Bolero Electronic Bill Lading
Critical Analysis – Under English Law
The advent of the electronic Bill Of Lading has had a very large implication in the shipping business recently. So I have decided to take up this topic as my coursework assignment for this semester. The users of Bolero are a wide variety of “Users” belonging to banks, insurers, agencies, freight forwarders, carriers and shippers around the world, the challenge arises with the different legal system and the cultures associated with it. This essay deals with the legal issues in accordance to the English Law and a traditional comparison with the bill of lading used in practice. The cases used for study are restricted to the English Law.
The Tri-partite function of the Bill of lading is considered of a prime importance in the International trade, due to the efforts of modernisation or one may simply call the Information Technology boom has stepped up as a considerable advantage in the shipping industry. Bolero is born in this era of modernisation by promising the replacement of a Bill Of Lading to an electronic form which is easier, faster, error free and reliable. Bills of Exchange were replaced by Bill Of Lading and now Bill Of Lading might be replaced by Bill of lading electronic registry organisation (BOLERO). Let’s analyse critically the effects which arises due to such a new implementation in the English law background.
Bill Of Lading a commercial and legal overview:
The BOL is treated as conclusive evidence i.e. “Prima facie” evidence between the seller, carrier and the Shipper (to certain extent other parties ). The series of cases which has been in looked under the COGSA - Carriage Of Goods Act over a period of time, would give an exact importance of the BOL. The relevance to the contents of the BOL do certainly has given raise to estoppel in the common law or may call for action on fraud or being negligent (under Torts1). The words mentioned in the BOL have a significant importance in the claims, so far, drafting a meaning for the terms in the Bill of lading is a craft and left to the English Lawyers only.
A traditional Bill of lading document satisfies the following functions:
The unique identity of presenting a BILL OF LADING to claim ownership of goods has significantly altered 5 in the recent years. The uniqueness in representing the key to the goods by the holder of the bill and the discharge of the carrier from its obligations of the contract carriage has been a very significant part of the contract. The endorsing and sale of goods on transit or Negotiable bill of lading under the Hague-Visby rules has been a boon to the merchants, insurers and Banks in financing the business.
The typical advantages as mentioned above has to a certain extent has constituted a variety of hybrid types of Bills of Lading documents in existence1:
1) Short forms of Bills of Lading
2) The way bill
3) The straight Bills of Lading
4) Electronic Bills Of Lading
5) Bolero - Bill of lading electronic registry organisation
The importance of this paragraph is to analyse the importance of the BILLS OF LADING and compare it with the BOLERO.
1 (Wilson, 2004) – COGSA 92
2Grant Vs Norway ( 1851)- 138 L.J.C.P.93
3 The Ardennes –(1950)- 2 All ER 517 / The Jalamohan – [1988] 1 LR.443
4 The Chitral [2000] 1 LR 529
5 The Rafeela S [2005] 2 A.C. 423
Bill of lading electronic registry organisation (BOLERO):
The Information technology had changed in the way we see the documentation procedures in almost all fields. Shipping was no exception, “ Sea-docs” was the result of this IT revolution. The major setback of seadoc was that it was restricted towards one bank “Chase Manhattan bank”. Although the Seadocs are not in use anymore (in a large amount), the relevant electronic forms and generations as per CMI rules has significantly challenged the Marine industry in producing an alternative to Seadoc.
BOLERO6 – a project sponsored by the European Union has found a way of using Electronic documents with signatures and authenticity of its documents and registered users came into existence in 1999. One of the challenges of the project was mainly to incorporate a general rule book to fit into the Legal boundaries of most of the Maritime countries. Bolero has more than 500 companies and Banks signed into the system. Although it was a test project launched in 1999 it has significantly marketed its place in the Marine field7.
The BOLERO uses EDI- Electronic Data Interchange, which uses the central system of title registry6.The “Users” are kept in the verified database with unique keys whose sole identity and reliance is kept available only to the BOLERO users. The generated user messages are kept secure in the CORE MESSAGE PLATFORM if a reference or a retrieval of data is required in the Legal sense, one can retrieve so. The advantages include a wide array of benefits to its users in processing complicated documents such as BILLS OF LADING and the payments related to in no time. It provides a negotiable BILLS OF LADING if a user so may require.
A multilateral contract in accordance with the BOLERO “Rule book” is significant to BOLERO itself. The Rule Book is governed and interpreted in accordance to English Law 8. BOLERO further more has promised secured transactions and connecting a variety of parties bonded by the Rulebook and in the international sense all parties who are registered as Users.
The third party involved in this BOLERO system is the “SWIFT-Society for Interbank Financial Telecommunication” who maintains the financial interlink between the Banks and the users. The digital signatures in the each BOLERO messages provide a key to their promise as per their RULEBOOK, thus fulfilling the CMI requirement on electronic Bills of lading.
In the journal published by the University Of Tasmania9 a valid quote of the” United Nations Commissions on International Trade Law (UNCITRAL) model law based on Legal aspects of the EDI and related means of communication” has significantly touched the legal side of the electronic BILLS OF LADING. However the BOLERO is recognised as per the COGSA 92 Section 1 (5), which allows the Secretary of State to provide a legal status for an electronic bill12.
A legal comparison:
The instant solution of developing and producing a system verified authenticated BILLS OF LADING has been of a great advantage to BOLERO system. However the problems for using Electronic Bills of lading as collateral has significantly put some small scale shipping companies and banks out of this system. A BILLS OF LADING’s tripartite function might be impaired to do only two functions in this case. Unlike the usual BILLS OF LADING where a single set of documents say a three to six originals will be made and the problems related to the authenticity of each bill has given raise to litigation12.Bolero system seem to guarantee a safe system for documentary credit by generating series of electronic messages and stores in the title registry or simply replicates with electronic messages10.
6 (Bolero, 2003) – www.bolero.net
7 (Group, 1999) – Trade and Forfaiting review – accessed 22 March 2008
8 BOLERO Rulebook section 2.5 page 12
9 (Li, 1998) - Electronic Bills Of Lading and Functional Equivalence. Journal of information, law and Technology
10 (Caplehorn, 1999)
11 (The Delfini, 1989)
12 (The standard steam owner's protection and indemnity association ltd v GIE vision bail and others, 2004)
13 SWIFT pattern, used in Banking
The cases like “DELPHINI”11, where the Bills of lading arrived late after the goods arrived and the conflict of the passing the property goods can be significantly resolved by using BOLERO BILLS OF LADING. Apart from the authenticity a user in the Bolero system can easily verify the electronic documentation online before he accepts to take possession of the Bill. The significant difficulty which is prevailing in the marine field is to “whom” to hold responsible for? has been radically eliminated by this system. But in contradiction this system allows a User to getaway with the wrong doings for the first time by eliminating the User from the system or “Black listing “ them in the system and informing the other users13.But one has to understand that the BOLERO is system which facilitates a group of members within the system to have a legal contractual binding within each other(during a business) and develop a significant trust in their trade by speeding up their business and the verification procedures and it is seen to large extent that BOLERO documents will hold good to prosecute a User under the present English Law.The transfer of a constructive possession has always been a key in the BOLERO system, BOLERO acts as a constructive broker in remaking a contract with another party. The challenge remains in their significance in interlinking a carrier’s value added services (especially in the container trade), where more than one party is involved (intermodal services).
A recent case study of a A.P.Moller (liner company)14, has had problems with their profits. One of the reason being that is, more than half of their Bills of lading documents had errors in them, partly being their system was not regulated with the acquisition of series of companies in the last three years. A vital point one has to note is the significance of the correctness of the Bill of lading documents. One has to note that MAERSK is a BOLERO member.
In financial sense as a security:
Bolero Bill of lading has consequently raised a lot of questions in the narration towards keeping it as a “security”. It may be argued to weather the BOLERO bill of lading is a valid document of title or not? (especially when non-participants are concerned). A controversy such as this has heavy set back in the promised BOLERO’s trade significance. “Trust Receipt” an another concept where the issuing bank might take its security from. Under the Trust receipt the bank releases the Bill of lading to the applicant, under his sole undertaking to pay the bank by selling the goods. Now the complication is how will a BOLERO user benefit from the bank who is not an user. Does it mean that the user should give his “PRIVATE CODE” as a security to the bank?. Although English law holds good in solving a dispute by the electronic bills, one has to ask BOLERO’s efficiency in getting the systems running within the model which it has created. When one is tided up to a judistriction, the question of one’s legal rights to sue in rem based on an electronic document, still is some what cloudy in other judistrictions.The article published in the Trade and forfeiting review 16 has given an oversight of the present problems which we just discussed.
Conclusion:
The economics, technology and the globalization has significantly increased the importance in the pace of shipping trade. The advent of the IT revolution will sooner or latter is going to take a form in the Judicial stream of all countries. The technology has proved as a mile stone in overcoming hurdles , going obsolete by having a very short life span (upgrades, system crashes, new programming language, legal hurdles in a model etc...), more over a secure hacker free access to a system is still a question mark.
The idea of paperless trading will revolutionize the shipping industry. More and more companies have been entering the BOLERO due to its significant advantage and almost instant solution for a considerable error free Bill of lading document.
Although the English law holds good for the electronic documents of title documents, one has to understand a special law hasn’t been developed yet. Even if one may argue that the RULE BOOK holds good!, yes for the time being where a statue hasn’t developed its own legal sense for a controversy that so may arise out of the RULE BOOK. The rapid changing of the legal systems around the world to a codified law around the world must be taken into account of what the future might look at it, if it takes too long to develop.
The model as given by the BOLERO Conventions15 is simply not enough for changes in the system, it means that a change according to the requirement is always open. Which narrates more addendum and ratification in the RULEBOOK. SO one has to note that all the Legal systems in the world must ratify accordingly to the phase of the change or use a rule book provided by the BOLERO “a private company, accepts no responsibility”. Apart from criticism, BOLERO for the time being has secured a path for its success within the English law. The remarkable concept of putting an agile document such as Bill of lading, is a move worth for and well backed up by the English Law.
14 Web conference – A.P.Moller Maersk – www.maersk.com
15 Bolero Conventions
16 (Group, 1999)
Bibliography
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