The paper-based nature of trade finance presents significant risks of error, fraud and duplicated costs.

The COVID-19 pandemic has revitalised efforts towards digitisation, because the transport of these documents is dependent on courier services and the processing is dependent on in-person handling. The International Chamber of Commerce (ICC) called on governments and central banks in April 2020 to take emergency measures to enable an immediate transition to paperless trading to mitigate the effect of COVID-19 on related workplace restrictions.

In 2017 the ICC launched a Working Group on Digitalisation in Trade Finance to serve as a coordinating body for work related to the digitisation of trade finance. According to a survey conducted by the Working Group on the legal status of electronic bills of lading there are three main challenges to the digitisation of trade finance:

  • the development of adequate technology;
  • uncertainty over the legal status of electronic trade documents; and
  • coordination between stakeholders.

Blockchain enables transactions to be recorded on a distributed ledger across a network of users which are stored in blocks of information. This technology has a number of potential benefits in the trade finance context, including immutability; reduced transaction fees by virtue of automated contracts; improved traceability by virtue of lasting audit trails; the ability to review financial documents in real time, thereby reducing the delays in shipping; new levels of connectivity; and protecting privacy and ownership rights. There are a number of platforms currently using blockchain technology to offer entry into the world of digital trade, including Contour, Marco Polo and Trade Information Network. Despite the benefits of using blockchain technology, digitisation comes with its own risks as well however, including fraud, cybercrime, and a lack of interoperability between the various blockchain networks, which can impede the ability to access and share information in cases where stakeholders make use of different platforms.

It can be inferred from the Electronic Communications and Transactions Act 2002, which allows for the recognition and use of electronic signatures, that that the use of electronic signatures in terms of the Act applies to bills of lading. The Act specifically exclude bills of exchange from being signed electronically.

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