UNCITRAL – Electronic Transferable Records – Moving Right Along

The official report of the October 2012 meeting of the Working Group on Electronic Commerce of UNCITRAL is now online as the first document at this site. (16 pages including formalities)

You will recall that the project is looking for international rules to govern the creation and use of electronic transferable records (ETR), that is, documents that entitle their holder to the delivery of goods or money. The meeting decided that there was enough interest in the topic among businesses and member states to pursue the topic further.

At the outset, the group determined that the elements of negotiability were matters of substantive law, and this project should be about electronic format only. As a result, the work could proceed without distinguishing between negotiable or non-negotiable transferable records. (20-21 – paragraph numbers of the report) It did, however, distinguish between transferable records and ‘electronic means of payment’, which would not be part of the project. Likewise electronic equivalents of securities, such as shares and bonds, would be excluded.(22)

A few other highlights:

  • ‘Possession’ of a paper record would be demonstrated by ‘control’ of an electronic record. (This is a long-standing principle.)(24)
  • Any rules developed would be technology neutral (not depend on the adoption of any particular technology to satisfy them) and system neutral. (23)
  • A distinction must be drawn between ‘issuance’ and ‘release’ of ETRs. Issuance was a substantive law concept; release was the putting the ETR under the control of its first holder, so essential to the project.(31)
  • A distinction must also be drawn between a ‘register’ and a ‘repository’ – though the report is less clear on the distinction. My guess is that registers may have legal duties and consequences, repositories are just places where ETRs may be. (31)
  • Somewhere the rules have to allow for the expression of consent to deal electronically at all in such matters.(32)
  • Uniqueness of ETRs is not an end in itself, but a means to avoid multiple claims, based on multiple documents, against the same goods or money. Thus, it was said, the methods of achieving uniqueness might vary in light of the technology used and other circumstances.(33)
  • Anonymity (or pseudonymity) should be provided for, so that ETRs can be the equivalent of a ‘bearer’ document on paper.(42)
  • Some provision should be made to permit the amendment of ETRs once issued, but consent by all parties might be needed.(45 – 49)
  • Rules on the transfer of control of ETRs were crucial to an operating system of rules (not surprisingly, since ‘transfer’ is the T in ETR!)(50 – 58)
  • An equivalent to pledges and guarantees based on ETRs as security needed to be devised.(63 – 65)
  • The rules needed an electronic functional equivalent of ‘presentation’ of paper-based documents. The report does not hint what this might be. (70 – 71)
  • It would also be good to have rules for converting paper records to electronic form, and perhaps back again.(73 – 77)
  • Rules were also needed about the full or partial cessation of ETRs to have any legal effect (78 – 82)

You can see that the Working Group was comprehensive in its discussion. The Secretariat was asked to prepare for the next meeting (in New York, May 2013) a set of rules in the form of a Model Law, though the final product of the Group may be in some other form.(93)

Would such a set of rules appear useful to you, for your clients? What do they need to see in such rules? Are there topics that the Working Group should be addressing that they are not (yet)? Do any approaches mentioned in the report seem more promising that others, or less, and why?

I will let you know when the draft rules are available, probably some time in April 2013, but don’t let their absence stop you from taking a view now of what they should be!


  1. A draft Model Law on Electronic Transferable Records is now available on the UNCITRAL web site. It will be discussed in New York starting on May 13th.

    Does it look right to you? Should Canadian lawyers and their clients be paying close attention? Are they likely to want to use electronic bills of lading, warehouse receipts, or other transferable records once the UN decides on a global legal (if not technological) standard for such things?