UNCITRAL United Nations Commission on International Trade Law

UNCITRAL e-commerce texts and

paperless trade facilitation

Luca Castellani
Secretary
UNCITRAL Working Group IV
(Electronic Commerce)
 ICT policies and their implementation

• The pervasive and ubiquitous use of information and

communication technology (ICT) is a defining element of the
global economy.
• Success in promoting ICT requires:
– solid policy;
– a robust technical infrastructure; and
– a supportive legal environment.
• Two legislative approaches have emerged:
– Based on specific technologies
• Secure and predictable;
– Based on technology neutrality
• Flexible and open to future developments.
• The second approach has proven to be more effective,
especially to support commercial exchanges.

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 UNCITRAL’s mandate and work

• The core legal body of the United Nations system in the field
of commercial law.
• A UN Commission with universal membership active in
commercial law reform since 50 years.
• UNCITRAL's goal is the modernization and harmonization of
international business law.
• UNCITRAL deals with the law of electronic transactions,
electronic contracting and electronic signatures, by
– Preparing dedicated legislative texts;
– Inserting dedicated provisions in texts on other legal areas
(e.g., arbitration, carriage of goods by sea, public
procurement)

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UNCITRAL Model Law on Electronic Commerce (MLEC)

• Adopted in 1996, the MLEC aims to enable the

commercial use of modern means of
communications and storage of information.

• It contains the first formulation of the three

fundamental principles of technology neutrality, non
discrimination and functional equivalence in
electronic media for paper-based concepts such as
"writing", "signature" and "original".

• It also establishes rules for the formation and

validity of contracts concluded electronically and for
the attribution and retention of data messages.

• Enacted in over 70 States, including most States

in East and South Asia.

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UNCITRAL Model Law on Electronic Signatures (MLES)
• Adopted in 2001, the MLES aims at bringing
additional legal certainty to the use of electronic
signatures.

• It establishes criteria of technical reliability for the

equivalence between electronic and hand-written
signatures.

• It follows a technology-neutral “two tier” approach,

which avoids favoring the use of any specific
software, method or product while attaching legal
presumptions to more secure signatures.

• It establishes rules for assessing possible liability

of signatories, relying parties and trusted service
providers intervening in the signature process.

• Enacted in over 30 States, including China, India.

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UN Electronic Communications Convention (e-CC)
• Adopted in 2005, the e-CC builds up on and
updates the provisions of previous UNCITRAL
texts.

• It aims at enhancing legal certainty and

commercial predictability where electronic
communications are used across borders by,
among others:
– validating the legal status of cross-border
electronic exchanges;
– preventing medium and technology
discrimination;
– enabling the use of electronic
communications in other treaties (e.g. NYC,
CISG).

• Status: 18 signatories (including China), 11

State parties (including Russia, Singapore).

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UNCITRAL Model Law on Electronic Transferable
Records (MLETR)
• Adopted in 2017, the MLETR legally enables the
use of electronic transferable records
incorporating the right to delivery of goods or
payment of sums of money (bills of lading; bills
of exchange; warehouse receipts; promissory
notes; checks).

• Technology-neutral and specifically compatible

with the use of blockchain, the MLETR is a
fintech and smart contracts enabler.

• It allows transport, finance and other documents

to be merged in a single electronic record.
– Valuable data source for single window
submission.
• Adopted in Bahrain, under consideration in
Singapore.

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 UNCITRAL texts and FTAs

• Increasing interest for promoting cross-border e-commerce in

free trade agreements.
• In e-commerce chapters :
– Enabling provisions following a piecemeal approach;
– Certain FTAs are used as models.
• In customs or trade facilitation chapters :
– Regulatory provisions on paperless trade facilitation.
• Often these provisions are soft commitments;
– If binding, the enforcement mechanism is left to States.
• Lack of implementation hinders e-commerce development.

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 CPTPP
• Chapter 14 of the Comprehensive and Progressive Trans-Pacific
Partnership (CPTPP) aims to promote e-commerce and paperless
trade facilitation
• It provides one of the most comprehensive formulations of e-
commerce provisions in an FTA
• In particular, CPTPP articles 14.5 (Domestic Electronic Transactions
Framework) and 14.6 (Electronic Authentication and Electronic
Signatures):
1. Pursue mutual legal recognition and interoperability;
2. Endorse the principles of non-discrimination and technology
neutrality;
3. Explicitly refer to a duty to adopt UNCITRAL texts (e-CC and
MLEC);
4. Allow mandating the use of specific technologies for certain
types of transactions.

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 Paperless trade facilitation

• Trade facilitation aims at simplifying procedures and controls

relating to movement of goods across borders.
• The goal of trade facilitation is to reduce direct and indirect
trade costs.
• More cross-border trade means economic development.
– No prejudice to border control but mutual reinforcement.
• ICT helps trade facilitation through concepts such as
paperless trade and electronic single window (eSW) facilities.

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 Paperless trade facilitation: the private side

• International trade is a B2B transaction.

• B2B exchanges fall under the scope of commercial law.
• The overarching principle of commercial law is “freedom of
contract”.
• According to technology neutrality, parties are free to choose
the technology, method or product used.
• B2B e-commerce laws are often based on UNCITRAL texts.
• Limited number of provisions needed to address technology
requirements.
• Legal uniformity facilitates mutual legal recognition of
electronic exchanges and “legal interoperability”.

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 Paperless trade facilitation: the public side

• eSW perform regulatory functions that fall under the scope of

customs law, a branch of public / administrative law.
• Since customs are a public body, the SW is a B2G transaction
• Commercial operators must comply with regulatory
requirements.
• One consequence is that commercial operators may be asked
to use specific eSW formats and technologies to interact with
a public body.
– This brings additional compliance costs that may
discourage traders from using eSW facilities.

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Paperless trade facilitation: reconciling private and public side

• Cross-border eSW are a G2G transaction

• Need to enable B2B, B2G and G2G exchanges
• eSW technical and legal standards are not uniform across
States.
– This hinders mutual legal recognition of electronic
exchanges and, therefore “legal interoperability”.
• The same laws should apply in different States and both to
private and public sector in order to:
– facilitate submission of trade-related data;
– reinforce regulatory functions.
• Actually, an enabling legal environment may assist in
complying with regulatory requirements

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Legal topics relevant for paperless trade facilitation

• UN/CEFACT Rec. 35 lists the legal topics relevant for

paperless trade facilitation, including electronic single
windows. They include e-transactions and e-contracting;
authentication/security (e-signatures/IdM); data protection,
retention, archiving and sharing; and cybercrime, digital
forensics.
• Additional issues are specific to SW operators
– liability, SLAs, data sharing agreements
• Law reform needs may be identified by comparing legislation
against a checklist of best international legal standards.
– See also UN NExT Electronic Single Window Legal
Issues: a Capacity-Building Guide

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Building an enabling legal environment: concrete steps

• An enabling legal environment may be achieved:

– Through the adoption of treaties;
– Through the harmonisation of national laws on the basis of
uniform legal standards, when they exist.
• This is approach is endorsed in article 10 of the FA-PT.
• Standards may be global (UNCITRAL) or regional (e.g., APEC
Data Privacy Pathfinder and Cross Border Privacy Rules).

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 WTO TFA

• WTO TFA art. 10.4.1: “Members shall, to the extent possible

and practicable, use information technology to support the
single window.”
– Cautious approach
– Based on the concept of SW.

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 ESCAP FA-PT

• Framework Agreement on Facilitation of Cross-border Paperless

Trade in Asia and the Pacific (FA-PT)
• Relies on a voluntary implementation mechanism.
• Based on two complementary principles of technical
interoperability and mutual legal recognition.
• The FA-PT refers to the creation of an enabling legal
environment:
• Aims at facilitating mutual legal recognition and not at
regulating it;
• Does not affect regulatory requirements arising from other
legal texts;
– May actually assist in complying with those
requirements.

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 FA-PT: general principles of legal relevance

• Art. 5 FA-PT refers to the fundamental principles underpinning

UNCITRAL e-commerce law as directly relevant for
establishing mutual cross-border recognition of electronic
communications:
1. Principle of non-discrimination;
2. Principle of functional equivalence;
3. Principle of technological neutrality.
• Those principles have already been adopted in at least 25
States in Asia and the Pacific .

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 Principle of non-discrimination

A communication shall not be denied validity on the sole ground

that it is in electronic form.

– Conditions for legal recognition of electronic documents shall be

the same as for paper documents
– Easier to implement in the private sector than in the public
sector.
• Typically needs explicit legislation when applied to customs
operations.
• Requires establishment of a business culture through in-
house training, etc.

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 Principle of functional equivalence

Purposes and functions of paper-based requirements may be

satisfied with electronic communications, provided certain
criteria are met

– For instance, the written form requirement is met if the

electronic communications is accessible for future reference
– Electronic accessibility satisfies the same function as paper
accessibility
• As a result, all references to “writing”, “original” and
“signature” contained in customs law are satisfied
according to the requirements of the electronic
transactions law.

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 Principle of technology neutrality
Legislation shall not impose the use of or otherwise favour any
specific technology

– This approach is necessary to enable the use of future

technologies
– Challenge in jurisdictions where only documents signed with
national PKI standards are given legal recognition
• This may increase costs, affect interoperability and prevent
mutual legal recognition
• SW operators want better quality data from commercial
documents.
– Practical solution: distinguish data submission and data
storage/analysis, professional and occasional user, etc.

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 FA-PT Implementation Tools

• The FA-PT foresees a cooperative mechanism to identify the

steps necessary to facilitate paperless trade
• Specific implementation tools are being developed:
– Roadmap for the implementation of the substantive
provisions in the Framework Agreement on Facilitation of
Cross-border Paperless Trade in Asia and the Pacific
– Legal Gap Analysis Checklist for Self-Assessment to
support cross-border paperless trade
• The self-assessment process has to be conducted fairly and
objectively: it is not a goal in itself, but an opportunity to
explores the most useful directions of future work in support of
paperless trade facilitation.

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 FA-PT: relation to other legal instruments

• Mutual legal recognition of electronic communications at the

international level may be achieved:
– through the adoption of treaties;
– through the harmonisation of national laws on the basis of
uniform model laws.
• Art. 10(1) FA-PT points at the need to adopt treaties, model laws
and other standards that:
– may be global (e-CC, MLEC) or regional (e.g., APEC Data
Privacy Pathfinder and Cross Border Privacy Rules);
– have a broader scope than paperless trade facilitation by
generally enabling electronic transactions.

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 ECC and paperless trade facilitation

• The ECC creates the legal framework to promote B2B

exchanges.
– It ensures that fundamental principles of e-commerce law
are recognised.
– It helps harmonising domestic legislation.
• Facilitates the establishment of “legal interoperability” also for
B2G and G2G transactions.
– For that reason, referenced in article 10 of the FA-PT.
• For instance, article 9(3) sets the conditions for
recognition of foreign electronic signatures
• It also fulfils legal requirements contained in FTAs.

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 MLETR and paperless trade facilitation

• Certain commercial documents entitle the holder to obtain payment

of a sum of money or delivery of goods:
– Bills of lading, promissory notes, bills of exchange, warehouse
receipts and cheques
• These documents are commonly used in a number of business
sectors: shipping and logistics, farming, banking and financing...
• Electronic transferable records (ETR) are the electronic equivalents
of these documents

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 MLETR and data pipeline implementation

• One single ETR could replace multiple documents

– All commercial and regulatory documents relevant for cross-
border trade may be contained in a single electronic transferable
record
– Information may be selectively shared with each business partner
– This enables integration of all data elements from various sources
in a supply chain (“data pipeline”)
• Data contained in a single record offers a higher level of reliability of
being complete, accurate, up-to-date and authentic (i.e. attributable to
the originator)
– Example of Singapore’s TradeTrust initiative

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 Conclusions

• There is a convergence between FTAs and paperless trade

facilitation.
• E-commerce plurilateral “joint statement initiative” at the WTO:
– One pillar is e-transactions and e-signatures;
– Benchmarked against UNCITRAL texts.
• States should consider adopting MLEC and ECC.
• Those interested in further integrations should consider adopting
also MLETR.

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