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Ship Agency : Tuesday 3rd October

15.30 - 17.30 Paul Mallon - Bolero.net


Electronic Bills of Lading in the Bolero System

Alan Asay, Bolero International Limited, London

Challenges for electronic bills

Why have there been no electronic bills of lading until now?

    • Economic reasons for electronic b/ls are compelling.
    • Transactions not involving b/ls have been done electronically for years.

Problems in doing bills of lading electronically:

    • Lack of legal infrastructure
    • Electronic fraud (imposters, forgers, alterations)
    • Loss of business functionality and reliability
      • Transferability: Ability to transfer rights while underway
      • Credit security: Ability to use the b/l as collateral
      • Established practices and risks

Legal infrastructure for electronic bills

Problem: Existing global fabric of treaties and national laws:

    • Assumes a tangible document as a bill of lading
    • Applies to something it never envisaged?

Solution: A global contract-based infrastructure: The Bolero Rulebook

    • Serves a community of interest
    • Adapts easily to changing circumstances/opportunities
    • Capable of supporting a technically robust system in a timely manner

Examples: Bank cards, payment and settlement systems

Secure messages prevent fraud

Digital signatures and public key certificates ensure:

    • Who authenticated (signed) this message?
    • Is the message intact?
    • Can I therefore hold the signatory responsible?
    • Has the message been kept confidential? (optional)

Better even than a handwritten signature.

Core Messaging Platform provides:

    • Acknowledgement upon receipt
    • Central tracking and tracing
    • Monitoring of message flows by sender and recipients.

Better even than a paper courier

What is a Bolero Bill of Lading?

2 A Document

Digitally signed in a Bolero message

Tracked through the Bolero System

Much like a paper bill of lading

Content left for parties to decide

Termed a ‘BBL Text’

Plus:

A Database record

Kept centrally in a secure database called the ‘Title Registry’

Updated through digitally signed Bolero messages

Shows how roles change as functions are executed

Termed a ‘Title Registry Record’

Traditional business functions of b/l

What a bill of lading does:

A receipt for the goods BBL Text serves as a receipt.

Contract of carriage: Creation of BBL forms contract.

Transfer is designation in Title Registry with novation* of contract

    • Establishes
    • Transfers

Constructive possession Creation of the BBL effects a bailment. Transfer or pledge is a designation in the Title Registry with attornment* of the bailment (constructive possession).

    • Establishes
    • Transfers
    • Pledges

Orderly termination Surrender terminates the BBL.

May also switch to paper.

    • Who receives the goods
    • Claims

Novation of the contract of carriage

Novation is replacement of an existing contract by its parties. A Roman law concept.

Not an assignment of the contract:

Form requirements in effecting assignment

Form requirements for notice of assignment to assignee

Issues whether the burdens as well as benefits are assigned

Novation occurs automatically in the Bolero System

Pursuant to Bolero Rulebook § 3.5.1

Upon designation of a contract successor

Successor may refuse within 24 hours

Attornment: Transfer of constructive possession

Result: Electronic bill of lading

Legal effect like a paper bill, but with a different legal rationale (not statute/treaty but a contract-based infrastructure).

With advantages of electronic form:

Fast transmission: It is in the right place when needed.

Less expensive: Digital transmission costs less than physical.

Integration with existing databases:

    • All Title Registry Instructions are in a prescribed form, and
    • All BBL Texts can be in a standardised form if agreed.
    • Result:
      • Faster more accurate data by eliminating manual data entry.
      • More checking and responsiveness possible.

Improved security:

    • Paper documents can be forged, but digitally signed documents can be forged only if the private signing key is lost.
    • Enrolment ensures that all parties are known to all other parties