Maritime Rules for Rail Carriage: China’s
Initiative to Incorporate Rules from
the Road to the Belt
Abhinayan Basu Bal and Trisha Rajput
Abstract A group of small and medium sized importers in the Chongqing Pilot Free
Trade Zone (PFTZ) using the Eurasian railway corridors connecting European
countries to China requested the Chongqing local government for creating negotiable transport document for railway carriage, similar to bill of lading in maritime
transport, for financing purposes. The importers highlighted that Chinese banks are
unwilling to issue letter of credit to support the payment for their imports carried by
rail from European countries as railway consignment note is not a document of title.
As an interim measure, the Chongqing local government established a logistics and
financial intermediary that would assume the credit risk before importers can
approach banks to issue letter of credit. To find a permanent solution, the Chinese
government plans to initiate international negotiations for revising railway carriage
rules in the near future.
This chapter critically analyses from a legal standpoint whether the approach
adopted by the Chongqing local government can address the evolving trade finance
needs of importers in the Chongqing PFTZ. The chapter discusses in contextual
detail the legal and policy framework of the BRI under which the Eurasian railway
corridors are created and then draws connection between the frameworks of the BRI
and the Chongqing PFTZ. The paper examines whether there is real need to apply
maritime rules to railway carriage for purpose of obtaining letter of credit and then
analytically probes how digital infrastructures such as single windows, platforms
and distributed ledgers may be used to reduce information asymmetry between
traders and banks to increase access to trade finance. In this context, paperless
trade and supply chain finance initiatives that can be supported by the recently
adopted Model Law on Electronic Transferable Records is discussed. In conclusion,
a prognosis of legal rules that may be promulgated with greater ease to attend to the
A. Basu Bal (*) · T. Rajput
Department of Law, School of Business, Economics and Law, University of Gothenburg,
Gothenburg, Sweden
e-mail: abhinayan.basu@law.gu.se; trisha.rajput@law.gu.se
© Springer Nature Switzerland AG 2020
P. K. Mukherjee et al. (eds.), Maritime Law in Motion, WMU Studies in Maritime
Affairs 8, https://doi.org/10.1007/978-3-030-31749-2_3
39
Initiative to Incorporate Rules from
the Road to the Belt
Abhinayan Basu Bal and Trisha Rajput
Abstract A group of small and medium sized importers in the Chongqing Pilot Free
Trade Zone (PFTZ) using the Eurasian railway corridors connecting European
countries to China requested the Chongqing local government for creating negotiable transport document for railway carriage, similar to bill of lading in maritime
transport, for financing purposes. The importers highlighted that Chinese banks are
unwilling to issue letter of credit to support the payment for their imports carried by
rail from European countries as railway consignment note is not a document of title.
As an interim measure, the Chongqing local government established a logistics and
financial intermediary that would assume the credit risk before importers can
approach banks to issue letter of credit. To find a permanent solution, the Chinese
government plans to initiate international negotiations for revising railway carriage
rules in the near future.
This chapter critically analyses from a legal standpoint whether the approach
adopted by the Chongqing local government can address the evolving trade finance
needs of importers in the Chongqing PFTZ. The chapter discusses in contextual
detail the legal and policy framework of the BRI under which the Eurasian railway
corridors are created and then draws connection between the frameworks of the BRI
and the Chongqing PFTZ. The paper examines whether there is real need to apply
maritime rules to railway carriage for purpose of obtaining letter of credit and then
analytically probes how digital infrastructures such as single windows, platforms
and distributed ledgers may be used to reduce information asymmetry between
traders and banks to increase access to trade finance. In this context, paperless
trade and supply chain finance initiatives that can be supported by the recently
adopted Model Law on Electronic Transferable Records is discussed. In conclusion,
a prognosis of legal rules that may be promulgated with greater ease to attend to the
A. Basu Bal (*) · T. Rajput
Department of Law, School of Business, Economics and Law, University of Gothenburg,
Gothenburg, Sweden
e-mail: abhinayan.basu@law.gu.se; trisha.rajput@law.gu.se
© Springer Nature Switzerland AG 2020
P. K. Mukherjee et al. (eds.), Maritime Law in Motion, WMU Studies in Maritime
Affairs 8, https://doi.org/10.1007/978-3-030-31749-2_3
39