The United Nations Commission on International Trade Law (UNCITRAL) is the core legal body of the United Nations system in the field of uniform commercial law. It is tasked with promoting the harmonization and modernization of commercial law by preparing legal texts and by promoting their adoption.
UNCITRAL has prepared, among others, model laws that give legal effect and predictability to the use of electronic transactions. The most recent text in that field is the UNCITRAL Model Law on Electronic Transferable Records (MLETR), which enables the use of certain commercial documents such as bills of lading, bills of exchange and promissory notes in electronic form. The MLETR has been widely hailed as an enabler of emerging technologies such as blockchain and smart contracts, and as the legislative cornerstone of a fully digital logistics and trade financing ecosystem.
However, the MLETR may deliver the expected benefits to traders only if States adopt it broadly, and States will do so upon demand from stakeholders, which, in turn, requires awareness of the content and of the benefits of the MLETR.
The good news is that there is already significant awareness of the MLETR and of its benefits thanks also to the work of the ICC Digital Standards Initiative. The turning point for MLETR promotion has been the G7 Digital and Technology Ministerial Declaration of 28 April 2021 supporting the development of a framework for the use of electronic transferable records. The Declaration calls upon the concerned States to consider the desirability and feasibility of MLETR adoption. Importantly, the Declaration foresees support to developing countries, so that digital trade transformation will not concur to widening the digital gap. This matches UNCITRAL’s engagement in favor of developing countries, in line with the broader UN economic and social development mandate.
The analysis of the jurisdictions that have adopted the MLETR confirms the existence of a dual track approach.
In some countries, the MLETR complements or updates existing sophisticate legal frameworks and supports the deployment of cutting-edge business solutions. This is the case of Bahrain, which adopted the MLETR – as the first jurisdiction in the world – to build an enabling legal environment for fintech. This is also the case of Singapore, where the MLETR underpins the TradeTrust vision, and of the Abu Dhabi Global Market, another innovative trading hub.
In other countries, the MLETR is adopted in preparation for trade digitisation pending infrastructural and economic development. Thus, the MLETR has been incorporated in the new Electronic Transactions Act of Kiribati, prepared with the assistance of the UNCITRAL Secretariat, and in the revision of the Electronic Transactions Act of Belize, drafted with the support of the Inter-American Development Bank. Similarly, the legislators of Paraguay have included the MLETR in the comprehensive Law on Trust Services for Electronic Transactions.
The current dual track approach may ensure a balanced adoption of the MLETR and an equitable distribution of the benefits arising from digital trade, which is a desirable outcome. However, the support of legislators is necessary, but not sufficient to achieve that goal: commercial operators must take advantage of new opportunities in daily trade, and this may take place in developing countries only if business practices, models and technologies are shared. This is where each entrepreneur, and the ICC as a whole, may make a significant difference.
* Secretary, Working Group IV (Electronic Commerce), UNCITRAL Secretariat. The views expressed herein are those of the author and do not necessarily reflect the views of the United Nations.