On October 25, 2024, I had the pleasure of participating in Freight Forwarder’s Day, where the 50th anniversary of APAT was celebrated—an event of significant importance for the sector and for all Portuguese freight forwarders in general. I participated in a panel discussion on the topicThe Impact of Digitalization on Freight Forwarding Activities”.

In my presentation, I argued, "In the future, international trade will differ significantly from how it operates today. Data will replace the paper, processes will become simpler, technologies such as tracking and monitoring will be widely employed, and financial transactions will occur in real-time. Trade data from supply chains will flow in standardised formats through interoperable systems between the public and private sectors. They will be integrated with sustainability data to provide companies and states full transparency regarding the shipment of goods and enable more accurate ESG (Environmental, Social, and Governance) reporting.”

I have no doubt that this will be the future; however, achieving it will require overcoming several legal barriers, compounded by the diversity of legal frameworks inherent to international trade. Just as paper-based documents—still the standard for transport documentation—face legal hurdles, adopting electronic records will encounter similar obstacles. More than merely digitising paper documents, it will be necessary to address legal and regulatory requirements in some countries that still do not permit the use of electronic documents or continue to mandate the submission of physical documents with a physical stamp. Legal uncertainty and ambiguity in various states (what may be accepted by public authorities in the country of origin might not be recognised by authorities in the destination country) have led to a preference for paper to mitigate risks such as the non-delivery of goods, additional costs, and penalties. A lack of specialised knowledge among stakeholders, legitimate concerns about the authenticity and transmission of electronic documents, and the availability of equipment and technology capable of processing these documents have all contributed to their limited practical implementation.

Despite these challenges, it is paramount to ensure that electronic documents gain legal recognition and validity across different countries, whether for accompanying goods, formalising purchase and sale contracts, or supporting the transportation of goods and related international trade services.

Recently, numerous initiatives have been to adopt electronic transport documents, including the e-AWB, e-FBL, e-CMR, and e-BL. While it is relatively straightforward to implement these documents electronically in relationships between private parties (e.g., seller/buyer, shipper/carrier/consignee), the same does not hold true for interactions with official authorities and state entities (e.g., customs, tax authorities, courts, banks), where there is no uniformity or tacit understanding of acceptance regarding the validity of electronic documents.

In private autonomy, where no regional or global uniformity exists, UNCITRAL adopted the Model Law on Electronic Transferable Records (MLETR)in 2017. This law applies to electronic transferable records, the electronic equivalents of traditional (paper-based) transferable documents. The MLETR was designed to provide a uniform and technologically neutral legal framework, allowing electronic records to hold the same legal validity as paper documents, regardless of whether the latter have been digitised. These electronic records must meet the following requirements:

• Integrity – The record's content must remain complete and unaltered.
• Control – A reliable method must exist to identify the person with exclusive control over the electronic record.
• Transferability – Similar to paper documents, the rights contained in the electronic record must be transferable from one party to another.

The MLETR guarantees four foundational principles:

1. Functional Equivalence—This ensures that an electronic record has the same legal effect as a paper document, provided it meets the necessary requirements.

2. Technological Neutrality allows various technological solutions, such as blockchain or traditional electronic records, to achieve broader applicability.

3. International Legal Recognition – Facilitates international harmonisation by ensuring that electronic records are recognised in cross-border transactions.

4. Party Autonomy—This option enables parties involved in commercial transactions to choose whether or not to use electronic records.

Though non-binding, the MLETR can serve as a guide for implementing national regulations. While it lacks the weight of an international convention, adherence to its principles could lead to greater alignment among the rules of different states that also adopt the model law. States may incorporate the model law into their domestic legislation or adopt its principles and minimum requirements without directly enacting its provisions. To date, ten states have enacted legislation based on the MLETR, including France (2024), the United Kingdom (2023), and Singapore (2021). Despite having national legislation on electronic documents (the Electronic Signatures in Global and National Commerce Act (E-SIGN Act) and the Uniform Electronic Transactions Act (UETA)), the United States has not yet adopted the model law. These U.S. laws, however, are more general, covering both digital signatures and documents broadly. They already incorporate many of the principles and requirements of UNCITRAL’s model law, making its implementation relatively straightforward. Portugal, on the other hand, has not yet enacted legislation capable of integrating the principles and requirements of this model law. However, its implementation should be considered to enhance the efficiency and competitiveness of Portuguese companies by reducing export and import costs, accelerating commercial transactions, and positioning Portugal at the forefront of the"digital era”.

Article published in APAT Magazine no. 150 - December 2024

Available in www.apat.pt