The Electronic Trade Documents Act 2023 has come into force. The Act was the culmination of a project by the Law Commission of England and Wales, and allows for the legal recognition of trade documents such as bills of lading and bills of exchange in electronic form.  It takes effect from 20 September 2023. 

Under the current law of England and Wales, being the “holder” or having “possession” of a trade document has special significance. However, the law does not allow an electronic document to be possessed. As a result, nearly all documents used in international trade are still in paper form, which slows down transactions and is bad for the environment.

The Act enables a trade document in electronic form to be used in the same way as its paper counterpart, provided that it meets certain criteria, including that it is susceptible to exclusive control, and is fully divested on transfer. A reliable system must be used to ensure that the criteria are satisfied. If a trade document in electronic form satisfies the requirements of the Act, it is an “electronic trade document” and is capable of being possessed.

As a consequence of the Act, electronic trade documents, being possessable, will be treated in law in a manner equivalent to their paper counterparts and will have the same effects and be subject to the same treatment and dealings in all respects.

The UK government has estimated that the Act will help to boost the UK’s international trade – which it says is already worth more than £1.4 trillion – by providing benefits to UK businesses over the next ten years of £1.1 billion.