein.
The multifarious rules governing different types of contracts were developed
when paper contracts were the norm and the rules so established were naturally
compatible with paper as the medium for entering into them. Paper was the means
envisaged through which representations were made, contractual stipulations communicated and records were kept although it is conceded that much of that is
obsolete today with revolutionary changes in communications and related technology. Needless to say, these changes have had a profound impact and influence on
contemporary seaborne trade and commerce and the business of shipping.
In past decades, several attempts have been made to utilize electronic bills of
lading. Until recent times, some shipping companies have reportedly been exploring
the use of blockchain technology in devising new forms of electronic bills of lading,
such as the CargoX.
38 However, this technology has not yet experienced widespread
use in the shipping industry and the likelihood of this changing anytime soon is
rather remote. There are several legal issues and practical challenges at stake
including the assurance of interoperability.
39 New devices will have to be created
to incorporate substantive contractual clauses, and processes regarding blockchain
and smart contract use in information technology systems will have to be replicated
38 See https://cargox.io/welcome/.
39 Takahashi (2016), pp. 207–210.
Blockchain and Bills of Lading: Legal Issues in Perspective
425
through this consecutive process. Each block so created is permanent as any attempt
to alter the hash in a block can be detected by all previous blocks and be rejected.
6 Legal Implications of Blockchain Bill of Lading
6.1 General Legal Framework
Some of the challenges faced when seeking to replicate the legal functions of a paper
bill of lading in an electronic bill of lading, relate to the document of title function of
the bill. Being a document of title, the bill of lading has embedded in it, elements of
both property and contract law. Possession of a paper bill of lading indicates that the
holder is a party to the relevant contract evidenced by it and therefore has the right to
enforce it to gain physical possession of the cargo underlying the paper instrument.
But where the contract is evidenced by an electronic intangible instrument which,
strictly speaking, cannot be physically possessed, laying claim to the goods underlying it becomes a serious problem in the circumstances. Added to this notional
difficulty, there is also the problem of replicating the signatures of the parties
concerned. Signatures primarily serves the purpose of confirming that the contents
of a document are true and authentic as made by the parties to the agreement. They
also serve as assurance of the consent of the parties committing themselves to
comply with the conditions stated therein.
The multifarious rules governing different types of contracts were developed
when paper contracts were the norm and the rules so established were naturally
compatible with paper as the medium for entering into them. Paper was the means
envisaged through which representations were made, contractual stipulations communicated and records were kept although it is conceded that much of that is
obsolete today with revolutionary changes in communications and related technology. Needless to say, these changes have had a profound impact and influence on
contemporary seaborne trade and commerce and the business of shipping.
In past decades, several attempts have been made to utilize electronic bills of
lading. Until recent times, some shipping companies have reportedly been exploring
the use of blockchain technology in devising new forms of electronic bills of lading,
such as the CargoX.
38 However, this technology has not yet experienced widespread
use in the shipping industry and the likelihood of this changing anytime soon is
rather remote. There are several legal issues and practical challenges at stake
including the assurance of interoperability.
39 New devices will have to be created
to incorporate substantive contractual clauses, and processes regarding blockchain
and smart contract use in information technology systems will have to be replicated
38 See https://cargox.io/welcome/.
39 Takahashi (2016), pp. 207–210.
Blockchain and Bills of Lading: Legal Issues in Perspective
425