On 25 October 2024, I had the pleasure of participating in Freight Forwarders' Day, which marked the 50th anniversary of APAT—an important milestone for the freight forwarding sector and for the Portuguese freight forwarding community as a whole. I took part in the panel discussion on the topic"The Impact of Digitalisation on Freight Forwarding Activities”.

On the presentation I prepared, I defended"In the future, international trade will be fundamentally different from the way it is conducted today. Paper documents will be replaced by data, processes will become simpler, technologies such as tracking and monitoring will be widely adopted, and financial transactions will take place in real time. Supply chain trade data will flow in standardised formats through interoperable systems connecting the public and private sectors and will be integrated with sustainability data, enabling businesses and governments to achieve full transparency in the movement of goods and to produce more accurate Environmental, Social and Governance (ESG) reports..”

There is little doubt that this represents the future. However, before that future can be fully realised, several legal barriers must first be overcome, compounded by the diversity of legal systems inherent in international trade. Just as paper documents, which remain the standard for transport documentation today, have long formed the basis of international trade, a number of legal obstacles must still be addressed before electronic documents can be fully adopted. More than simply digitising paper documents, it will be necessary to overcome the legal and regulatory requirements of certain jurisdictions that still do not permit the use of electronic documents or continue to require the submission of a physical document or the affixing of a physical stamp. Legal uncertainty and ambiguity across different jurisdictions—where a document accepted by the competent authorities in the country of origin may not be recognised by the authorities in the country of destination—continue to encourage the use of paper documents as a means of mitigating the risk of non-delivery of goods, additional costs and potential penalties. The limited availability of specialised expertise among the various stakeholders, legitimate concerns regarding the authenticity and transmission of electronic documents, and the lack of adequate technological infrastructure capable of processing electronic documentation have also contributed to their limited practical implementation..

Notwithstanding these challenges, it is essential above all to ensure that electronic documents are recognised as legally valid across different jurisdictions, whether they accompany goods, evidence contracts for the international sale of goods, document the carriage of goods, or support the other services required for international trade.

In recent years, significant progress has been made in the adoption of electronic transport documents, including the e-AWB, e-FBL, e-CMR and e-BL. While the implementation of these electronic documents has proved relatively straightforward within the contractual relationships between the parties (seller/buyer and consignor/carrier/consignee), the same cannot be said for interactions between those parties and public authorities and official bodies, such as Customs Authorities, Tax Authorities, Courts and Banks. In this context, there is still no harmonised approach or common understanding, even on an implicit basis, regarding the legal recognition and acceptance of electronic documents.

Given that this falls within the sphere of private autonomy par excellence and that there is no harmonisation at either the regional or global level, UNCITRAL adopted, in 2017, the Model Law on Electronic Transferable Records (MLETR)The MLETR applies to electronic transferable records, which are the electronic equivalents of traditional transferable documents (i.e. paper-based documents). It was developed to provide a uniform, technology-neutral legal framework enabling electronic transferable records to have the same legal effect as paper-based documents, regardless of whether the latter have been digitised. Such electronic transferable records must satisfy the following requirements:

• Integrity (the content of the electronic transferable record must remain complete and unaltered).
• Control (there must be a reliable method to identify the person exercising exclusive control over the electronic transferable record); and finally,
• Transferability (as with paper-based documents, the rights embodied in the electronic transferable record must be capable of being transferred from one party to another).

The MLETR is founded on four fundamental principles, mainly:

(1) Functional Equivalence – ensuring that an electronic transferable record has the same legal effect as a paper-based document, provided that it satisfies the applicable legal requirements.

(2) Technology Neutrality – ensuring that no specific technology is prescribed, thereby allowing different technological solutions, such as blockchain or conventional electronic record systems, to be used in order to achieve broader application.

(3) International Legal Recognition – promoting international harmonisation by ensuring that electronic transferable records are recognised in cross-border transactions; and

(4) Party Autonomy – allowing the parties to commercial transactions to choose whether or not to use electronic transferable records.

Although it is not legally binding, the MLETR may serve as a guide for the implementation of national legislation. While such legislation does not carry the same legal force as an international convention, adherence to the principles of the MLETR would result in a much greater degree of harmonisation with the legal frameworks of other States that have also adopted the Model Law. States may either incorporate the Model Law into their domestic legislation or, without adopting its provisions verbatim, implement its underlying principles and minimum requirements. To date, ten States have enacted legislation based on the MLETR, including France (2024), the United Kingdom (2023) and Singapore (2021). Although the United States has enacted legislation governing electronic documents, namely the Electronic Signatures in Global and National Commerce Act (E-SIGN Act) and the Uniform Electronic Transactions Act (UETA), it has not yet adopted the MLETR. These legislative instruments are broader in scope, covering both electronic signatures and electronic documents in general. Nevertheless, they incorporate, to a large extent, the principles and minimum requirements of the UNCITRAL Model Law, making the implementation of the MLETR relatively straightforward. Portugal has likewise not yet enacted legislation incorporating the principles and minimum requirements of the MLETR. However, its implementation should be seriously considered in order to enhance the efficiency and competitiveness of Portuguese businesses by reducing import and export costs, accelerating international commercial transactions and positioning Portugal at the forefront of the"digital era”.

Published in APAT nº150 – December 2024

Available in www.apat.pt