UNCITRAL Model Law on Electronic Transferable Records

The use of electronic transferable records may bring a number of benefits to commerce due to speed and security of transmission, the possibility of reusing data and of automating certain transactions through “smart contracts”. Those features may be of particular interest for the finance and transport business sectors. Particularly relevant for developing countries is the possibility to establish a market for electronic warehouse receipts, which, in turn, may facilitate farmers’ access to credit. However, an adequate legislative framework is necessary to provide certainty on the legal status of electronic transferable records and therefore enable their use. Building on existing UNCITRAL texts on electronic commerce, and namely on the principles of functional equivalence and of technology neutrality underpinning those texts, the UNCITRAL Model Law on Electronic Transferable Records aims at legally enabling dematerialisation of transferable documents and instruments such as bills of lading, promissory notes, bills of exchange and warehouse receipts. It does so by setting forth the requirements for the equivalence between paper-based transferable documents and instruments, on the one hand, and electronic transferable records, on the other hand. Thus, the Model Law allows transposing the notion of “possession” in an electronic environment. The Model Law provides also guidance on the assessment of the reliability of the method used to manage the electronic transferable record, on change of medium (electronic to paper and the reverse), and on cross-border issues, among others. Being technology-neutral, the Model Law may accommodate the use of emerging technologies such as those based on distributed ledgers or blockchain technology. The Model Law is accompanied by an Explanatory Note to assist States in enacting its provisions and to offer guidance to other users of the text.