Merchants are progressively utilizing computing machines to ease international minutess, and many perceivers believe that fully fledged electronic commercialism is nearing world. At present, the concern community uses a system known as electronic informations interchange ( EDI ) . Because EDI is both speedy and efficient, the transportation industry is expected to profit greatly from its acceptance, peculiarly in the countries of measures of ladling. Unfortunately, legion proficient and legal obstructions have slowed the debut of EDI, with the main hindrance being the jurisprudence ‘s insisting on paper-based certification.

Recently, nevertheless, several important stairss have been taken to advance the usage of EDI. The intent of this paper is to briefly depict these developments.

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The writers would wish to show thanks for advice and transcripts of relevant articles to Professor Tony Davies, Director of the Electronic Commerce Innovation Centre, University of Wales, Cardiff, United Kingdom


International trade is now doing extended and increasing usage of computing machine engineering to ease international minutess, and traveling toward electronic commercialism. The computerised system which is presently developed for trading intents is electronic informations interchange ( EDI ) . For illustration, an EDI system called ‘SWIFT ‘ is used in international commercialism by the banking industry for the communicating of commercial letters of recognition among Bankss worldwide.[ 1 ]In the transportation industry, EDI systems have been developed in order to replace traditional paper transportation paperss, in peculiar measures of cargo, because the most of import advantages of EDI lies on its velocity. However, there are a figure of obstructions to the usage of EDI for electronic measures of cargo, both in footings of computing machine engineering development and legal issues. The major obstruction to the usage of electronic measures of cargo is the legal demand of paper-based certifications. A related issue is in what manner electronic messages must be conveyed in order to run into the demands of measures of ladling which, at present, must be signed paperss.

Furthermore, since a measure of cargo has an of import map as a papers of rubric to the goods shipped, there is value in itself as security to Bankss and it entitles its holder to sell the goods while in theodolite. This map of paper measures of cargo is non easy incorporated in electronically generated paperss.

This paper discusses the legal obstructions to the usage of EDI systems for electronic measures of cargo, in peculiar, jobs refering the map of paper measures of ladling as a negotiable papers of rubric. The first portion of the paper will analyze the proposals by the UNCITRAL Working Group on EDI to get the better of this job, known as ‘the functional equality attack ‘[ 2 ]. Second, the paper will look at other efforts to ease the usage of electronic measures of ladling, such as the CMI Rules and Bolero Project. Last, solutions to the jobs which may originate from the usage of electronic measures of cargo will be discussed.

2. The UNCITRAL Model Law on Legal Aspects of Electronic Data Interchange ( EDI ) and Related Means of Communication

The United Nations Commission on International Trade Law ( UNCITRAL ) is trying to develop unvarying international regulations that would formalize and promote the usage of EDI. In 1995, UNCITRAL adopted the bill of exchange Model Law on Legal Aspects of Electronic Data Interchange ( EDI ) and Related Means of Communication[ 3 ]. The Model Law is intended to function as a theoretical account to states in order to make unvarying jurisprudence and pattern affecting the usage of computerised systems in international trade. The aims of the Model Law are indispensable to better the efficiency in international trade since it will, if adopted by a big figure of states, enable and ease the usage of EDI and the related agencies of communicating and supplying equal intervention to users of paper-based certification and to users of computer-based information. The Model Law was finalised and approved in the UNCITRAL 29th session, 28 May to 14 June 1996. The Model Law is before the United Nations General Assembly and is presently expecting blessing.

The Model Law applies to any sort of information that is transferred in the signifier of a information message used in commercial activities. Ocean measures of ladling are one sort of papers within the range of the Model Law. However, the legal facets of measures of ladling are cardinal issues of the Model Law developments, as noted in the UNCITRAL Working Group on EDI of its thirtieth session, 26 February – 8 March 1996. This reported that future work could concentrate on EDI conveyance paperss, with peculiar accent on nautical electronic measures of cargo and the possibility of their usage in the context of the bing national and international statute law covering with nautical conveyance ( UN 1995b ) .

It should be noted, nevertheless, that the Model Law has no legal force of its ain. Its commissariats will hold legal enforcement merely if they are enacted in national jurisprudence. For this ground UNCITRAL besides adopted a Guide to passage of the Model Law ( UN 1996 ) .

2.1 Application of Legal Requirements to Data Messages

‘Electronic Data Interchange ‘ or ‘EDI ‘ , as defined by the Model Law, means the electronic transportation from computing machine to computing machine of information utilizing an in agreement criterion to construction the information[ 4 ]. The chief issues related to EDI which have been discussed internationally and solutions proposed by the Model Law are:

( a ) legal acknowledgment of informations messages ;

( B ) authorship or a ‘document ‘ demand ;

( degree Celsius ) signature demand ; and

( vitamin D ) papers of rubric and negotiability.

The Model Law is based on the acknowledgment that legal demands for the usage of paper paperss are the chief obstruction to the development of EDI. EDI itself can non be regarded as an equivalent of a paper papers, both in nature and legal facets. Therefore, the Model Law introduced a new attack known as ‘functional equality attack ‘ which is based on an analysis of the maps of paper-based demands and finding how those maps could be fulfilled through EDI.

2.1.1 Legal acknowledgment and evidentiary value of informations messages

The first inquiry is whether a data message can be treated as a papers and whether it be accepted as grounds in tribunals. In many states, ( both civil jurisprudence and common jurisprudence systems ) , computerised records are by and large admissible as grounds. For illustration, the English tribunals have recognised other agencies of go throughing on information than paper paperss. In Derby & A ; Co v. Weldon ( No 9 ) ( 1991 ) Vinelott J. held that the database of a computing machine, in so far as it contained information capable of being retrieved and converted into clear signifier and whether stored in the computing machine or record in backup file, is a papers for the intents of the High Court regulations regulating find of paperss.

The ‘best grounds regulation ‘ requires presentation of the best available grounds. In the instance where there is an original papers, a informations message may non be accepted as the best grounds and may be considered as hearsay grounds. However, in the instance where there is no original papers, a information message or a computing machine print-out could be considered as the best available grounds[ 5 ].

A solution to the job given by the Model Law is provided in article 4 that information should non be denied effectivity, cogency or enforceability entirely on the evidences that it is in the signifier of a information message[ 6 ]. Article 8 besides provides in mention to admissibility and evidentiary value of informations messages in any legal proceedings, that nil in the application of the regulations of grounds shall use so as to forestall the admittance of a information message in grounds on the land that it is a data message, or if it is the best grounds that the individual abducing it could moderately be expected to obtain, on the evidences that it is non in its original signifier. Article 8 is intended to do it clear that no affair how the ‘best grounds ‘ or ‘hearsay ‘ regulations apply to informations messages, they will non change the legal acknowledgment and evidentiary value of such informations messages.

2.1.2 The demand of a ‘writing ‘ or a ‘document ‘

The demand of a ‘writing ‘ or a ‘document ‘ is imposed or implied by Torahs in most legal powers. In Australia, for illustration, the Carriage of Goods by Sea Act 1991 ( Cwlth ) defines the term ‘contract of passenger car ‘ as ‘a contract of passenger car covered by a measure of ladling or any similar papers of rubric aˆ¦ ‘ The definition of ‘document ‘ provided in Section 25 of the Acts Interpretation Act 1901 ( Cwlth ) includes:

‘ ( a ) any paper or other stuff on with there is composing ;

any paper or other stuff on which there are Markss, figures aˆ¦ holding a significance for individuals qualified to construe them ; and

any article or stuff signifier which sounds images or Hagiographas are capable of being reproduced with or without the assistance of any other article or device. ‘

Even though the significance of papers is non limited merely to a paper papers, in so far as ocean measures of ladling are concerned, the Australian measures of ladling statute law may cover measures of ladling in paper signifier since the jurisprudence requires them to be signed[ 7 ].

As already noted, the English tribunal has held that the database of a computing machine is a papers for the intents of the High Court regulations. This, nevertheless, may non fulfill the demand of ‘writing ‘ . Since the definition of ‘writing ‘ in the Interpretation Act 1978 ( UK ) includes ‘typing, printing, lithography, picture taking and other manners of stand foring or reproducing words in seeable signifier ‘ , an electronic message itself is non seeable and can non be included in the significance of ‘writing ‘ . Therefore, if a papers is required to be written, such an electronic message is non a papers. One perceiver presents a position that since electronic communicating is more common, the word ‘document ‘ should be more liberally construed[ 8 ].

The Model jurisprudence expressly gives electronic transmittals the same legal position as Hagiographas. Article 5 provides that where a regulation of jurisprudence ( national Torahs ) requires information to be in composing or to be presented in authorship, or provides for certain effects if it is non, a information message satisfies that rule if the information contained therein is accessible so as to be functional for subsequent mention.

2.1.3 Signature and other hallmark

The most common signifier of hallmark required by domestic and international jurisprudence is a manual signature. The map of signature is really important non merely because it authenticates parties to a contract but besides evidences an purpose to be lawfully bound. Authentication of a transmittal by a signature is an indicant to the receiver and 3rd parties of the beginning of the papers and the purpose of the party who issues that papers.

The Hamburg Rules provide for signature ‘in authorship, printed in autotype, perforated, stamped, in symbols, or made by any other mechanical or electronic agencies, if non inconsistent with the jurisprudence of the state where the measure of cargo is issued ‘ . Most commissariats of the Australian measures of ladling statute law necessitate a signature.

The word ‘signature ‘ appears to be restricted by the tribunals to manual signatures. Consequently it is non certain that the tribunals will include an electronic signifier of hallmark as a ‘signature ‘ so that this uncertainness could merely be resolved by statute law. A facsimile signature was accepted as a signature by the High Court of Australia in Electronic Rentals Pty Ltd v. Anderson ( 1971 ) . The country is non wholly clear. In Molodyski v. Vema Australia Pty Ltd ( 1980 ) the issue was whether a facsimile of a signed papers amounted to a papers signed by the transmitter ( the offeror ) which was so signed by the receiver ( offeree ) amounted to a binding signed understanding. Cohn J ( obiter ) stated that whether bringing by facsimile of a signed papers is every bit effectual as bringing of the original signed understanding depends on the purpose of the signer. If the signer intends the facsimile signature to be used to authenticate the papers and regarded as one ‘s signature, so the papers is to be regarded as a transcript duly signed.

In Twyman Pastoral Co Pty Ltd v. Anburn Pty Ltd Young J assumed, non make up one’s minding, that a facsimile could non run into both the authorship and signature demands. In contrast to these two determinations, in NM Superannuation Pty Ltd v. Baker and Others ( 1989 Cohen J ( obiter ) suggested that a faxed signature was non the original signature and so might non be equal where a signature was required. In this instance the issue did non necessitate determination as there was no signature required in the affair at issue.

In the context of EDI systems, signature or other hallmark can be done in many ways, for case,

by utilizing secret digital codifications, similar to PIN Numberss used for automatic Teller machines ;

by utilizing more complex systems of public keys cryptanalysis which provides a mathematical strategy for set uping computing machine informations ;

by utilizing ‘digital signature ‘ as in the Utah Digital Signatures Act 1996 ( see 3.4 ) ; or

by utilizing a specific computing machine package such as ‘PenOp ‘ & lt ; hypertext transfer protocol: //www.penop.com & gt ; where a individual marks the computing machine screen and the package encrypts the signature.

The inquiry as to which electronic signatures engineering is appropriate for electronic measures of cargo is beyond the limited range of this paper. However, one point to be made is that these methods of hallmark may technically verify the beginning of the messages but may non run into the legal demand for signature.

The Model Law explicitly gives appropriate proficient solutions the same legal cogency as a traditional signature and allows the parties to hold on specific agencies. Article 6 of the Model Law provides:

‘Where a regulation of jurisprudence requires a signature, or provides for certain effects in the absence of a signature, that regulation shall be satisfied in relation to a information message if:

a method is used to place the conceiver of the informations message and to bespeak the conceiver ‘s blessing of the information contained therein ; and

B that method is dependable as was appropriate for the intent for which the information message was generated or communicated, in the visible radiation of all fortunes, including any understanding between the conceiver and the addressee of the information message. ‘

Harmonizing to this article, the Model Law does non necessitate a specific technique of signature, any electronic signature engineerings can be introduced in the hereafter as appropriate without altering the jurisprudence.

2.1.4 Document of rubric and negotiability

Negotiable papers of rubric is a cardinal map of measures of ladling. A inquiry refering papers of rubric and negotiability in an electronic measures of ladling context is whether negotiability and transferability of rights in goods can be accommodated in electronic measures.

The UNCITRAL Working Group on EDI has non yet finished its survey on this job. A planning of future work on EDI is a treatment on negotiability and transferability of rights in goods refering nautical measures of ladling. This survey will see a figure of recommendations and proposals by states and international administrations. An interesting proposal was noted by the United States of America and raised as an issue for the consideration of the Working Group.

‘It should be borne in head that what is being ‘transferred ‘ is non the paper or EDI message ( that being merely the medium ) , but the rights and/or rubric to the topic of the dealing. ( UN 1995c ) ‘ .

The result of the last and most of import issue of the functional equality attack is still awaited and should be added to the concluding text of the Model Law.

3. Other efforts to get the better of EDI ‘s jobs

Apart from the extended work of the UNCITRAL on EDI uniformity in international trade, there have besides been other attempts by states and other administrations to ease the usage of EDI for measures of ladling. For illustration, UN/EDIFACT ( Electronic Data Interchange for Administration, Commerce and Transport ) has developed the standard electronic messages that are necessary to make an electronic measure of ladling. The Committee Maritime International ( CMI ) has provided a set of regulations for the usage of electronic measures. There are besides back uping regulations by the International Chamber of Commerce ( ICC ) ; the commissariats related to the usage of electronic measures of ladling in INCOTERMS 1990 and UCP 500[ 9 ]

3.1 The CMI Rules for Electronic Bills of Ladling 1990

The Committee Maritime International ( CMI ) adopted Rules for Electronic Bills of Lading in 1990. The CMI Rules are voluntary so they will use merely if the parties to a contract of passenger car agree so, the Rules so run by incorporation into the contract. The CMI Rules provide for a private register system for electronic messages as measures of ladling. This is distinguishable from a cardinal register system such as that set up by Project Bolero ( see 3.2 ) .

The CMI regulations are operated by the bearer publishing to the shipper an electronic measure of ladling utilizing electronic messages together with a private codification or ‘key ‘ , ownership of which entitles the holder to command the goods. This right of control is passed to other involvements after presentment by the shipper to the bearer who cancels the original key and gives a new key to the new individual entitled to command of the goods. In this manner the cardinal holder should hold the same rights as the measure of ladling holder.

The CMI Rules provide a solution to legal demands of authorship and signature that the bearer, shipper and all subsequent parties using these processs agree that any national or local jurisprudence, usage or pattern necessitating the contract of passenger car to be evidenced in authorship and signed, is satisfied by these processs. In holding to follow these Rules, ( Rule 11 ) the parties shall be taken to hold agreed non to raise the defense mechanism that this contract is non in authorship.

The CMI Rules are presently a utile set of regulations that set up a procedural footing for the usage of electronic measures of ladling. However, the Rules deficiency commissariats covering with the issues of what constitutes an existent reception of an offer and subsequent credence. The Rules besides have no guideline in the event of system failure.[ 10 ]

3.2 Undertaking Bolero ( Bills of Ladling for Europe )

The most recent undertaking on electronic measures of cargo is a pilot undertaking called Bolero ( Bills of Ladling for Europe )[ 11 ]. The undertaking is being operated by a concern pool of transporting companies, Bankss and telecommunications companies and purposes to replace paper-based transportation paperss with an online computerised register.

The undertaking attempts to turn to the particular legal issues that arise when paper negotiable paperss are converted into electronic signifier. In peculiar, Bolero ‘s initial focal point is the usage of EDI systems as negotiable measures of ladling. The procedures used in the undertaking are based on the CMI Rules for Electronic Bills of Lading. The replacement of paper-based international trade paperss with EDI messages will ensue in salvaging clip and costs[ 12 ]and besides addition degrees of security against fraud and a decrease in the possibility of mistake.

The Bolero services are based on the exchange of EDI messages between a cardinal service known as the ‘registry ‘ and users. The users, usually are bearers, shippers, cargo forwarders and Bankss, will direct and have messages from the cardinal register by agencies of a computing machine workstation. Users besides will be able to interchange messages straight between themselves. The cardinal register will incorporate inside informations of transporting paperss contained in a ‘consignment record ‘ . Entree to these inside informations will formalize and authenticate messages received, and automatically bring forth messages to other users in response to messages received.

Under the Bolero undertaking, there are strong security controls and processs to protect the unity and turn out the genuineness of electronic messages. The peculiarly of import security characteristic is the usage of digital signature techniques. These authenticate the message transmitter and prevent alteration of minutess in theodolite.

3.3 The Passenger car of Goods by Sea Act 1992 ( UK )

The Carriage of Goods by Sea Act 1992 ( UK ) replaced the Bills of Lading Act 1855 and by and large trades with rubric to action jobs. However, the Act besides provides an unfastened proviso to widen its applications to instances where an EDI systems is used. Section 1 ( 5 ) allows the Secretary of State to do commissariats for information given by means other than in composing to be tantamount and effectual as if it had been given in a written papers[ 13 ].

3.4 Utah Digital Signature Act 1995

The Utah Digital Signature Act 1995[ 14 ]( the ‘1995 Utah Act ‘ ) appears to be the first statute law in the universe empowering the usage of digital signatures. The 1995 Utah Act specifies the usage of public cardinal encoding and defines a strategy for licencing enfranchisement governments. Digital signatures are created and verified by agencies of ‘cryptography ‘ , the subdivision of applied mathematics that is concerned with transforming messages into apparently unintelligible signifiers and back once more. For digital signatures, two different keys are by and large used, one for making a digital signature or transforming informations into a apparently unintelligible signifier, and another key for verifying a digital signature or returning the message to its original signifier. The keys of a cryptosystem for digital signatures are termed the ‘private key ‘ , which is known merely to the signer and used to make the digital signature, and the ‘public key ‘ , which is normally more widely known and is used to verify the digital signature. A receiver must hold the corresponding public key in order to verify that a digital signature is the signer ‘s[ 15 ]

The Utah Digital Signature Act 1995, although it does non expressly use to measures of cargo, has really extended aims to follow regulations regulating the consequence of digital signature which may be used in assorted sorts of paperss. However, the chief aim of the Act as provided in ‘Part 4. Consequence of a Digital Signature ‘ , is that ‘This portion provides that a digital signature has about the same legal effects as handwritten signature on paper. ‘ Therefore, the Act should be studied for the possibility of acceptance at international degree in order to ease the usage of electronic measures of cargo.

3.5 The Australian Sea-Carriage Documents Bill 1996

The Australian Sea-Carriage Documents Bill 1996 is the latest effort to convey electronic measures of ladling into pattern. The Australian Federal authorities has had before it the proposals for reform of measures of ladling statute law since 1992 and to extinguish some legal jobs incorporated in measures of ladling[ 16 ]. Recommendations made by the Attorney-General ‘s Department Discussion Paper suggested that any reform of the statute law should include a proviso to cover instances where EDI systems are used and the UNCITRAL functional equality attack should be examined with a position to its pertinence to electronic measures of cargo.

As the consequence of the proposals for reform measures of ladling statute law, the Federal authorities presented the Sea-Carriage Documents Bill to the Federal Parliament in March 1996. The Standing Committee of Attorneys-General had besides approved commissariats in the bill of exchange theoretical account measure and agreed to implement statute law in each province every bit shortly as operable.

The Bill contains commissariats on ‘electronic and computerised sea-carriage paperss ‘ which are based on the UNCITRAL Model Law[ 17 ]. The Bill defines the significance of ‘data message ‘ precisely as in the Model Law. Section 6 of the Bill provides:

‘6. ( 1 ) This Act applies, with necessary alterations, in relation to a sea-carriage papers in the signifier of a information message in the same manner as it applies in relation to a written sea-carriage papers.

( 2 ) This Act applies, with necessary alterations, in relation to the communicating of a sea- passenger car papers by agencies of a information message in the same manner as it applies in relation to the communicating of a sea-carriage papers by other agencies aˆ¦ ‘

4. Decision

International attempts to replace traditional paper measures of ladling with an EDI system still hold a long manner to travel. Even though there are a figure of regulations that support the usage of electronic measures of cargo and besides undertakings that really operate electronic measures of ladling in pattern, there is still a deficiency of international assurance in the usage of electronic measures. This is because one of the distinguishing characteristics of international trade is that a big figure of parties may be involved in a individual cargo of goods. In add-on to the purchaser and the marketer, contracts of passenger car can easy affect several Bankss in different states, insurance companies, bearers, forwarders, port and imposts governments. Each of these parties may hold a documental demand so that it is peculiarly hard to invent a comprehensive EDI system for measures of cargo.

In relation to electronic measures of cargo, it remains a inquiry whether a centralized register attack, such as the Bolero undertaking, can work on more than a limited footing. However, the UNCITRAL Working Group on EDI considered that the work undertaken within the CMI, or the Bolero undertaking, was aimed at easing the usage of EDI conveyance paperss but did non, in general, trade with the legal consequence of EDI conveyance paperss. Therefore, peculiar attending demands to be given to the future work of UNCITRAL which could convey legal support to the new methods being developed in the field of ‘electronic transportation of rights ‘ .

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