Electronic Trade Documents Bill [HL]

Lord Clement-Jones Excerpts

Lords Special Public Bill Committee
Monday 20th February 2023 Other Business

[Lord Lansley (Con)]

I will say a few words on Clause 1. On a previous occasion, I drew attention to my interest as a vice-chair of the trade and investment all-party group, which is supported by the International Chamber of Commerce. It and many others gave us the benefit of evidence, and we are all most grateful to our witnesses, not least Professor Sarah Green of the Law Commission, for this. I feel that I now understand, in my own limited way, how the Bill achieves its objectives, and the several particular issues that I raised at Second Reading have been thoroughly explored and answered. Members of the committee will want to thank our chair, the noble and learned Lord, Lord Thomas of Cwmgiedd, who was instrumental in us achieving that, patiently taking us non-lawyers through the provisions from time to time.

On Clause 1, when I spoke at Second Reading I noticed that the list of documents in subsection (2) was not the same as in paragraph 38 of the Explanatory Notes on the model law on electronic trade records. As the Bill states, the list is not exhaustive but indicative. The Law Commission’s consultation gave an indication of which documents in the list possession may most commonly be relevant to. For example, although air waybills are in the MLETR list, the Law Commission concluded that possession of these documents is never required for them to function as intended. By contrast, possession of mates’ receipts, which we discussed in our earlier sessions, may be relevant if transferring them results in the property transfer of ships’ goods. These differences between the two indicative lists are the result of their relative significance in English and Welsh law, as compared to other jurisdictions. The difference is not in itself of significance.

As the Minister’s helpful letter to the committee on 17 February stated, in practice the list in Clause 1(2) gives examples of documents that

“may satisfy all three requirements of sub-clauses 1(1)(a), (b) and (c).”

However, the Bill states that they are

“examples of documents that are commonly used as mentioned in subsection (1)(b)”.

This difference also should not worry us. The Bill is clear that a “paper trade document” is one that satisfies all three requirements. The indicative list, however composed, includes only documents that are commonly used, so the clause serves its purpose.

[Lord Clement-Jones (LD)]

I am not quite sure about the procedure. Is this a debate on Clause 1 standing part?

[Lord Lansley (Con)]

Yes.

[Lord Clement-Jones (LD)]

I see. The only part of the Bill that we received contrary evidence on was mates’ receipts. If that is the only matter that there was an argument on, we have done pretty well on the Bill so far. I thank our chair for his expertise, which helped us enormously as we went through the Bill; we kicked the tires fairly firmly. I congratulate our Minister, who switched hats seamlessly during the Recess and is now the spokesperson in this area; his versatility clearly knows no bounds. I thank him for his letter, which cites case law that makes the status of mates’ receipts very clear. We also owe the noble Lord, Lord Lansley, quite a bit for unpacking, with his trade expertise, the issues in Clause 1 today and throughout the passage of the Bill.

I am personally quite satisfied, although I have some trepidation. Professor Sir Roy Goode is no mean authority, but we must conclude that the Minister is correct in quoting case law, and I think our chair is very satisfied with how Clause 1, and the documents cited in Clause 1(2), are set out. So I agree with the noble Lord, Lord Lansley, but it is useful that we have explicitly said that we are satisfied in that respect.

[Lord Bassam of Brighton (Lab)]

I feel provoked to speak. I shall not detain the committee long. I entirely echo what the noble Lord, Lord Clement-Jones, said. The letters from all parties have been extremely helpful, and the noble Lord, Lord Lansley, has played a blinder in trying to draw out the detail, which has helped all of us. This is obviously a very necessary Bill, and I am sure that, in the fullness of time, it will ensure that we as a nation are well placed in the world of electronic trade and electronic trade documentation. I do not have any particular misgivings about the Bill, but I shall of course listen very carefully to what is said in the other clause stand part debates.

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[Lord Clement-Jones (LD)]

My Lords, this is probably the most positive clause stand part debate that I have had the privilege of speaking in. We have debated the essence and architecture of Clause 2 extensively during the passage of the Bill so far. I thought that our chair, the noble and learned Lord, Lord Thomas, was very tactful in talking about our experience as a committee. The fact is that we had a fairly steep learning curve on trade documents in many respects. He guided us expertly through what we can safely say—interestingly, we had a bit of a history lesson during committee on the Bill—is the biggest change to trade documents since the Venetians ruled the waves.

In particular, these gateway provisions in Clause 2 were examined extremely carefully for their compatibility with the MLETR. One of the issues raised by the noble Lord, Lord Lansley, was about time and place. The Minister’s letter, again, answers that very effectively, so that issue is settled to our satisfaction.

The noble Lord, Lord Holmes, talked about the interoperability aspect. This is crucial, and, again, even though perhaps we do not make enough of that explicitly, it is clearly satisfied by the Bill and needs to be supported on that basis.

[Lord Parkinson of Whitley Bay (Con)]

My Lords, I am grateful for the consensus of the committee and the opportunity to set out on the record the reasons for the approach that we have taken.

Clause 2 sets out the criteria that a document in electronic form must satisfy in order to qualify as an electronic trade document for the purposes of the Bill. It defines the subject matter with which the Bill is concerned: namely, electronic trade documents. In my noble friend’s explanatory statement to his Motion that the clause should not stand part, reference is made to the provisions of the MLETR and how they are consistent with the structure of the Bill. One area that we did not reach consensus on was whether to refer to the MLETR as the M, L, E, T, R; to pronounce it “Meleeter”; or to refer to it by its full name. However, I am glad that we have had the opportunity to focus on it again today.

The starting point for the Bill has been the following question: what requirements must trade documents in electronic form satisfy in order to be considered capable of performing the same functions as their paper counterparts? Clause 2 seeks to address this question by setting out the criteria that a document must satisfy in order to qualify as an electronic trade document. These gateway criteria are intended to replicate the salient features of paper trade documents, such as being capable of exclusive control and fully divestible upon transfer. An electronic document that satisfies the criteria in Clause 2 is capable of possession and of performing the same functions as its paper counterpart.

Article 10 of the model law sets out criteria that an electronic record must meet in order to satisfy a requirement for a transferable document or instrument—in other words, a paper trade document. A document that satisfies the criteria in Article 10 is an electronic transferable record for the purposes of the model law. In this sense, the MLETR also contains gateway criteria, many of which are closely comparable to those in the Bill.

As I think the committee fully agrees, Clause 2 is fundamental to the Bill and has been carefully drafted to ensure that electronic trade documents can function in the same way as their paper counterparts. The Bill is not intended to be a comprehensive code in relation to electronic trade documents. Rather, it is intended to ensure that electronic documents that satisfy certain criteria, in a reliable way, are legally and functionally equivalent to their paper versions.

As was made clear throughout the committee’s evidence sessions, the structure and the content of the Bill, and Clause 2 in particular, are compatible with the MLETR and with laws in other jurisdictions that have adopted it. It is, however, drafted to cater for the specificities and nuances of UK law, and to take account of feedback to the Law Commission’s consultation paper and draft Bill. So I agree with my noble friend, the noble and learned Lord and others that the salient point here is the interoperability, and I hope that that and the letter I sent to the committee make that clear.

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As the noble and learned Lord, Lord Thomas, perfectly pointed out, the Bill is all about interoperability and consistency, and that can barely be restated enough. However, by deploying the concept of possession in the Bill we have interoperability, consistency and the benefit of bringing hundreds of years of English law to bear, without cutting across the essential need for interoperability in any sense or the absolute need for consistency for the smooth and efficient functioning of electronic trade documents for international trade as a result of the Bill.

[Lord Clement-Jones (LD)]

My Lords, I will be brief. As all noble Lords described, this approach was overwhelmingly supported by our witnesses to the committee. All of them emphasised that MLETR is a model law, not a prescription for law. Possession of digital documents is absolutely the essence of the Law Commission’s approach to the Bill, and it has been entirely justified. The noble Lord, Lord Lansley, talked about something being capable of possession, which essentially makes this clause a gateway, like Clause 2, leading it to common law to establish possession. This approach was entirely supported by everything that we heard during our inquiry. We fully support that Law Commission approach.

[Lord Bassam of Brighton (Lab)]

My Lords, clearly, the issue of possession and exclusive control was the nearest we came to controversy in our sessions on the Bill. But the convocation of professors arraigned before us was unanimous in the view that this is the way to approach the issue. The seminars on this which the noble and learned Lord, Lord Thomas, gave us added to our conviction that this was the right way. No doubt, it will establish the benchmark for other jurisdictions to follow.

I have one question. My eye alighted on the word “indorse” in Clause 3(1). Normally, this would be “endorse”. As I understand it—my English is not the best in the world—the difference is pretty marginal, but one relates specifically to financial terminology. I wanted to understand this better, because it is an unusual word that is not often used. Apart from that, I have nothing to add.

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[Lord Holmes of Richmond (Con)]

My Lords, like the noble and learned Lord, Lord Thomas, I thank everyone involved in getting the Bill to this stage, not least Professor Green and her team at the Law Commission, our clerks and team here in the House and everyone who has been involved. As a committee, we benefited hugely from the expert and excellent chairmanship of the noble and learned Lord, Lord Thomas, with all his legal experience in this space, not the least of which was an interesting case, which he recounted to the committee, involving a large consignment leaving the port of Bordeaux. All the committee members’ ears pricked up at that point, only to prick down, if ears can do so, when it turned out that the consignment was grain, rather than any product from the right or left bank of the Gironde that may perhaps have been of more interest.

The noble and learned Lord, Lord Thomas, set out the point absolutely clearly: that the Bill demonstrates what we can do when we combine common law with our new technologies. It is right that we conceive of blockchain, distributed ledger technology, AI, machine learning and all the new technologies as tools. They are incredibly powerful and may be incredibly positive, but they are still tools that we humans have to determine how to deploy.

The Electronic Trade Documents Bill is a trade-enabling, trade-empowering Bill, through the potential of electronic trade documents. In reality, however, it is at its heart a new technologies Bill—new technologies in combination with English common law, brought to bear in the area of international trade in this instance.

As the noble and learned Lord, Lord Thomas, pointed out, the most important stage is after Royal Assent, when the hugest sales job must, rightly, be done on the Bill to get traders in this country, banks and other people involved in the international trade business, like insurers, to very much get behind and use electronic trade documents. Rightly, the Bill is permissive rather than mandatory. That is quite correct, but it means that this sales job must be done.

Secondly, this sales job must be done, rightly, through His Majesty’s Government in all the international fora —through bilaterals, trilaterals and all means—to demonstrate to other nation states the benefit of incorporating MLETR into their domestic legislation. To put it plainly, what purpose would the UK passing the Bill have if other nations have not taken MLETR into their legislation and enabled that international trade, which can be done in seconds rather than days?

As the noble and learned Lord, Lord Thomas, perfectly pointed out, the benefit to the environment and net zero should not be missed in any sense here. Currently, in trade, it may take seven to 10 days for a bill of lading document to be transferred to enable a shipment to move. This was illustrated so clearly during Covid, when the planes were grounded at London Heathrow with the trade documents on board and the ships queued up outside the Port of Singapore, unable to move for want of that physical document, which is so painfully papery. The Bill perfectly addresses that, enabling not only settlement in seconds but all that carbon, which would have been wasted in flights and timing, being wiped away through the implementation of the Bill.

Can my noble friend the Minister therefore say whether he will ensure that there is real cross-department and cross-Whitehall consideration not just of what we have learned through the Electronic Trade Documents Bill process but of how we can look to every possibility, in every potential context, to combine common law with the new technologies available, for the benefit of citizen and state alike?

[Lord Clement-Jones (LD)]

My Lords, I was struck by the Minister saying that today’s stand part debates are an opportunity to show our workings. He is admirably qualified to be a Science Minister on that basis.

I add my thanks to the Law Commission, to our witnesses for both their oral and written evidence, to the clerks and staff on the committee in particular and, overwhelmingly, to our chair, the noble and learned Lord, Lord Thomas, who has guided us so carefully and successfully through the thickets of the MLETR and the common law. I very much hope that the Minister and the House authorities more generally will take note of our chair’s comments on the procedure and the serendipity of the fact that we had time successfully to get the evidence and so on. If we had not had the intervening period of Christmas, this would have been extremely difficult.

I fully endorse—as opposed to indorse—what the chair said about the hard part being the practical application and adoption of the Bill. He mentioned the letter from Barclays, which is worth a little consideration because it is very encouraging. It came in rather late, but it expresses quite an appetite from its customers for the Bill, which bodes well:

“Our customers want trade to be simpler, faster and more digital, enabling them to complete trade deals in hours and days rather than weeks and months … The security and compliance of trade will also be strengthened through the proposals in the ETD Bill … The proposals in the ETD Bill will also result in a significant reduction of the estimated 25 billion paper documents generated and couriered around the world each year”—


the noble Lord, Lord Holmes, made this point. That net-zero aspect is extremely important in all of this. The letter says,

“Overall, we are confident that the … Bill will be a positive boost to UK trading”.


On implementation, the Barclays letter picks up the point about the new trade digitisation task force. It would be useful if the Minister could give us a little more information about that, if he has any, particularly in relation to some of the points raised by the noble Lord, Lord Holmes, on the duty or opportunity for the taskforce to encourage the adoption of new technologies, which will of course be absolutely crucial. The letter, again, stresses the need for UK leadership, so the trade digitisation task force will clearly have an international engagement duty. It would be useful if the Minister could unpack that a little so that we know that the Law Commission’s work, which we carried on, will bear fruit in due course.

We very much hope to see that the Bill has all the advantages set out in that Barclays letter.

Electronic Trade Documents Bill [HL]

Lord Clement-Jones Excerpts

3rd reading
Wednesday 22nd March 2023 Lords Chamber

[Lord Thomas of Cwmgiedd (CB)]

My Lords, may I add one word of thanks to the Minister and all the members of the Committee? I am afraid they had to work quite hard learning something that I had the disadvantage, probably, of having done for more than 50 years. The House also ought to thank so many from the industry, academia and the court who gave evidence to us because we scrutinised the work of the Law Commission to make certain that the Bill would meet the demands of international trade and, particularly, the convention produced by UNCITRAL to which this Bill gives effect. I thank all the members of the Committee again.

[Lord Clement-Jones (LD)]

My Lords, I add my thanks to those of the noble and learned Lord, Lord Thomas of Cwmgiedd. I certainly learned a great deal about the Law Commission process for scrutinising Bills, and a lot of that was due to the fact that the noble and learned Lord, Lord Thomas, was an expert and wise chair of our Committee. Great thanks are due to him and to the Minister. It is rather unusual to have a Minister sitting in on the Committee, but he was very welcome nevertheless, along with the noble Lord, Lord Harlech. I also thank the other members of the Committee who kicked the tyres very effectively on the Bill. Of course, I particularly thank Professor Sarah Green and the Law Commission.

The whole purpose of the Bill is to make digital trade a reality. We sometimes think that our job is done when a Bill goes through and we can think about something else, but it is important that progress is made on the single trade window which will result from this Bill. Can the Minister tell us when the first phase of the single trade window might happen? Will it happen in November 2023? After all, it is a very important part of what we should expect. It is quite complex. It is described as a multi-department programme, which probably sends quivers down the spines in Whitehall. It would be very good to hear that the Bill is going to come into effect very quickly and will lead in the very short term to greater digital trade, but it is a very good Bill and we have scrutinised it pretty effectively.

[Lord Bassam of Brighton (Lab)]

My Lords, it falls to me to add my general congratulations to the Minister, to the noble and learned Lord, Lord Thomas, for his work on this, to the Bill team and the advisers who were behind them and, in particular, as the noble Lord, Lord Clement-Jones, said, to Professor Sarah Green, who led the way in the evidence and cleared a great pathway for us. The Law Commission should be congratulated on constructing this legislation to which none of us wanted to effect an amendment, and we succeeded in that through many hours of deliberation and consideration, so that is something to be proud of in itself.

I want to add to a point the noble Lord, Lord Clement- Jones, usefully began. Many Bills meander their way through Parliament and disappear, sinking without a trace. I suspect this Bill might do that as well, but it does not deserve to. This is a really important piece of legislation which we should not just be proud of but make something of. Some estimates suggest we can save something like 50% in costs by moving to forms of electronic trade. That is not to be sniffed at in an intensely competitive international trading world. This piece of legislation, which puts us in the lead on electronic trade, is something we should celebrate.

I raised in Committee with the Minister that we should ensure we have a strategy which means that this Bill gets the opportunity to do what it says it is about: facilitating electronic trading. I asked the Minister about this when we were in Committee. He said:

“Following the Bill being passed, many of the precise steps taken to implement and fully harness the benefits of the Bill will be for business and industry to determine.”


That is fine, but we need a clear pathway and strategy from the Government for us to be able as a trading nation to reap the benefits of this legislation. I would like to hear from the Minister—it is something I am sure the House will want to come back to at some point—what that strategy might look like. He later said that there is

“a role for government to play”,—[Official Report, Electronic Trade Documents Bill [HL] Special Public Bill Committee, 20/2/23; col. 17.]

which is the case. However, we and Singapore are the only two trading nations with the benefit of this legislation in prospect.

I congratulate the Government on bringing this forward. It is a fine piece of legislation. It may not be controversial, but it is potentially of great value. I hope this Government can aspire to give this piece of legislation the value it deserves.

Electronic Trade Documents Bill [HL]

Lord Clement-Jones Excerpts

Consideration of Commons amendments
Wednesday 19th July 2023 Lords Chamber

[Lord Clement-Jones (LD)]

My Lords, I add my thanks to the Minister for moving these amendments from the Commons. He has shown remarkable consistency with the words of his honourable friend Mr Scully in the Commons—I think word for word it is what he said, so that is excellent. I see other members of the committee here; I am only sorry that the noble and learned Lord, Lord Thomas of Cwmgiedd, is not here to see the final process and see this legislation go forward.

I welcome these amendments, because it means that the legislation will cover the whole United Kingdom, and that the exception power in Clause 5 will operate across the UK. Could the Minister say whether anything is in contemplation under Clause 5 to be excepted in using that power across the UK?

I very much agree with what the noble Lord, Lord Bassam, said about a plan for implementation. This is a much more important Bill than it appears at first sight, and we should really speed it on its way in implementation terms.

[Lord Holmes of Richmond (Con)]

My Lords, I rise briefly to support the amendments as set out. In doing so, I declare my technology interests as set out in the register.

This is the most important Bill that no one has ever heard of. It demonstrates what we can do when we combine the potential of these new technologies with the great good fortune of common law that we have in this country. I particularly support the comments made by the noble Lords, Lord Bassam and Lord Clement-Jones, about the Government’s plan for implementation. Although it is obviously critical that we get Royal Assent to this Bill as soon as possible, that is really where the work begins. As my noble friend the Minister knows, the Bill is rightly permissive in nature; it cannot be that, having done all the work through both Houses of Parliament, the Bill is then just left on the shelf. There needs to be an active plan for implementation, communicating to all the sectors and all the organisations, institutions and brilliant businesses in this space to seize the opportunity that comes from electronic trade documents. Does my noble friend the Minister agree— and will he fill out some more detail on what that implementation plan is?