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Singapore has unveiled the next phase in its push for global adoption of electronic bills of lading (eBLs): TradeTrust Model Terms have been launched by the Infocomm Media Development Authority (IMDA) to facilitate legal alignment atop the technological interoperability at the heart of its TradeTrust initiative.  

Unveiled on March 27 at the Marine Insurance Asia event in Singapore, the Model Terms prepared by international law firm Watson Farley & Williams provide a template for TradeTrust eBL adopters to reference as a baseline for dealing with marine liability cover from the International Group of Protection and Indemnity (P&I) Clubs, improving efficiency and providing legal confidence across international borders. 

The market for eBLs is characterised by a growing number of competing providers, each with their own platforms, and finding a way to connect users of different systems has long been touted as key to wider adoption. 

A survey carried out last year by the Future of International Trade (FIT) Alliance, which brings together major industry groups as well as Swift and the International Chamber of Commerce (ICC), found that despite widespread awareness of eBLs, only 21% of bank respondents currently accept them. 

The FIT Alliance said the findings show a lack of interoperability are causing hesitancy around adoption, and further engagement is needed to address those concerns. 

Interoperability is typically defined as the ability to transfer an eBL seamlessly from one platform to another. But TradeTrust, an open-source framework developed by IMDA, takes a different approach. 

It uses a public blockchain to maintain a unique record of who has title to an eBL at any moment, meaning there is no ‘handover point’ where record-keeping duties are transferred from one platform to another.  

This approach solves concerns over liability at the moment title is transferred from a party on one platform to another party on another platform, because any failure to do so will be immediately apparent and should be addressed. More broadly, this means TradeTrust eBLs can operate across multiple systems rather than rely on bilateral, bespoke connections between individual providers. 

IMDA has now added to this proposition by incorporating legal interoperability into the TradeTrust framework. 

 

Legal interoperability and insurance cover 

The TradeTrust Model Terms are effectively a template that any user of TradeTrust eBLs can adopt. 

Loh Sin Yong, senior principal consultant of TradeTrust at IMDA, says they “complement the open-source TradeTrust software components and collectively support the interoperability of electronic transferable records, both technically and legally”.  

“They facilitate TradeTrust partners’ applications for relevant approvals from industry bodies such as the International Group of P&I Clubs and the ICC Digital Standards Initiative, scaling up industry digitalisation of negotiable instruments such as bills of lading,” he says. 

The TradeTrust Model Terms are in three parts, covering definitions, terms used in user agreements, and terms incorporated into eBLs. Some parts are relevant only to issuers, such as carriers and vessel operators, while others also apply to sellers, buyers, traders and banks. 

As well as setting out a path to interoperability, the TradeTrust Model Terms include measures for compliance with legislation addressing the use of electronic trade documents and establish best practices for service providers. 

They also serve as a baseline reference for TradeTrust eBL system providers when they seek legal counsel for drafting documentation, and are accompanied by detailed guidance notes prepared by Watson Farley & Williams. 

This approach is intended to make it easier, faster and cheaper for industry to adopt the practice of using TradeTrust eBLs and helps solve a critical challenge in doing so: maintaining P&I insurance cover. 

P&I insurance is essential for ocean carriers, protecting them from liability claims from crew and other third parties. Claims can arise from collision, property damage, pollution or environmental damage, and removal of wrecks. Generally, carriers obtain this cover through one of 12 not-for-profit mutual insurance associations that form the International Group of P&I Clubs. 

The International Group has been supportive of the transition away from paper bills of lading and maintains a register of approved eBL systems. However, if an alternative eBL system is being used, its members face limitations: they will not provide cover for liability if that liability would not have arisen if paper documents were being used. 

Historically, this required the International Group to assess the contractual agreements between users of an eBL system, to ensure all parties’ rights and liabilities were equivalent to a trade using paper documents. 

 

Reliable systems and International Group approval 

The International Group initially set out a process for approving eBL systems in 2010, which requires providers to meet 10 criteria. These criteria cover clauses for closing or rejecting an eBL, liability in the case of system failure, and evidence of the terms of contract of carriage, among other points. 

Since then, the legislative landscape has been transformed following the UN’s adoption of the Model Law on Electronic Transferable Records (MLETR), which provides a basis for giving electronic transferable trade documents the same legal standing as their paper equivalents. 

Legislation based on MLETR has now been enacted in several jurisdictions, including in major hubs for global trade such as Singapore through the Electronic Transactions (Amendment) Act 2021 and the UK via its Electronic Trade Documents Act 2023. 

In light of these developments, the International Group introduced a streamlined approval process in February last year, targeted at systems that issue eBLs in compliance with MLETR and narrowing the number of criteria to five. 

Last month, it simplified this process further, launching a “deemed approval” mechanism. This process means systems can be greenlighted for insurance cover based on just two factors.  

The first is whether they issue compliant eBLs, which means those subject to a law that gives digital trade documents equal recognition to paper. The second is whether they can provide evidence their system is deemed reliable, based on whether eBLs meet the requirements set out in MLETR. 

For the latter point, the International Group alludes to an assessment scheme launched in October 2024 by the ICC’s Digital Standards Initiative and Digital Governance Council of Canada to verify which eBL systems meet the criteria for a “reliable system”. 

It is in this context that IMDA’s TradeTrust Model Terms should prove a major step forward for scaling up digital trade. 

They are freely available from IMDA, working in tandem with TradeTrust’s open-source software components to facilitate the growth of MLETR-compliant eBL offerings.  

At the same time, with the International Group’s deemed approval process, a greater number of platforms can be verified as “reliable systems” without a burdensome assessment process. 

Taken together, these factors can help users overcome long-standing challenges around interoperability – from technology to compliance to insurance – laying the foundations for accelerated adoption of eBLs around the world. 

Looking ahead, the benefits could go beyond eBLs. Though eBLs remains IMDA’s primary focus, the principles outlined in the Model Terms could also be adapted for other types of electronic transferable records recognised by law, such as electronic promissory notes, bills of exchange, warehouse receipts and any future MLETR-aligned instruments. 

The TradeTrust Model Terms and Guidance Notes can be viewed here.