LEGAL REPORT ON UNCITRAL MODEL LAW ON

ELECTRONIC TRANSFERABLE RECORDS

Model law on Electronic Transferable Record, hereinafter MLETR, emphasising the
legal usage of electronic transferable records. The using of these electronic transferable records
can be made internally or meaning to say nationally and internationally. The purpose of this
model law on electronic transferable records is to give a guideline for benefit to the traders that
making a international business involving electronic commerce.

This model also give alternative method of the use of electronic transferable records
that can work as equivalent to transferable documents and instruments. For example, the
documents namely bill of lading, promissory notes, bill of exchange and warehouse receipt.
This can be seen in the chapter one of general provision under Article 2 of MLETR.

However, it must be noted that this MLETR does not applies to security such as share
and bonds and other investment instruments that can be seen under paragraph 3 of Article 1 of
the same chapter. Before going further, it is pertinence to know the definition of electronic
records and electronic transferable records.

Electronic records by Article 2 means that information generated, communicated,

received or stored by electronic means including ware appropriate, all information logically
associated with or otherwise, linked together to be part of the record. While electronic
transferable record is defined under the same article which giving the meaning an electronic
record that comply with the requirement of Article 10 that mention about transferable
documents or instruments.

In this report, UNCITRAL MLETR is significant to show that the paper-based

document or namely as transferable documents and instruments are very crucial market tools.
The presence of transferable documents and instruments in the form of electronic are giving a
bit impact for regulating electronic commerce in a good way. This is because the method of
using electronic transferable record give the easiest way to the traders that involve in cross
boarder transaction allow faster and more secure transmission. It shows that this paperless
instrument will accelerate the efficiency in fulfilling the contractual obligations through
electronic and at the same time giving a way for us to save the environment.
 The function of this electronic transferable record has an equivalent function as if it is
on a paper where it includes writing and signature as stated in Article 8 and 9. Besides, Article
11 emphasise on the control which means give the same meaning to possession this can be seen
in the commentary below.

“Article 11 provides a functional equivalence rule for the possession of a transferable

document or instrument. Functional equivalence of possession is achieved when a reliable
method is employed to establish control of that record by a person and to identify the person
in control.”

Moving on to the relevant of the Chapter III, which mention about the use of electronic
transferable record. We acknowledge that to operate best function of the model, electronic
transferable records provide general liability standard. This can be seen in Article 12 of
UNCITRAL MLETR.

Article 13 is about the indication of time and place in electronic transferable records.
This provision allows indication in electronic transferable record. For example, the Article 13
actually emphasise on how important the sequence of the time of endorsement as it is differ
with transferable documents or instruments which naturally in order.

Article 16 indirectly mention about how the substantive law does not prohibit the
amendment of transferable documents or instruments. It also mentioned that it have the same
function as how the law was made for the transferable documents or instruments.

Article 17 and 18 giving the similar effects when it mentioned about the change of
medium in accordance in said provision. For example Article 17 mention the replacement of a
transferable document or instrument with an electronic transferable record which also mention
in the term of vice versa in Article 18.

Next, this MLETR gives a guideline that an electronic transferable record

recognized itself in the cross-border transaction. For example, it is mentioned in Article 19
under chapter IV mention regarding non-discrimination of foreign electronic transferable
records. In details, it mentioned that the legality of the electronic transferable record must not
be denied in lines with the validity or enforceability just for the reason it is from abroad.
Furthermore, this article does not allow MLETR to affect the governing law which can be
substantive law or private international law.

Nevertheless, the provision under MLETR does not touch anything regarding the term
‘original’ because as stated in Article 8 the function of electronic transferable records is the
same as transferable documents or instruments. Also, this electronic transferable record is
suitable for documents such as contracts whose modification is possible but neither necessary
nor frequent. It means electronic transferable records can be modified and must not be
important to be in ‘final form’ until presentation.

Electronic transferable records also can be in multiple original as it does not affect the
continuation of the practice. For example, the documents can be one on paper and one in
electronic form. This condition can only occur if it is permitted under applicable law. However,
problem may arise when issuing multiple electronic transferable record as it will lead to
multiple claims for the same performance based on the presentation of each original.

Further, MLETR does neither contain or touch on the matter on storage and archiving
nor regarding third party service providers. Among the benefits there is a need, a supplement
by the third-party service provider. This is because depending on the model that have been
chosen, the management system of electronic transferable record may need or in need or require
the use of service by the third party aforesaid.

To conclude, MLETR is a model law that does not disregard on substantive law itself
which shows it still preserve the exist law. Apart from that, the model itself as legal guidance
give benefit to all the parties which involve with international transaction along the line with
domestic transaction as it basis and method are the most convenient to traders around the world.
(1000 words)