Electronic Trade Documents Bill [HL]

Lord Bassam of Brighton Excerpts

Second reading committee
Monday 7th November 2022 Grand Committee

[Lord Bassam of Brighton (Lab)]

My Lords, like all other Members of this Committee I welcome the Minister back to this modest piece of legislation, although it has a truly massive import, as all previous speakers have said today. I have drawn one or two points from their comments.

The noble Viscount, Lord Waverley, made the point that this was a major innovation in legislation and an important part of a jigsaw that needs to fall into place if we are to ensure that our place in the trading world is maintained. The noble Viscount asked four important questions; I shall listen for the answers to them with great interest. As he said, this is part of an exciting journey and one which we obviously need to follow closely. I was deeply impressed by his contribution and that of the noble Lord, Lord Lansley, who accurately described it as an important framework Bill—that is what it is, at seven pages long. With his enormous experience in international trade, I am sure that he will focus laser-like attention on it when we get to Committee. The major issue that he identified was interoperability, which is key to what we are trying to achieve here. Overcoming obstacles around that will be extremely important.

I was grateful to the noble Lord, Lord Holmes, for his comments because he brought the debate into the real world when he said that the Bill could achieve something like 5% savings in transaction costs. In itself, that does not sound like an enormous amount, but when you think about the value of international trade it is vast. Another important point that he made was about the environmental benefits that this legislation could bring. I think we are all very conscious of those now, but he also talked about the importance of accountability and transparency and we, too, on our Benches, very much share that.

The noble Earl, Lord Lindsay, made the important point that SMEs will be the big beneficiaries from this. That is without doubt or question, because clearly it is of enormous advantage to an SME when its transaction costs are reduced and ability to trade speedily is very much underlined. The noble Lord, Lord Fox, talked about the Bill being technical, and it is, but the big problem it has to solve is that of possession. We should all focus on that.

The Labour Benches fully support the introduction of the Bill. We see it as a long overdue reform, which allows for the legal recognition of certain types of documents used in trade and trade finance in electronic form. This will finally mean that parties can use the law that currently applies to paper trade documents when transacting with electronic trade documents.

As we know, the Law Commission does invaluable work in advising on the reform of long outdated legislation. Despite the size and sophistication of the international trade market, many of its processes, and underlying legislation, are based on practices and frameworks developed by the nation’s merchants hundreds of years ago. It is the Bill’s intention that electronic trade documents, when capable of possession, should be treated in law in a manner equivalent to their paper counterparts—a simple notion but one that is obviously complex to implement.

The Bill represents for us a most welcome opportunity to further modernise trade transactions. In theory, it should speed up transactions and bring business into the modern world, where electronic interactivity is commonplace. The Law Commission report said that

“there is an existing set of complex private international law rules that determine which courts have jurisdiction over a dispute, and which country’s laws should be applied to resolve it … these rules are complex and fact specific”.

It then said that electronic trade documents may give rise to

“novel issues … that require further consideration”.

For instance, it continued, there are “inherent difficulties” in ascertaining “the geographical location” of digital assets, including electronic trade documents. Similarly

“questions may arise as to how an electronic trade document issued in England and Wales would be treated by a country that does not recognise the validity of electronic trade documents”.

The Law Commission also recommended that private international law aspects of electronic trade documents should be dealt with in a separate commission project that deals with digital assets more broadly as part of its 14th programme of law reform. I think it was supposed to be completed in mid-2022. Can the Minister advise on what steps will be taken in the meantime to mitigate issues that may arise affecting the operation of trade transactions? Can the Minister undertake to report back to Parliament on the operation of the provisions within a year of the date on which the Act is implemented?

We on our Benches believe it is important that parliamentarians are kept advised of progress in this field. I have nothing much more to add, except that we thank the Law Commission for its critical work on the Bill which we see as largely uncontroversial and of great value in ensuring that the world of trade and commerce operates smoothly and efficiently as possible and that UK businesses are not disadvantaged in any way. This Bill eases those processes and transactions that we need for us to continue to be competitive in a highly competitive world of trade.