Although the MLETR is a positive step forward, it is not law. Individual states
will have to decide whether to adopt it into their own law. At present Bahrain is the
only state that has adopted the MLETR in its domestic legislation.
66 As a leading
international trading nation, China may wish to be an early adopter of the MLETR.
In that case, the local government in Chongqing may explore the possibility of
testing the application of MLETR in business areas such as railway transport and
trade finance based on the requests made by car importers. In that case, MLETR can
support an electronic platform for a transferable instrument based receivable financing programme to create a market-based approach for trade finance. It would also
allow China to test the MLETR in a controlled environment before deciding on
whether or not to promulgate its national law based on the UNCITRAL template.
7 Concluding Remarks
The commercial maritime law framework surrounding physical shipping documents
evolved during the sixteenth century to allow traders to dispose the goods while
remaining in the custody of the carrier. Incidentally, that legal framework also
afforded security to the lenders. Currently, with strict banking regulations on capital
adequacy,
67 using that legal framework has become increasingly expensive for
exporters and importers. In addition, with the surge in pace and complexity of
international trade, the physical movement of the shipping documents from trader
to trader and/or bank to bank lags behind the movement of the goods. However, a
substantial portion of international trade still relies on physical shipping documents
and the associated legal framework because of traditional inertia. While several
attempts to reform the framework to allow use of electronic records have been made
in the past four decades, small and medium sized exporters and importers have not
seen enough value to be persuaded to make the transition.
In the past decade, international institutions such as the WTO, UNCITRAL,
UNESCAP,
68 UN/CEFACT and UNECE
69 have included paperless trade within
the broad meaning of trade facilitation and connected commercial and regulatory
aspects of international trade under a modern and coherent legal framework to clear
the way for e-commerce. Consequently, governments have been tasked to create the
necessary electronic infrastructure to enable business-to-government and vice versa
66 See “Bahrain enacts the UNCITRAL Model Law on Electronic Transferable Records” http://
www.unis.unvienna.org/unis/en/pressrels/2018/unisl269.html, accessed on 17 April 2019.
67 For example, Basel II is an internationally agreed set of measures adopted for the assessment of
international banks’ capital adequacy, issued by the Basel Committee on Banking Supervision in
2004. Basel III was subsequently issued in December 2010 in response to the financial crisis of
2007–09 and provides a regulatory scheme targeting governance and risk management and the
introduction of global liquidity standards.
68 The United Nations Economic and Social Commission for Asia and the Pacific.
69 The United Nations Economic Commission for Europe.
56
A. Basu Bal and T. Rajput
will have to decide whether to adopt it into their own law. At present Bahrain is the
only state that has adopted the MLETR in its domestic legislation.
66 As a leading
international trading nation, China may wish to be an early adopter of the MLETR.
In that case, the local government in Chongqing may explore the possibility of
testing the application of MLETR in business areas such as railway transport and
trade finance based on the requests made by car importers. In that case, MLETR can
support an electronic platform for a transferable instrument based receivable financing programme to create a market-based approach for trade finance. It would also
allow China to test the MLETR in a controlled environment before deciding on
whether or not to promulgate its national law based on the UNCITRAL template.
7 Concluding Remarks
The commercial maritime law framework surrounding physical shipping documents
evolved during the sixteenth century to allow traders to dispose the goods while
remaining in the custody of the carrier. Incidentally, that legal framework also
afforded security to the lenders. Currently, with strict banking regulations on capital
adequacy,
67 using that legal framework has become increasingly expensive for
exporters and importers. In addition, with the surge in pace and complexity of
international trade, the physical movement of the shipping documents from trader
to trader and/or bank to bank lags behind the movement of the goods. However, a
substantial portion of international trade still relies on physical shipping documents
and the associated legal framework because of traditional inertia. While several
attempts to reform the framework to allow use of electronic records have been made
in the past four decades, small and medium sized exporters and importers have not
seen enough value to be persuaded to make the transition.
In the past decade, international institutions such as the WTO, UNCITRAL,
UNESCAP,
68 UN/CEFACT and UNECE
69 have included paperless trade within
the broad meaning of trade facilitation and connected commercial and regulatory
aspects of international trade under a modern and coherent legal framework to clear
the way for e-commerce. Consequently, governments have been tasked to create the
necessary electronic infrastructure to enable business-to-government and vice versa
66 See “Bahrain enacts the UNCITRAL Model Law on Electronic Transferable Records” http://
www.unis.unvienna.org/unis/en/pressrels/2018/unisl269.html, accessed on 17 April 2019.
67 For example, Basel II is an internationally agreed set of measures adopted for the assessment of
international banks’ capital adequacy, issued by the Basel Committee on Banking Supervision in
2004. Basel III was subsequently issued in December 2010 in response to the financial crisis of
2007–09 and provides a regulatory scheme targeting governance and risk management and the
introduction of global liquidity standards.
68 The United Nations Economic and Social Commission for Asia and the Pacific.
69 The United Nations Economic Commission for Europe.
56
A. Basu Bal and T. Rajput