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UNCITRAL Model Law on Electronic Transferable Records (2017)

 

Text - Explanatory note

 

Date of adoption: 13 July 2017

Purpose

The Model Law on Electronic Transferable Records (MLETR) aims to enable the legal use of electronic transferable records both domestically and across borders. The MLETR applies to electronic transferable records that are functionally equivalent to transferable documents or instruments. Transferable documents or instruments are paper-based documents or instruments that entitle the holder to claim the performance of the obligation indicated therein and that allow the transfer of the claim to that performance by transferring possession of the document or instrument. Transferable documents or instruments typically include bills of lading, bills of exchange, promissory notes and warehouse receipts.

Why is it relevant?

Transferable documents and instruments are essential commercial tools.  Their availability in electronic form may be greatly beneficial for facilitating electronic commerce by, for example, improving speed and security of transmission, permitting the reuse of data and automating certain transactions through "smart contracts".

Electronic transferable records may be particularly relevant for certain business areas such as transport and logistics, and finance ("fintech") and for developing countries interested in establishing a market for electronic warehouse receipts to facilitate farmers' access to credit.

Moreover, electronic transferable records are a fundamental component of a paperless trade environment, which may make an important contribution to trade facilitation.

Key provisions

The MLETR builds on the principles of non-discrimination against the use of electronic means, functional equivalence and technology neutrality underpinning all UNCITRAL texts on electronic commerce.  It may therefore accommodate the use of all technologies and of all models, such as registries, tokens and distributed ledgers.

According to the MLETR, an electronic transferable record is functionally equivalent to a transferable  document or instrument if that record contains the information required to be contained in a transferable document or instrument, and a reliable method is used to: (a) identify that electronic record as the electronic transferable record; (b) render that electronic record capable of being subject to control from its creation until it ceases to have any effect or validity; and (c) retain the integrity of that electronic record.

Control is a fundamental notion of the Model Law since it represents the functional equivalent of possession of a transferable document or instrument. In particular, the possession requirement is met with respect to an electronic transferable record if a reliable method is used to: (a) establish exclusive control of that electronic transferable record by a person; and (b) identify that person as the person in control.

Moreover, the MLETR enables information that may not be included in a paper-based transferable document or instrument because of its nature to be included in an electronic transferable record. The MLETR also provides guidance on assessing the reliability of the method used to manage an electronic transferable record and on change of medium (electronic to paper and the reverse), among other things. Finally, the MLETR aims to facilitate the cross-border use of electronic transferable records by supporting the principle of non-discrimination against the foreign origin or use abroad of an electronic transferable record.

The MLETR does not affect in any manner the law applicable to transferable documents or instruments, which is referred to as "substantive law" and includes rules on private international law.

Additional information

The Model Law is accompanied by an Explanatory Note, which provides background information to assist States in enacting its provisions and to offer guidance to other users of the text.