Fear digital not: Why enforcing electronic trade documents isn’t harder than paper - Trade Treasury Payments

Somewhere in the back of every trader’s mind, when conducting a cross-border transaction, is the question of what will happen if a dispute arises. Which law applies? Where will it be decided? Will I be protected?

For centuries, merchants have relied on bills of lading and other trade documents whose value rests on the goods they represent and the enforceability of the rights they embody. As these instruments move from paper to digital form, attention has turned to whether these electronic trade documents are at risk in jurisdictions that have not adopted digitally enabling legislation like the UNCITRAL Model Law on Electronic Transferable Records (MLETR). 

Let’s look at the UK as an example. Under UK law, the Electronic Trade Documents Act 2023 (ETDA) now gives specified electronic trade documents, including bills of lading, bills of exchange, and warehouse receipts, the same legal effect as paper if held in a “reliable system”. This law, built on the principles of MLETR, provides legal certainty within the country, but what about when a transaction involves another jurisdiction without such legislation? Can the digital version still withstand legal scrutiny?

That answer to this question lies in a field known as private international law, or conflict of laws, rather than in the format of the document itself.

Conflict of laws: what it is and why it matters

The term conflict of laws (or private international law (PIL)) refers to the body of rules that determines which legal system and which court should decide a dispute when a case spans more than one jurisdiction. It determines three things: which law applies (choice of law), who decides (jurisdiction or choice of forum, including arbitration), and whether the outcome will be recognised (enforceability).

Sarah Green, Head of Digital Assets and Trade Finance at D2 Legal Technology and former law commissioner for England and Wales, said, “This label [PIL] refers to the issue created by the fact that each jurisdiction has its own laws… Not only might these different laws come to different conclusions on the same issues, but it might also not be clear which courts should hear a particular dispute and which jurisdiction’s law they should apply to it.”

The EU’s Rome I Regulation is one example of how these issues can be handled. It says that parties to a contract are free to choose the law that governs it (referred to in legal parlance as “party autonomy”). If the parties do not make a choice, the law is decided based on factors such as where the contract was made or where it is most closely connected (“default connecting factors”). 

The regulation also makes clear that some rules cannot be avoided, such as mandatory national laws (“overriding mandatory provisions”) or public policy concerns (“public policy exception”). Rome I expressly excludes transferable documents and instruments from its scope. For those instruments, private international law rules are found in other instruments such as the Geneva Conventions and the Hague rules.

While party autonomy (choosing governing law) is long established for transferable instruments on paper, electronic transferable records add some practical considerations. For example, in France, a recent decree requires certification of the service provider. That raises the practical question of whether an e-bill of lading issued under English law needs to meet that certification to be recognised in France? Some lawyers consider that contractual mechanisms may address the point, but it shows how ETRs can trigger additional checks alongside the core conflict-of-laws analysis. That is why domestic laws and industry rules remain important for trade documents.

How courts organise cross-border cases

When courts handle cross-border disputes, they rely on rules and agreements that help them decide which law applies and whether a judgment will be recognised abroad. In broad terms, litigation is supported by the Hague framework on choice of court and foreign judgments, while arbitration relies on the New York Convention for recognition and enforcement.

Sarah Green said conflict rules “set out how disputes with an international dimension should be dealt with. There are also some international conventions and regulations that, for their signatories, determine those issues.”  

The Rome I Regulation is one example. Another is the Hague 2005 Convention on Choice of Court Agreements. The Hague Convention says that if two parties have agreed that disputes will be heard in a particular country’s courts, then other countries that have signed the Convention must respect that choice and enforce the resulting judgment. The UK is a party to the Choice of Court Convention, alongside the EU and other contracting states. The Hague 2019 Judgments Convention goes further by creating a broader system for recognising civil and commercial judgments between countries. It came into force for the UK in July 2025. 

Green explained that while frameworks like the Rome Regulations bring consistency, “outside of international agreements, each jurisdiction could well have different conflict of law rules, meaning that the way in which these international issues are dealt with will have a different result.”

Arbitration (when parties settle disputes privately through an independent decision-maker, rather than in court) is another way to resolve cross-border disputes. If parties agree to arbitrate, they can have their dispute decided by an independent tribunal. Thanks to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), arbitral awards made in one country can usually be recognised and enforced in the courts of more than 170 others. This makes arbitration one of the most effective tools for ensuring that a decision reached privately in one place can actually be carried out across borders.

Luca Castellani said that some jurisdictions have developed private international law and apply it regularly, but many do not. “Unfortunately, most jurisdictions, especially in developing countries, don’t have it. So, we may face a double capacity issue: drafting and adopting adequate law, and training judges and lawyers about it.”

How parties manage conflict risk in the real world

Up until this point, we have looked at the legal frameworks that courts can use to resolve cross-border disputes. But as Luca Castellani noted, not every jurisdiction has the capacity or consistency to apply these rules in practice. That is why parties themselves take deliberate steps to manage conflict risk when structuring international transactions.

A central tool is the inclusion of governing law and jurisdiction clauses. Parties want certainty about both their rights and the remedies available to them. They also want to make sure that if a judgment is awarded in their favour following a dispute, that judgment will be enforceable against their counterparty and its assets. As a result, they generally seek to include clauses in their contracts specifying which courts will determine disputes arising in relation to the transaction (jurisdiction clauses) and which law will be applied (governing law clauses). These clauses may appear as boilerplate at the back of a contract, but as she pointed out, they can determine whether a party has an effective remedy if something goes wrong.

Alongside this, parties look for industry standards that harmonise practice across borders. Piotr Cichocki, Managing Director of Maritime and Trade Solutions at trade digitalisation firm Secro, said commercial parties typically “expressly choose governing law and forum in their contracts (e.g. English law and London jurisdiction), and use standardised instruments to harmonise risk and title transfer issues (e.g. Incoterms, UCP600, etc.).” By leaning on widely accepted rules such as Incoterms 2020 or the ICC’s UCP600 and its electronic supplement, the eUCP, parties can reduce uncertainty about delivery obligations and the presentation of electronic records.

In practice, disputes about enforceability rarely reach a court. Most are settled to preserve commercial relationships and reputation. Even so, clarity on applicable law and forum remains essential – and legal effects also arise outside the contract network, for example, where an electronic bill of lading is used as supporting documentation in customs processes.

Together, these choices (careful clause drafting and reliance on global standards) allow parties to build legal certainty into transactions even before the possibility of a dispute arises.

Implications for electronic trade documents

Having now looked at how parties use governing law clauses and global standards to manage conflict risk, we can finally turn back to the question that brought us all here in the first place: what does this all mean in practice for electronic trade documents? There are two key points that help to put things in perspective.

First, the rules of private international law apply to the legal issue at hand, not the format of the document. Sarah Green said, “This is not an issue that is unique to, or exacerbated by, the advent of electronic trade documents… The potential for conflict of laws issues to arise, therefore, is no greater in relation to ETDs than it is to any other dispute with an international element.” In other words, whether a bill of lading is paper or electronic, the same analysis applies.

Second, recognition does not automatically collapse when an electronic trade record enters a jurisdiction that has not enacted MLETR. Article 19 of the Model Law includes a non-discrimination rule for electronic records issued or used abroad. Castellani said, “Transferable documents and instruments, especially bills of lading, often contain a choice of law clause. However, their use in electronic form may not be allowed in every jurisdiction where enforcement is sought.” He noted how this is particularly an issue in civil law jurisdictions, which may require explicit statutory recognition. That being said, this is less a question of electronic fragility and more about aligning domestic law with global practice.

Piotr Cichocki added, “The key implication is that cross-border validity and enforceability depends on legal recognition of its electronic format by a given jurisdiction. If one country does not recognise ETRs under its domestic law, parties relying on a contractual or foreign legal framework must ensure that local courts will respect the chosen law for determining the ETR’s legal status.”

Industry practice adds another safeguard. The International Group of P&I Clubs, which insures about 90% of the world’s ocean-going tonnage, maintains a list of approved eBL systems. In February 2025, the Group introduced a new deemed approval process for systems that meet its requirements, such as being subject to a law that recognises eBLs as equivalent to paper. These approvals reduce uncertainty for carriers, banks, and insurers alike, and they show that the market is already building the same layers of trust and enforceability around electronic documents that have long existed for paper.

Policymakers are also advancing this area. The Hague Conference on Private International Law is exploring ways to complement Article 19 of MLETR, and the UK Law Commission has opened related work. In time, this could lead to a dedicated MLETR provision on private international law to further smooth cross-border recognition.

Building certainty in practice

So far, we have seen how law, conventions, and industry standards give electronic trade documents the same footing as paper. But just like with paper, parties must do more than rely on statutes alone. They strengthen legal certainty and the enforceability of their rights through the way they structure contracts at the outset and the way they manage transactions in practice.

At the structuring stage, clearly establishing the governing law, jurisdiction, and arbitration clauses gives parties clarity about which rules will apply and where any disputes will be resolved. While no clause can insulate parties entirely from the reach of other laws or courts, deliberate drafting of governing law, jurisdiction, and arbitration clauses remains one of the most effective tools for mitigating transaction and enforcement risk.

Of course, execution matters just as much as drafting. Local legal opinions give parties confidence that the chosen law and forum will be respected, and that judgments or arbitral awards will be recognised if enforcement is needed. Local legal opinions often play an important role in practice. They can clarify when local courts will give effect to governing law and jurisdiction (or arbitration) clauses, and whether a judgment or arbitral award from the chosen forum is likely to be recognised and enforced.

Parties can also check that the technology they use to issue and transfer electronic trade documents is reliable and meets recognised standards. Piotr Cichocki said this can include “SaaS requirements such as ISO certification, SOC2 audits, cyber security insurance, and compliance with statutory definitions of system reliability.” By selecting platforms with strong rulebooks, recognised by insurers and industry groups, parties can be confident that the electronic trade documents they rely on will meet the standards expected in court.

Taken together, these legal, contractual, and technological safeguards show that electronic trade documents, like their paper predecessors, are supported by multiple layers of protection that give parties confidence in their enforceability, even when transactions cross borders or touch jurisdictions with uneven digital adoption.

Enforceability lives where you put it

The concern that electronic trade documents are riskier than paper in non-MLETR jurisdictions mistakes reality. Whether a bill of lading is paper or electronic, the same conflict of law rules determine which law applies and where disputes are decided. As Sarah Green said, conflict of laws “is not an issue that is unique to, or exacerbated by, the advent of electronic trade documents.”

International conventions provide predictability across borders, while parties can inject further certainty by adding governing law and jurisdiction clauses, turning to arbitration, relying on standard trade rules, and choosing systems that meet recognised benchmarks. These methods, which are by no means new, having long been used for paper, apply just as firmly to electronic form.

Transactions involving electronic trade documents are therefore no more vulnerable to private international law issues than any other transaction with an international element. They are underpinned by the same principles, supported by the same contractual and industry safeguards, and increasingly recognised by statute.

The debate should not be whether electronic trade documents are risky, but how quickly law, technology, and practice can be aligned to make them universal. History shows that trade has always adapted its instruments to the needs of the time, and today’s shift from paper to digital is no different.

The task ahead is to align law, practice, and technology so that digital trade becomes the norm.