The ICC Calls on Governments to Allow for Digital Authentication and Delivery of Trade Documents, in Light of the Covid-19-Induced Disruptions

Client Alert
April 17, 2020

Written by: Geoff Wynne and Szonja Kolbenheyer (trainee solicitor)

On 6 April 2020, the International Chamber of Commerce (ICC) published an urgent memorandum addressed to governments and Central Banks, urging them to take the necessary steps towards the immediate transition from mandating the use of paper-based trade documentation to recognising digital authentication and delivery of documents as a legally binding and enforceable alternative.

The ICC highlighted that the Covid-19-induced disruption in the market is likely to have significant negative impact on essential global trade flows with increased implications for the viability of many micro-, small- and medium-sized enterprises (MSMEs).

It stressed that bank-intermediated trade finance is an essential contributor to providing working capital for international trade transactions and serves as a means to mitigating payment risk, supporting approximately 30 per cent of all international trades, according to The Bank for International Settlements’ estimation. The effective functioning of bank-intermediated transactions is especially key in the case of developing economies and essential commodity markets.

The ICC further highlighted that trade finance transactions rely, to a very great extent, on hard copy paper documentation for the delivery of goods and to process payments, which is mostly due to the fact that in many jurisdictions electronic trade documents are either prohibited or their legal status is unclear. The ICC called on governments to provide emergency interventions to remove reliance on paper-based trade documentation, emphasising that as things stand, severe disruption to supply chains for essential goods is likely.

On 8 April 2020, the Secretary General of ICC UK addressed a public letter to the Secretary of State for Justice, urging the UK Government to separate the trade-related aspects of the envisaged law reform on digitisation and put these to Parliament as a matter of urgency, highlighting that the planned time frame of 2021 would be insufficient to ensure the effective continuity in global trade.

The Secretary General proposed implementing the requested changes via secondary legislation under specific Acts and/or using the Electronic Communications Act 2000.  These could include assisting with digital bills of exchange, promissory notes and electronic bills of lading. This would, it is argued, show the UK leading the way, and, in particular, English law.

The ICC recommended that the following actions could be taken by governments:

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Sullivan has developed a rapid response team of attorneys to help our clients and our communities around the globe cope with the impact of the COVID-19 pandemic. Please refer to Sullivan’s resource center at www.sullivanlaw.com/COVID19 for more information and for access to Sullivan’s library of related advisories.

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