Lloyd's Maritime and Commercial Law Quarterly
The e-UCP Rules, ETRs and the MLETR Standards
Gabriel Emeasoba*
Transferable papers are a special category of documents. They are used in international trade to transfer rights in goods among trade parties and between them and financial intermediaries. This is possible because, in mercantile law and custom, the right to goods is incorporated into the transferable paper in such a way that the physical paper serves as the vehicle for the transfer of the rights contained in it. Although these transferable papers have for centuries been created and transferred physically, the many vulnerabilities associated with paper-based documents have caused the international trade industry to seek the dematerialisation of these special trade documents. This article analyses the different requirements for the functional equivalence of transferable papers and electronic transferable records (ETRs), as provided under the Model Law on Electronic Transferable Records (MLETR). It argues that the recent framework for the electronic presentation of ETRs in Letter of Credit (LC) transactions (e-UCP Version 2.1) does not ensure that the ETRs presented to banks by LC beneficiaries in fulfilment of their payment obligation under LC contracts are a functional equivalent of transferable papers capable of incorporating and transferring rights to goods.
I. INTRODUCTION
From the legal perspective, the dematerialisation of transferable trade documents and instruments (transferable papers)1 poses challenges due to the fact that transferable papers rely on the legal fiction of incorporation.2 By this fiction, the right to delivery of, or payment for, goods is incorporated into the transferable paper in such a manner that this right cannot originate, or be transferred or claimed, without the paper document or instrument.3 These transferable papers operate as the vehicle for the transfer of the rights contained in them.4 As such, they are not like every other document; they are “documents with benefits”.
* Adjunct Lecturer, Herriot-Watt University.
1. This term is used as a general term for paper-based transferable instruments and documents of title. See UNGA, “Legal Issues Relating to the Use of Electronic Transferable Records—Note by the Secretariat” (8 September 2011) UN Doc A/CN.9/WG.IV/WP.115 (UN Doc 115), paras 5–6.
2. G Finocchiaro and L Castellani, “The UNCITRAL Model Law on Electronic Transferable Records: Introduction and Overview” (2023) No 5 ERPL 2. UN Doc 115, para.6.
3. Z Safranko, “The Notion of Electronic Transferable Records” (2016) 3 InterEULawEast: J Int’l, Econ & Market Integrations 3.
4. F Galgano, Credit Securities (Cedam, 2009), 8; Finocchiaro and Castellani (supra, fn.2), 3.
The e-UCP Rules, ETRs and the MLETR Standards
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