WEBINAR

This webinar was delivered by Mr Luca Castellani, Legal Officer at UNCITRAL, and moderated by Mr Adrian Lai JP, Deputy Secretary-General of AAIL. It attracted over 120 registrants coming from 30 jurisdictions all around the world, reflecting the global urgency to transition from paper-based trade to digital ecosystems. The discussion centred on the role of the Model Law on Electronic Transferable Records (MLETR) in bridging legal and technological gaps, enabling secure and interoperable digital trade practices.

MLETR: Bridging Legal and Technological Gaps
The MLETR, adopted in 2017, provides a legal framework to grant electronic transferable records (ETRs) – such as bills of lading, promissory notes, and warehouse receipts – the same legal standing as their paper counterparts. Central to MLETR are three principles: (1) control, which replaces physical possession with exclusive digital authority over ETRs; (2) singularity, ensuring each ETR is uniquely tied to a specific obligation to prevent duplication or fraud; and (3) integrity, requiring tamper-evident records of all lifecycle events, from issuance to transfer. The law’s technology-neutral design allows integration with emerging tools like blockchain, IoT, and smart contracts while promoting interoperability across diverse systems.

Global Adoption and Implementation Challenges
Mr Castellani highlighted progress in jurisdictions such as Singapore, UK, and Bahrain, which have fully adopted MLETR. France has aligned its legislation with EU trust service regulations, while the US and Germany rely on compatible frameworks. China and Japan are focusing narrowly on digitising bills of lading. Despite the momentum, challenges persist. Financial institutions, for instance, remain risk-averse compared to logistics sectors, which enthusiastically embrace digitalisation. Private-sector initiatives, such as the ICC’s Digital Standards Initiative and reliability assessments by organisations like P&I Clubs, are advancing technical benchmarks to build trust in ETR systems. However, fragmented adoption risks creating digital divides, underscoring the need for harmonisation through free trade agreements and cross-border collaboration.

Hong Kong’s Legislative Pathway
Enacted in 2000, Hong Kong’s Electronic Transactions Ordinance (ETO) currently excludes negotiable instruments, creating a legal gap that MLETR could address. Proposed reforms include amending the ETO to remove exemptions for negotiable instruments and incorporating MLETR as a standalone chapter. Updates to the Bills of Lading and Analogous Shipping Documents Ordinance (Cap. 440) would further empower regulators to authorise electronic transactions. Mr Castellani noted Hong Kong’s strong foundation in UNCITRAL’s e-commerce laws, simplifying MLETR integration. The government’s 2024 Budget Speech signalled openness to such reforms, aligning with industry goals – such as carriers’ pledge to achieve 100% electronic bills of lading by 2030.

Practical Benefits of Adopting MLETR
The webinar emphasised MLETR’s transformative potential. Digitising trade documents reduces fraud through real-time verification of ETR holders and IoT-enabled cargo tracking, minimising misdelivery risks. Automation streamlines processes, cutting manual errors and accelerating trade finance, particularly for small and medium enterprises. Unified data streams enhance supply chain visibility, enabling agile responses to disruptions. Additionally, MLETR supports compliance with evolving standards, such as ESG (environmental, social and governance) reporting and carbon footprint tracking, by embedding auditable data directly into ETRs. Cross-border recognition of ETRs under harmonised rules further simplifies multinational transactions, fostering global trade resilience.