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Key Trade Documents Can be Digitalised Under Proposed Changes to Electronic Transactions Law

Jan 08 2021 | by OrionW

The Electronic Transactions (Amendment) Bill (Bill) was read for the first time in Singapore’s Parliament on 4 January 2021.  The Bill is part of the Government’s efforts to encourage the wider digitalisation of commercial and legal documents.

The Bill adopts, with modifications, the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Electronic Transferable Records (Model Law). 

The Bill seeks to amend the Electronic Transactions Act (ETA), which puts most electronic documents on a legal footing equivalent to their paper counterparts.  However, the ETA currently does not cover many documents that represent a transferable right or obligation, such as bills of lading, warehouse receipts, negotiable instruments, documents of title, and other documents often used in trade finance and commercial transactions.  The Bill would expand the coverage of the ETA to include those transferable documents, enabling trading partners to rely on electronic versions of those documents when they are used both domestically and across borders.  If the Bill is passed, Singapore will become one of the first countries to implement the Model Law.

Trade Documents

In most maritime trade transactions, the use of physical bills of lading is still prevalent.  A bill of lading is a legal and commercial document that provides evidence for the contract of carriage, receipt, and ownership of goods.   

Typically, the use of physical bills of lading requires hundreds of pages for a single transaction.  Such documentation and processing can represent a significant portion of the shipping cost.  Migrating from physical documents to electronic records can save time and cost and reduce errors and risks of fraud.

To qualify as an electronic transferable record eligible for the benefits of the Bill, an electronic document must contain the same information as its paper counterpart and must be created and maintained by a method that assures its authoritativeness and integrity.  The Bill does not prescribe the methods or technologies that will satisfy the reliability standard, but does authorise the ETA’s regulator, the Infocomm Media Development Authority of Singapore, to accredit electronic transferable records management systems, the use of which would satisfy the reliability standard.

Other Documents Excluded from the ETA

The ETA currently excludes other classes of documents, including wills, trusts, indentures, powers of attorney, and contracts and conveyances of immovable property.  The Explanatory Statement to the Bill notes that those other classes of documents will be covered under the ETA when the legislative and administrative frameworks supporting their digitalisation are ready to be enacted or implemented.

The Government is already exploring the digitalisation of lasting powers of attorney (LPA).  An LPA allows an appointed person to make medical and financial decisions on another person's behalf should they lose mental capacity.  Currently, LPAs must be in hard copies.

In a public consultation conducted in October 2020, the Ministry of Social and Family Development said that the digitalisation of LPAs will shorten the average time of registering an LPA from three to eight working days.

Key Takeaway

The digitalisation of key trading documents would lead to faster processing, lower costs, and lower risks of fraud.  In this regard, the changes proposed in the Bill will reinforce Singapore’s position as a shipping and finance hub.