How to get ready for the upcoming UK Electronic Trade Documents Bill
The UK Electronic Trade Documents Bill has entered its final stage of approval, so we take a closer look at what this means for businesses and how they can prepare for the upcoming changes.
On 20th February 2023, the final Committee Stage debate for the Electronic Trade Documents Bill took place headed by Lord Holmes, a member of the UK House of Lords. The Bill has now officially been agreed to and gone to the Commons for final stages before it goes to the King for Royal Assent.
What does this mean for UK trade businesses? And how can they get ready for the upcoming reform? Find the answers to these questions and more in our quick guide below.
What is the UK Electronic Trade Documents Bill all about?
The Electronic Trade Documents Bill is a new piece of UK legislation which was first introduced in October 2022. According to Lord Holmes who is supporting the reform processing, it is “an incredibly important piece of legislation, small, succinct, and simple with just one clear aim – to allow the digitisation of trade documents”. The Bill seeks to replace and digitise the use of paper documents for international trade, such as bills of lading, certificates of origin, and other trade-related documents.
The current trade legal framework in the UK does not fully recognise electronic documents, which brings “millions and millions of pieces of paper, endless hours of burdensome bureaucracy, delays, inefficiencies, and significant environmental costs”. The Electronic Trade Documents Bill aims to address these issues by providing a clear and uniform legal environment for the implementation of electronic trade transactions globally.
The International Chamber of Commerce has estimated that digitalising trade documents could generate £25 billion in new economic growth by 2024, and free up £224 billion in efficiency savings.
As per the new proposed legislation, electronic trade documents should have the “same legal treatment, effects and functionality” as paper documents as long as they satisfy certain criteria. These criteria are:
The electronic document should be susceptible to exclusive control. It must not be possible for more than one person (or persons acting together) to exercise control of the document at any one time.
The electronic document should be fully divested on transfer. When a document is transferred, any person who was able to exercise control of the document before the transfer loses the ability to do so.
A reliable system should be used to ensure that the criteria are satisfied. Any person who exercises control of the document should be able to “demonstrate that fact, to protect the document from unauthorised interference, and to ensure the document can be distinguished from any copies”.
Who is in scope of the UK Electronic Trade Document Bill?
The Electronic Trade Document Bill legislation will apply to both large and SME organisations in the UK. However, the legislation will be permissive which means that firms will not be forced to move to using electronic trade documents and paper documents will still have equal legal footing.
The international transportation of goods requires a number of different transport, insurance, finance and logistics services so the new eBill legislation is expected to have a direct impact on all these sectors. Whilst the financial sector has already made some significant progress towards adopting digitalised documentation and automated trade systems, for example, shipping “has not matured far beyond where it was in the 1400s”. According to the Digital Container Shipping Association (DCSA), over 16 million original bills of lading were issued in 2020 and 99 per cent of them were paper bills.
How to get ready for the Electronic Trade Document Bill
If you are a business owner or a professional involved in trade, now is the perfect time to get ready for the Electronic Trade Documents Bill to ensure a smooth transition. In this section, we’ve listed 6 key steps that you can take to prepare for the reform.
1) Educate yourself
The first step in getting ready for the Electronic Trade Documents Bill is to educate yourself about the legislation. You should read up on the bill, understand its provisions and implications, and stay up to date with any changes that may occur during the legislative process. Here is a detailed summary report of the Law Commission’s consultation paper.
2) Evaluate your current trade practices
Next, it is important to evaluate your current trade practices to identify any areas that may be affected by the new legislation. For example, if you currently rely heavily on paper documents for trade transactions, you may need to invest in new technologies and processes to facilitate electronic document exchange.
3) Invest in new technologies
The Electronic Trade Documents Bill will require businesses to adopt new technologies to facilitate the exchange of electronic documents. As such, it is important to invest in new technologies that will enable you to comply with the new requirements. Some of the technologies that you may need to invest in include electronic signature software authorised signatory management applications like Cygnetise, document management systems, and secure file transfer protocols.
4) Train your staff
If you opt to digitise your trade documents handling system, you’ll have to ensure that your staff are adequately trained to use any new technologies and processes you might need to adopt.
5) Review your contracts
The eBill legislation may have implications for any existing contracts you have in place with your trading partners. As such, it’ll be key to review your contracts to ensure that they are compliant with the new legislation. You should also consider including clauses in your contracts that address the use of electronic documents in trade transactions.
6) Consult with experts
If you are unsure about how the Electronic Trade Documents Bill will affect your business, you might consider hiring a consultant or seeking expert advice from your legal counsel to ensure that you are fully prepared for the reform and any potential implications.
How Cygnetise can help you
Cygnetise complements the use of e-signatures and document management systems and allows you to manage, distribute and control authorised signatory data digitally, in real-time, in a secure, transparent and tamper-proof way.
By using Cygnetise, you can now easily:
update, share and manage signatory data in real-time, from anywhere in the world,
have one single source of truth,
have instant, remote access to the latest signatory data entry,
keep a historical record of any changes made,
have a sufficiently standardised process across all your functions/entities,
efficiently share your up-to-date signatory data with your banks.
This can also deliver some additional direct benefits like lower operational and financial fraud risks and enhanced governance (ESG) and internal control systems.