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Highly anticipated legislation in the United Kingdom designed to place electronic trade documents on par with paper trade documents came to fruition when the UK Electronic Trade Documents Act 2023 was enacted on 20 July 2023.
With the Act entering into force on 20 September 2023, this pivotal law ushers in a new era for actors in the supply chain, demanding practical understanding of its implications on trade and financing practices if they are to benefit from it. There are a host of important aspects of the Act which industry and regulators now need to work through. Among the most crucial, the Act describes an electronic trade document as one dependent on use of a ‘reliable system’ for its processing and provides some criteria for what constitutes such a system in the eyes of the law.
For purposes of the Act, its Section 2 (Definition of “electronic trade document”) provides that information constitutes an ‘electronic trade document’ if a “reliable system” is used to meet five criteria and that “[w]hen determining whether a system is reliable”, seven specified matters may be taken into account. As a result, multiple factors enter into play in this area.
“Whilst it can be said there is now legal certainty under UK law for use of electronic documents that satisfy the requirements of the law, there is still the need for certainty on whether a system is a ‘reliable system’. This is the assurance needed for massive uptake of electronic documents”, said Singapore-based trade and supply chain finance specialist Tat Yeen Yap who has been a drafter of ICC and ITFA rules for use of electronic records. “eUCP credits will become mainstream when the trade ecosystem establishes and adopts the use of reliable systems for electronic documents. How do we get there? This is the question that now needs to be answered.”