preparatoires but that does not mean its application is excluded in the practical
effectuation of the convention. Indeed, it may be quite the opposite given the
provisions relating to right of control in chapter 10, transfer of rights in a negotiable
transport document or negotiable electronic transport records (NETR) in chapter
11 and in chapters 3 and 8 of the convention. The principle of functional equivalence
requires that only an electronic record that fulfills the essential functions of a paper
document can replace the latter.
46 Thus, electronic bills of lading other than
blockchain-based ones are not able to replace paper bills of lading, given their failure
to function as documents of title.
In the MLETR, generic rules are provided that can apply across the board in
respect of any ETRs including models based on tokens and distributed ledger or
blockchain technology. In other words, it can be said that the use of blockchain bills
of lading is facilitated by the MLETR. Even though there is ostensible legal
recognition of ETRs, it does not imply that they must be used or be accepted. Indeed,
use of any ETR in general requires express consent but such consent need not be
stated in any particular form of words or portrayed otherwise in any standard form.
There can be inference of consent gathered from the prevailing circumstances
including the conduct of the parties concerned. The rationale for this can be gleaned
from the explanatory notes to the MLETR providing that a requirement for explicit
consent may create unnecessary and unreasonable obstacles to the use of electronic
transport documents.
47 In the view of this author, that would include electronic bills
of lading whether or not they are viewed as blockchain-based smart contracts.
48
It may be concluded that even though it is apparent from the instruments
discussed above that technological neutrality and their functional equivalence are
already there which can easily accommodate the use of blockchain and smart
contract concepts, there is still room for further improvement given that certain
issues have emerged from these technologies that have remained unresolved.
Notable in this context is that under English law, the definition of “bill of lading”
in the Carriage of Goods by Sea Act 1992, does not cover electronic documents. This
means that in that jurisdiction, the rules governing transfer of title and the right to sue
in that respect do not apply to electronic bills of lading; neither would they apply to
blockchain-based bills of lading as smart contracts. Digital transactions including
digital signatures would not be recognized under such a legal regime. The otherwise
automatic application feature of such bills of lading would be useless unless there is
law reform in this area.
46 Takahashi (2016), p. 207.
47 UNCITRAL (2018), p. 33, para.64.
48 Ong (2018), p. 10.
Blockchain and Bills of Lading: Legal Issues in Perspective
427
effectuation of the convention. Indeed, it may be quite the opposite given the
provisions relating to right of control in chapter 10, transfer of rights in a negotiable
transport document or negotiable electronic transport records (NETR) in chapter
11 and in chapters 3 and 8 of the convention. The principle of functional equivalence
requires that only an electronic record that fulfills the essential functions of a paper
document can replace the latter.
46 Thus, electronic bills of lading other than
blockchain-based ones are not able to replace paper bills of lading, given their failure
to function as documents of title.
In the MLETR, generic rules are provided that can apply across the board in
respect of any ETRs including models based on tokens and distributed ledger or
blockchain technology. In other words, it can be said that the use of blockchain bills
of lading is facilitated by the MLETR. Even though there is ostensible legal
recognition of ETRs, it does not imply that they must be used or be accepted. Indeed,
use of any ETR in general requires express consent but such consent need not be
stated in any particular form of words or portrayed otherwise in any standard form.
There can be inference of consent gathered from the prevailing circumstances
including the conduct of the parties concerned. The rationale for this can be gleaned
from the explanatory notes to the MLETR providing that a requirement for explicit
consent may create unnecessary and unreasonable obstacles to the use of electronic
transport documents.
47 In the view of this author, that would include electronic bills
of lading whether or not they are viewed as blockchain-based smart contracts.
48
It may be concluded that even though it is apparent from the instruments
discussed above that technological neutrality and their functional equivalence are
already there which can easily accommodate the use of blockchain and smart
contract concepts, there is still room for further improvement given that certain
issues have emerged from these technologies that have remained unresolved.
Notable in this context is that under English law, the definition of “bill of lading”
in the Carriage of Goods by Sea Act 1992, does not cover electronic documents. This
means that in that jurisdiction, the rules governing transfer of title and the right to sue
in that respect do not apply to electronic bills of lading; neither would they apply to
blockchain-based bills of lading as smart contracts. Digital transactions including
digital signatures would not be recognized under such a legal regime. The otherwise
automatic application feature of such bills of lading would be useless unless there is
law reform in this area.
46 Takahashi (2016), p. 207.
47 UNCITRAL (2018), p. 33, para.64.
48 Ong (2018), p. 10.
Blockchain and Bills of Lading: Legal Issues in Perspective
427