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Current law requires trade documents to be paper-based

International trade involves a wide range of processes which rely on paper documents. These include transport, insurance, finance and logistics. It is estimated that 25 billion paper documents are created globally each year to facilitate international container shipping.

Many of these processes and their underlying laws are based on practices which are hundreds of years old. There is particular importance in having “possession” of certain types of trade document, including bills of sale and bills of exchange. But the law does not allow electronic documents to be possessed. This explains why nearly all international trade documents remain paper-based. Trading using electronic documents is now viable as the technology exists to create unique, identifiable electronic documents.

The Bill allows electronic trade documents to be used

The Bill removes this legal impediment to allow documents in electronic form to be legally recognised in the same way as paper documents, provided they meet certain tests. The Bill refers to such documents as “electronic trade documents.” The Bill follows a report and recommendations by the Law Commission.

Benefits of using electronic trade documents

The Government believes the Bill will bring a number of advantages: electronic trade documents will be cheaper, simpler, faster and more secure than paper documents. Use of electronic documents will reduce trade costs, speed up transactions, reduce error and bring environmental benefits. The Bill has generally been welcomed by stakeholders.

There will be no legal requirement for businesses to use electronic trade documents – they can choose between paper and electronic versions.

The Bill was introduced into the Lords and received cross-party support. It was not amended in the Lords. The Bill follows a special procedure for Law Commission Bills. It had its second reading committee in the Commons on 12 June 2023 and its Public Bill Committee on 19 June.

Territorial extent

While the Law Commission’s recommendations covered England and Wales only, the Government has extended the Bill to cover the whole of the UK. The vast majority of the Bill applies to all parts of the UK. Part of one clause applies to Scotland only.

Legislative consent: Scotland

Most provisions fall within the devolved competence of the Scottish Parliament. At first, the Scottish Government did not recommend that the Scottish Parliament give legislative consent due to concerns over delegated powers. Following amendments made in the Commons Public Bill Committee (PDF),  the Scottish Government has now recommended that legislative consent be given. The Bill falls outside the legislative competence of the Northern Ireland Assembly and the Senedd Cymru/Welsh Parliament.

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