The forthcoming UNCITRAL Convention on Negotiable Cargo Documents (NCD) is one of the most significant recent developments in the harmonisation of international trade law. Its main objective is to establish a uniform legal regime governing negotiable transport documents, whether issued in paper or electronic form ensuring their authenticity, transferability and legal effect across different jurisdictions. The convention reflects the growing importance of digital documentation and the need for legal certainty in global logistics.

Negotiable Cargo Documents include unimodal and multimodal transport documents containing negotiability clauses such as “to order”, enabling the transfer of title to the goods through the mere transfer of the document. These instruments play a crucial role in international trade, particularly in transactions involving documentary credit or in situations where documentary control determines the physical release of goods. However, despite their importance, the legal treatment of negotiable documents has been fragmented, relying on divergent national laws, private rules, and commercial practices.

The new UNCITRAL Convention aims to address this fragmentation by establishing functional requirements for NCDs, including (i) authenticity, (ii) integrity, (iii) uniqueness, (iv) legal effect of endorsements, and (v) full equivalence between paper and electronic formats, provided adequate technological safeguards are in place. UNCTAD has supported this work by highlighting the economic and operational benefits of digitalisation and the reductions in cost and risk associated with the dematerialisation of transport documents.

A key reference in drafting the convention has been the FIATA Multimodal Transport Bill of Lading (FBL) and its electronic version, the eFBL. Although widely used in practice and accepted by banks in documentary credit operations, their legal validity has depended primarily on FIATA’s private rules. The new convention will change this by granting both instruments an internationally recognised legal framework, increasing legal certainty for freight forwarders, traders and financial institutions. This is a major development for multimodal transport documentation, particularly as digital issuance becomes more widely adopted.

The transport sector is expected to be one of the main beneficiaries. The convention does not replace existing liability regimes such as the Hague-Visby Rules, CMR, CIM or the Montreal Convention; it operates in a supplementary manner and applies only when the parties choose to use an NCD. This compatibility prevents regulatory conflicts and strengthens coordination between transport modes. Clarifying the legal effects of negotiability and the transfer of title also reduces disputes regarding endorsements, competing claims and the moment at which documentary control passes.

The explicit recognition of electronic NCDs will further accelerate digitalisation initiatives already underway in maritime transport, including electronic Bills of Lading, blockchain-based platforms, port community systems and smart contract workflows. The ability to circulate fully electronic negotiable documents will help reduce delays, administrative burdens and risks of fraud, contributing to a more efficient global supply chain.

In international sale contracts, particularly those governed by Incoterms CIF and CIP, the convention enhances legal predictability. Under these terms, the seller must provide the buyer with a negotiable transport document enabling the release of the goods at destination. Harmonised NCD requirements strengthen the reliability of documentation used in trade finance, simplify the handling of documentary credit, and clarify key contractual milestones such as the transfer of risk and title. This reduces the likelihood of disputes arising from ambiguous or inconsistent documentation.

Nevertheless, the transition to the new regime will require adaptation. State ratification may occur at different speeds, creating temporary regulatory disparities. Operators including carriers, freight forwarders and logistics service providers will need to update contractual templates, adopt compliant electronic systems and invest in training to ensure proper implementation. Ensuring technological interoperability will also be central to the success of electronic NCDs.

Overall, the new UNCITRAL Convention on NCDs marks a significant step forward in the modernisation of international logistics and trade. By establishing a clear and harmonised legal framework for negotiable transport documents, including their electronic forms, the convention enhances legal certainty, supports digital transformation and promotes a more efficient and secure multimodal transport environment. For industry stakeholders, this is the right moment to prepare operationally and strategically for the transition to a fully digital, internationally harmonised documentary landscape.

For more information, article published in APAT Magazine no. 153 - June 2024

Available in www.apat.pt