Written by Ellis Lawson (partner) and David Green (paralegal)
A significant milestone in the digitalisation of trade was reached on 26 July 2024 with the World Trade Organisation (WTO) Joint Statement Initiative (JSI) on Electronic Commerce publishing the text of its agreement on electronic commerce.
The wide-ranging agreement’s reference to the facilitation of electronic transferable records will have piqued the interest of those in the trade finance world, with the widespread use of digital bills of exchange, promissory notes, bills of lading, warehouse receipts and other trade documents moving one step closer.
The agreement follows in the wake of the Electronic Trade Documents Act 2023 (ETDA), the UK’s implementation of the UNCITRAL Model Law on Electronic Transferable Records (MLETR), and similar legislation passed in a small but growing number of other jurisdictions, including Singapore, France and the Abu Dhabi Global Market. The ETDA was widely celebrated for its recognition of certain electronic trade documents under English law. However, optimism surrounding the legislation was tempered by the need for widespread implementation of MLETR or equivalent legislation around the world for its full benefits to be achieved. The JSI’s agreement on electronic commerce brings us a step closer to achieving that potential, with more than 80 members of the WTO expressly recognising the importance of facilitating the use of electronic transferrable records and committing to endeavour to adopt or maintain a legal framework which takes into account MLETR.
The impact will not be immediate; the WTO members must agree on how the agreement will be integrated into the WTO rulebook, and countries must then decide how to proceed with their domestic processes. In addition, the agreement includes a number of exclusions and is not currently supported by the USA. However, after nearly eight years of talks, and seven years since the approval of MLETR, worldwide digitalisation of trade documents is growing closer.
Sullivan is at the forefront of the digitalisation of trade and has advised a wide range of clients including banks, alternative credit providers, digital trade platform providers and other fintechs on MLETR, the ETDA and a number of the early transactions taking advantage of the recognition of digital trade instruments under English law. Please reach out to your usual Sullivan contacts if we can assist in any way.