Blockchain firm R3 is gearing up to launch its own electronic bill of lading (eBL) solution into beta, five months after buying the legal framework from Singapore-based eBL provider eTitle.

Corda eBL, which will be available for development purposes in early April, is a new software development toolkit built on R3’s Corda blockchain platform.

It will enable Corda Enterprise customers – such as trade finance networks Contour and Marco Polo – to embed eBLs directly into their offering, instead of having to refer their users to third-party solution providers.

“Several of our customers have carried out integration work with eBL solutions providers in the past, and realised that it was difficult to digitise trade end to end on our technology, because they had to rely on external solutions,” says Henry Roxas, head of trade finance at R3. As a hypothetical example, a client using Contour’s network to carry out a trade transaction would also have to onboard in parallel with an eBL provider such as Bolero, adding costs and delays, and weakening the use case for Contour, particularly given that Bolero now has its own platform, Galileo, which connects to bank and other third-party systems and allows users to create, edit and manage letters of credit, electronic presentations and guarantees, as well as open account transactions and eBLs.

“We have 85-plus trade and supply chain networks now on Corda, and we have received consistent feedback that customers are looking for a solution that is scalable, cost effective and reduces commercial friction,” Roxas tells GTR. “Critically for us, integrating with some of the existing eBL solutions started diminishing the value of blockchain, because the value of Corda is that it allows for the peer-to-peer transfer of value with privacy. When you start relying on centralised registries, you end up losing some of that.”

Beyond the commercial benefits, R3 says that Corda eBL also solves for the scalability problem that has kept the proportion of eBLs at just 0.1% of all bill of lading issuances thus far. Other than in the vanishingly small number of jurisdictions that currently accept electronic documentation as legally equivalent to its paper counterpart, the eBL is not universally recognised as a document of title. In order for eBL solutions to work, therefore, they rely upon contract law, which is only binding on those parties who have agreed to be bound to it.

“This is problematic because everybody needs to rely on one application, one business network and one legal rulebook,” says Roxas. “It is difficult for one solution provider to onboard individual end users to one network; this is hard to scale.”

In effect, while some eBL solutions are technically distributed, legally they are all centralised. By using eTitle’s eBL framework, which enables title transfers by using peer-to-peer technology, R3’s approach overcomes this issue.

“Corda eBL relies on a multipartite agreement and international statutory provisions, without the use of novation of the contract of carriage as a means of transferring rights. The unique legal framework underpinning Corda eBL enables it to more closely mirror paper BLs,” says Roxas.

Furthermore, because Corda eBL is embedded into the Corda blockchain, it isn’t limited to any one trade network or service provider.

“We have designed a product that doesn’t require us to build a network,” says Roxas. “Corda eBL is a software development kit that existing solution providers can use to digitise their eBL workflows in their existing network. They are in control of the customer relationship, how eBLs are offered, and the pricing; they resell this to their customers. We are essentially democratising the eBL.”

In practice, this means that a carrier on an ocean freight marketplace running on Corda can issue an eBL which can then be transferred to a trade finance marketplace as part of a letter of credit flow, thus addressing the digital island problem – albeit only for platforms that run on R3’s tech, at least for the time being. “We are working with all of the standards bodies, and once there is a standard to enable interoperability across platforms outside of Corda then we can align to that, but as all of the existing tech platforms are still maturing, we wanted to just do what is in our control first,” says Roxas.

Whether this development will push out eBL providers such as Bolero, essDocs and CargoX – all of which have partnered with Contour – remains to be seen. While Roxas concedes that Corda eBL is “competitive to existing eBL solutions”, he challenges that “the market is big enough for everyone”, adding that Corda eBL’s main competitor is paper.

Because the legal framework which R3 acquired from eTitle can be extended to other documents of title, the company plans to extend the solution in the future to other documents such as warehouse receipts and bills of exchange. R3 plans to roll out the full production version of Corda eBL during the second half of this year.