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Transforming the bill of lading into the electronic form
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Transforming the bill of lading into the electronic form
Abstract
An increasing application of computers has been documented amongst the merchants for the sake of facilitating efficient transactions on an international context. This has led to a believe among most observers the use of electronic commerce on full fledge is almost coming to be a reality. The use of electronic data interchange has been efficient and also quick with great expectations in the shipping industry of embracing the benefits that are associated with its adoption and more so in the areas that deal with the bill of landing. The process dealing with the introduction of the technology has faced numerous legal obstacles leading to its slow pace of implementation. The greatest contributor of the slow implementation process is the insistence of the law on documentation based on paper work. Despite the occurrence of such impedences there has been significant development in the promotion of the application of the electronic data interchange in this industry. This paper posits to compare and contrast the arguments of authors on the controversy surrounding the replication of the bill of lading in electronic form. The paper also attempts to analyse the arguments of those who support the electronic version and those who do not support the development . It has also been important to note the specific areas where the contributors have agreed, and existing gaps with respect to their opinions. The paper also looks in to the crisis that touches on the document of title function and how to replicate this function and its effectiveness. The Rotterdam rules on the topic of electronic transport records have also been addressed in this paper linking it to the possibility of giving a solution.
1. Introduction
Bill of lading
The bill of lading has the implication of a document that a carrier gives to a shipper to serve the purpose of acknowledgement of reception of specific goods on board in form of cargo to be conveyed to a specific destination so that they can be delivered to a specific identifiable consignee. This document is popular in modes of transport such as air, water, rail or road. This document is in some cases applied in form of traded object and it may serve as evidence of goods carriage contract. Other purposes that can be derived out of the document include the following:
Serves as the evidence of carriage or chartering contract validity
The documents also ascertain the validity of a carriage contract with the incorporation of full terms contract in the midst of the consignor and carrier.
The document also serves the purpose of a receipt that the carrier should poses for the sake of confirmation that that goods are matching the description of the contract and their reception in the most desired condition. The cleanness of the bill depends on the condition that the goods have been received .
The document also serves transfer purposes governing all legal aspects allied to the physical carriage of the goods and in a similar manner as a cheque or alternative negotiable instrument, there is a possibility of endorsing it in a manner to effect the ownership of items that are n transit.
The intention behind the application of electronic commerce is the automation of the processes of business. The transactions that can be accomplished in a completely paperless way coupled with the movement of information from one application of a computer to the next application should be accomplished in exactly this manner. This is the essence of the use of electronic data interchange in fulfilling the requirements of electronic commerce
The innovation in technology contributes to a very vital role in the business and the economy in general. Since the advent of the industrial revolution, there has arisen a great level of business susceptibility to advancement in technology. With the appreciation of the advancement in technology, the end of the gone century was associated with the introduction of information technology in all sectors of business. Within a short span of time since these innovations, technology proliferated to the extent that it was a significant strategic weapon to facilitate the smooth running of business. Based on this realization, developments in computer systems as well as technologies were evident in the shipping business .
Majority of the organizations such as the ones of exporters, the banking institutions, the importers, the authorities of governments together with the freight forwarders among others were in a dire need for the information regarding the goods that they were dealing with. The need for this important technology was further supported by the requirement of the accuracy of the information. The technology facilitated for the interchange and exchange of this information as data that can be transmitted and also received through electronic means. The systems of electronic data interchange entails an electronic system in which computers are effectively utilized for the purpose of a formal exchange of data between the computers without necessary requiring to use paper documentation . The systems of electronic data interchange may also be perceived as an avenue of electronic transmission of commercial documents. The most significant purpose that it serves includes increasing the speed of operations that is a very essential component of trade coupled with the replacement of the paper based bill of landing that consequently increases the degree of accuracy and therefore minimizes the possibilities of frauds. The focus of this paper therefore is exploring the benefits and possibilities of success in the transformation of bill of lading into the electronic form . The role that electronic data interchange plays in the bill of lading is also clearly focused with the inclination towards efficiency and effectiveness of business processes of shipping in addition to trade in consideration of the complex environment of doing business. The paper goes further in the identification of some of the potential problems that are allied to the implementation of these transformations of the bill of lading in electronic form. T has also been imperative to suggest some of the possible measures that have been identified as being productive towards the solution of the problem and the areas that require further research to make sure that the development is a success .
The success in international trade has currently called for an extensive as well as ever increasing application of computer technology which is the best facilitators of global transactions with a shift in the direction of electronic commerce. This calls for the introduction of electronic data interchange. With respect to the shipping industry, the systems of electronic data interchange have undergone some development with the intention of replacing the shipping documentation using traditional paper method with specific interest in the bill of landing. This is based on the realization of the importance of speed in this nature of transactions .
Some obstacles however face the introduction of the electronic data interchange in the context of electronic bills of landing. The contributors of the obstacles include the development in computer technology coupled with some legal issues. The most important obstacle raised by some of the contributors in the debate in this respect lies in the legal requirements for the use of documentation that is based on paper work. The issue has a close relationship on the manner of conveying the message so that all the requirements can be achieved considering the requirements of signed documents related to bills of landing .
Other people have argued that the functions played by the bill of landing are so important, serving the purpose of a title document to goods that are shipped and therefore it qualifies to serve as a security to banks and the holder of the document is empowered to sell the goods while they are still on transit. This is a special function of paper based bill of landing that can hardly be incorporated in the documents that have been electronically generated.
The need for efficiency in business
The business leaders of today are compelled towards streamlining the processes of business with the intentions of cutting costs coupled with the improvement of efficiency. Considering that the core business of an organization is to produce a specific product, the ultimate business line is an efficient management of the documents that controls the products flow. It is unfortunate however that has estimated over 80 % of the receivable processes in business-to-business continue to use huge volumes of paper. The implications of this are that most organizations have embraced an insignificant fraction of the opportunities of cutting costs . The costs are attributed to wear and tear of the printer, Labour time, the Toner Paper Pre-printed forms, the use of envelopes and postage, Cover pages, Facsimile charges, Office space, Copies, Filling supplies, Cabinet space, management and movement of the invoices .
It is the duty of the management of companies to move forward economically through the implementation of solutions of document management. The international community has made significant strides in awareness of advantages allied to electronic operations and therefore taking serious efforts to tap the benefits. The efforts have facilitated the acceptability of electronic bill of landing in the context of maritime trade community through overcoming potential hindrances at varied levels whether they legal or even mental. One of the most important challenges is the legal issues that lawyers are faced with while dealing with the solution of issues in case of trading electronically. Despite the fact of existence of some amicable solutions, further research is still needed to come up with some changes in law. This will be an encouragement to all the concerned people to change their mind in a serious manner. Possibilities of reflections of the realities in the societies by the law may not be underestimated. With the ever changing technology in the business world, the maritime industry should not be left behind and change is inevitable and it is the high time that the law gives a response to the issue .
Rotterdam rules on electronic transport records
Article 1 (1) of the Rotterdam rules on electronic transport records provide for the “contract of carriage” being the “means of contract whereby a carrier, against payment of freight, agree to to carry goods from a specific place to another. The contract provides for the carriage by sea and is also meant to provide for the carriage by supplementary modes of transport along with the sea carriage’’. This therefore has the implication that in case the carriage is not by sea, the alternative is by land, meaning rail or road.
Rotterdam mode also advocates for electronic commerce through updating as well as modernizing commerce. This is provided for in Chapter three in articles 8, 9 and 10 of the Rotterdam rules on electronic transport records. Article 8 addresses the application and the effecting of the electronic transport documents. According to the provisions of this article 8 of the Rotterdam rules on electronic transport records, anything meant for being in transport documents according to the convention requires recording using electronic transport records, on condition that the issuance along with the subsequent use of electronic documentation has been consented by the carrier as well as the shipper .
The origin of electronic commerce application is attributed to the revisions made to the Kyoto Convention in 1999. The changes made called the adoption of the concept behind the application of innovative electronic technology in the context of the customs practices. The major theme behind the changes made during the “Revised Kyoto Convention of 1999” revolved around the simplification of the Customs procedures laying its major emphasis on the use of information technology coupled with the management of risks with the application of automated systems with a major focus on the shipments exposed to high risks and their inspection.
The issuance, the exclusive control together with the transfer of the electronic transport record bears similar effects to those of issuance, the possession as w ell as the transport documents.
According to the provisions of article 9 of the Rotterdam rules on electronic transport records, the procedures responsible for use of electronic transport records that are negotiable have been facilitated. Article 10 of the same deals with the replacement of the electronic documents for transport that are negotiable and the replacement as well as surrender of the negotiable documents. Rotterdam rules on electronic transport records remove the doubts of electronic commerce and it also facilitates modernization of innovative global vessel carriage.
Rotterdam rules on electronic transport records are the most recent signals to the effect that the application of global commerce shall continue to receive support, while overlooking the use of paper and concentrating on electronic transmission of data.
Added to the knowledge required of electronic transport document, all the existing links in supply chain may be availed to the consignee in order to have a clear knowledge of the loaded goods, the time that the goods left, the exact place it has reached and the anticipated time of arrival among other things. These are among the vital information that accompanies electronic data which facilitate the capturing all what is needed by the importer. Generally, the shift towards the implementation of electronic data transmission along with the use of smarter container technology is a good source of direct benefits of supply chain to the bottom line of the imports. The use of electronic documentation along with smart container technology is showing a good sense of business in addition to being a good legal proptection .
Thus in consideration of the fact that the discovery of ESI is likely to in the context of the section of the federal civil litigation, the international acceptance of the use of electronic commerce according to the provisions of the Rotterdam Rules accompanied by associated importance as indicated in the changes made in Federal Rules of Civil Procedure are likely to be indispensable allies to the importers as well as exporters as they modernize the international supply chain. This is the most important goal that the Rotterdam Rules strives to achieve .
Leaving the legal implications aside, the use of electronic data interchange in the context of international supply chain has important implications on the consequences of cost-benefits. In considerations of costs, the most important question is the requirement for documentation using paper. The reduction in the costs associated with the use of papers, the solutions of the problems of filling the papers and also their safe storage, coupled with the elimination of possible falsification in the paper documents at the time that the goods are en route has been achieved through the use of electronic data interchange and the provision of an electronic end to end line of supply. The portals that are incorporated in the automated commercial environment include the following:
* Automated Manifest System (AMS)
* Automated Broker Interface (ABI)
* Automated Export System (AES)
* Automated Commercial System (ACS)
The Rotterdam rules on electronic transport records having the ortigin-to destination coupled with the electronic transmission is currently in the best position of complying with the most important components as needed by the “Customs Trade Partnership Against Terrorism (C-TPAT)” and is responsible for authorization of security that is initiated at the stage of stuffing and culminating at the destination, all which are evident in the electronic data interchange .
Rotterdam rules and the legal implications of ESI
Based on the changes that Federal Rules of Civil Procedure encountered, all possibilities exist that the use of ESI may become persuasive evidence towards the actions of CBD as well as the cases. A good example of this is the situation where a specific foreign shipper makes use of the smart container technology accompanied with a breach during transhipment at the time of container movement in which case some counterfeit goods are incorporated in the cargo, the shipper, the consignee as well as the carrier are empowered to demonstrate to the Customs & Border Protection, CBD, through the use of ESI about the breaching of the container. In addition to this, a breach verification is possible at third party where the movement is monitored in addition to the status in addition to the status of the revealed container which may be recorded then stored with an indication that that they were breached in a manner that was surreptitious. In a situation of this nature, the consignee, the shipper as well as the carrier with the application of the smart container control center, have a chance of demonstrating to the relevant authorities about the proper and accurate stuffing of the container all along from the origin under a supervision of an individual who can be identified and vetted but deliberately made the certifications that the contents of the cargo were correct and complete .
2.1.1 Legal recognition and evidential value of data messages
One of the most important issues arising from the application of data message is whether it can be considered as valid document together with its acceptability to serve as evidence in the law courts. In majority of the civil as well as the common systems of law applicable in a variety of countries, these records that have been computerized are generally acceptable to serve the purpose of evidence. A good example of this is the English courts that recognize alternative approaches of disseminating information apart from the use of paper documents. Past evidence has indicated that the computer database can serve as a valid document in courts if only the information stored in that computer can be retrieved and be read without difficulties when retrieved from the computer or the back up file records of the computer.
The most appropriate evidence rule calls for the presentation of evidence that can best be accessed. On condition of the availability of original document, then the data message becomes unacceptable as the most appropriate evidence which can then qualify to be hearsay evidence. However, on condition of the absence of the original document, then the data message or a printout from the computer qualifies to be the best evidence that is available. The Model law is a basis of solution to some of the up coming problems which provides that the denial of effectiveness, enforceability or validity of an information is not warranted based on the fact that the information has been obtained from data message
2.1.3 Signature and other authentication
Authentication of documents is a very vital part governing the validity of the document. More often than not manual signatures abide during authenticating documents that are used in domestic as well as international law. The role that is played by a signature is very crucial in the process of authenticating the relevant parties involved in a contract in addition to serving as evidence of the intention of a legally binding document. The use of a signature for the purpose of authentication is a clear indication to recipient party together with the third parties about the document origin coupled with the intentions of the party responsible for the document issuance.
A signature should hence be given in the form of writing, facsimile printing, stamped, perforated, in symbols or by use of any alternative mechanical or even electronic means and should comply with the laws applicable in the particular country where the bill of landing is to be issued. In most cases, there appears to be restrictions of the term signature to imply to the manual signatures. This therefore means that the certainity of the courts to consider a signature authentication through electronic means is not guaranteed and the resolution of an uncertainty of this nature only rests on the courts.
With regard to the systems of electronic data interchange, there are a varuiety of ways to accomplish authentication and signature. These includes the following:
The use of digital codes which are secret in the same manner as the PIN numbers that are applicable in the case of automatic teller machines
The use of other systems that are more complex that applies public keys cryptography through the provision of mathematical schemes which arrange the computer data
The use of the digital signatures applying the concepts such as the “Utah Digital Signatures Act 1996”.
The application of some software in the computer that allows a person to sign on the screen of the computer and the signature is then encrypted by the software. An example of this software is the ‘PenOp’ http://www.penop.com
In the later years as the technology was gaining momentum the developers in that field started developing electronic data interchange systems which could be applied in the management of the documents in an electronic format. This meant that these documents and all the files which shall find there origin within the computer system is stored just within the same computer functions. An improvement which was launched on this document management systems at the later stages resulted into a rebirth of most efficient and appropriate electronic data interchange system which called the document imaging systems. This name originated from the fact that they mainly concentrated on the acquiring, safe storage, effective numbering and the retrieval of data in any case the same shall be considered important. The electronic data interchange offered the organizations several benefits at that moment given the fact that they were then in a position to get the necessary faxes and the forms, the copies of the same could also be effectively saved in the form of images. The stored data had some advantages in which they had high security and the retrieval is also very fast thus saving a lot of time .
The evolvement of the electronic document management system reached an extent in which the systems were therefore able to accept and store whatever kind of the file depending on the format and the size. The organizations that were making use of these management systems could therefore be able to store and retrieve these files from the internet where even sharing was necessary with a lot of improved security across the network. Other functionalities which were supported again include the efficient tools for document manipulation and the auditing techniques were also acquired.
The most important issue that needs to be addressed in this respect is the choice of the most appropriate option of the technology of electronic signature to be applicable in the context of the bill of landing. This is an area that calls for further research because a gap in knowledge exists in as far as the issue is concerned. There are divergent views among the scholars who have worked in this field and a clear conclusion has not been arrived at. It is however important to consider the fact that the above mentioned ways of authentication have the possibility of a technical verification of the message origin although some of them fail to meet the legal requirements required of a signature.
On legal grounds, paper documents are generally acceptable to serve as evidence in any situation on condition that the bear a signature in accordance to the relevant laws. The signature may be appended with the use of a hand written authentication, the use of fingerprints or the use of stamps. According to the provisions of the law, the messages in the form of Telex and the Fax can only be acceptable to give evidence in the situation that the original documents that were filled in the office of issue can be accessed and the originals bear the original signature of the sender. These types of messages can only be valued in form of the common document with respect to the proof. In absence of this, the messages may be disregarded except when they are used to seek guidance .
Faxes along with telexes applicable in some of the marine contracts are well thought-out as evidence to prove the contracts have been concluded through correspondence in writing as well as they are necessary to prove and also establish the maritime transportation contracts. It is however worthwhile to note that the messages of this nature never constitute an appropriate condition that may facilitate concluding such contracts. In place of this, they are used to facilitate for a proof of conclusion of the contracts. A contract of carriage is not necessary a formal type of a contract that can facilitate for any person to claim the nullification of the contract in case it has not been accomplished in writing. This therefore has the implication of the fact that the exchange of the relevant data with the use of an electronic system has an insignificant impact in as far as the contract conclusion is concerned.
Despite all the efforts made towards the reduction of the use of paper documents in transactions of the bill of lading coupled with the ever rising inclination towards the adoption of electronic means provided by computer technology in as far as the contracts of transportation and ecommerce are concerned, a number of difficulties still surround the system. Among the most important of the difficulties are the legal disputes which are associated with the application of this system on a general context and particularly with regard to the maritime contracts. There exists several alternatives whose innovations was meant to be substitutes to signing of the paper documents coupled with the efforts of compliance to the actual identity of electronic message sender. This was achieved through the use of a specific code that was known by the sender and the recipient. Despite these efforts, the courts have refused to recognise the use of electronic transmission of data with the arguments that the traditional documentation is the only valid form of authentication in consideration of the legal conclusiveness. The court has the upper hand in the decision of the conclusiveness of the proof of electronic message .
In consideration of the advantages that are associated the use of electronic data interchange, some important complications needs to be addressed. These include the need for the signature of the sender and the complication arising out of the legal procedures of the law which is different in the context of different countries. Other issues of complications arise out of the need for a distinct appointments as well as locations that may be stipulated and they must comply with the offer acceptance and more so in the case of the commercial transactions because they present the most abundant contracting procedures. The contracts of this nature are on a continuous increase on a daily basis thus requiring the application of computers in the conclusion of the contacts between potential buyers and the sellers without the requirements for the use of paper documentation. The contracts of this nature may be associated with some characteristics of being accomplished in the absence of the two concerned parties without any one of the parties attempting to execute the agreement in person. In essence therefore this has the requirements that a specific period of time lapses irrespective of whether it is long or short before both of the parties express their desire un till such a time that the two parties are aware of the existence of such kind of an offer or acceptance.
The courts in some cases however recognize the data from a computer to serve as evidence in issues where proof is required. It is important to realize the fact that a bill of lading has the implication of a document that a carrier gives to a shipper to serve the purpose of acknowledgement of reception of specific goods on board in form of cargo to be conveyed to a specific destination so that they can be delivered to a specific identifiable consignee. This document is popular in modes of transport such as air, water, rail or road. This document is in some cases applied in form of traded object and it may serve as evidence of goods carriage contract.
Some legal issues are therefore eminent in as far this subject is concerned. This is exemplified in a situation where an electronic message is sent from a country that is foreign considering the time as well as the place where the contract should be concluded together with the interaction of acceptance offer. This is a potential cause of conflicts in the governing laws in which case the courts cannot accept neither recognizes the electronic message to serve as an evidence in lawsuits. Additionally the parties with onus of proof have the duty of proving the message content. The ports custom authorities in some of the countries fail to accept the electronic messages together with the shipper in which case it becomes difficult to approve electronic messages that the carrier presents. The reason behind this is because the message may not be taken as a replacement to the paper documentation .
These traditional paper bill have similar characteristics that are contained in a bill of lading that serves the purpose of representing symbolic ownership of the goods that have been shipped. The bill of lading is therefore entitled to serve similar duties as the ones that the traditional paper bill serves in consideration of the requirements to prove the process of shipping together with the conclusion of Maritime Transportation Contract.
Conclusion
The global efforts towards the replacement of traditional bills of landing based on the use of paper with a system of electronic data interchange requires a lot of input by scholars in form of research. Great developments are required to see that the system becomes effective. Despite the fact of the existence of a variety of rules that are in favour of transformation of the bill of lading in to electronic form in addition to the existing projects that have implemented the system, some form of global confidence is still lacking in as far as the application of electronic data interchange is concerned. The reason for this deduction is imputed to the fact that there are some distinguishing features in as far as the global trade is concerned requiring the participation of so many parties in one shipment of the goods. Added to the buyer and the seller, there is a possibility of the involvement of a variety of banks in the course of the transaction hailing from divergent countries, different carriers, insurance companies, forwarders ports as well as custom authorities. All the concerned parties may need to be provided by some documents which complicates the possibility of devising a system of electronic data interchange that is comprehensive enough to address the needs of the bill of lading.
References
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