In common law systems, serving as a document of title is one of the three functions of a B/L. Although some statutory laws do provide for the definition of “document of title”, such as Article 1(4) of Factors Act 1889 of UK and Article 1-201 of Uniform Commercial Code of USA, there is no authoritative definition of the document of title at common law, but it is submitted that in its original or traditional meaning the phrase refers to a document, the transfer of which operates as a transfer of the constructive possession of the goods covered by the document and may, if so intended, operate as a transfer of the property in them (Bridge, 2010). Therefore, the document of title is generally a document attesting title or possession (Greenberg, 2015), and the word “title” in document of title refers to the narrower concept of a right to possession (Rose and Reynolds, 2022). The ocean B/L is the only document of title to goods at common law presently recognized under the English common law. As such, the transfer of a B/L is capable of transferring to the transferee the constructive/symbolic possession of the goods (Aikens et al., 2021), and constructive possession means the control over a property without actual possession of it (Garner, 2019).

There are three purposes for which possession of the B/L may be regarded as equivalent to possession of the goods covered by it: (a) The holder of the B/L is entitled to delivery of the goods at the port of discharge. (b) The holder can transfer the ownership of the goods during transit merely by indorsing the B/L. (c) The B/L can be used as security for a debt. The development of the B/L as a document of title has been so successful that, over the years, it has come to exercise a tripartite function in relation to the contract of carriage, to the sale of goods in transit, and to the raising of a financial credit (Wilson, 2010). Therefore, possession of the B/L is the basis for the B/L to serve as a document of title. Therefore, the eB/L must establish the right of its holder to take possession of the goods. It must transfer rights and (where appropriate) liabilities under the carriage contract. It must be capable of transferring property, and the right to possess the goods. Crucially also though, if the carrier delivers goods against presentation, or if he refuses to deliver except against presentation, he should be protected from action, just as he is with a paper bill. Carrier defenses are problematic for an eB/L (Todd, 2019).

In civil law systems, there are documents corresponding to documents of title, but a different approach is taken. The term “document of title” itself is alien to civil law systems, and it created serious difficulties as to how to translate this term into civil law systems (Pejović, 2020). The corresponding function of the B/L as a document of title in the civil law systems is the effect to property rights of the B/L, also known as the delivery effect of the B/L, which shows that the B/L is a document representing the right to request delivery of goods (Nakamura and Hakoi, 2013). For example, Article 524 of German Commercial Code provides that: “Provided the carrier is in possession of the goods, the transfer of a bill of lading to the consignee identified therein shall have the same effects, in terms of the acquisition of rights to the goods, as does the delivery of the goods for carriage.” Similar provisions can also be found in Article 763 of Japanese Commercial Code, Article 133 of Korean Commercial Code and many other jurisdictions.

In most jurisdictions of civil law systems, transfer of property rights of goods as movable properties requires the delivery of goods. For example, Paragraph 1 of Article 188 of Korean Civil Code provides that: “The assignment of real rights over movables takes effect by delivery of the Article.” Even the Japanese Civil Code, which adopts the principle of agreement, requires only the agreement between the transferor and transferee to transfer of property rights, also requires the delivery for the acquisition of movable property as a requirement without which the transferee shall not be able to assert a priority of his/her acquisition against a third party (Article 178) (Matsuo, 2021). However, if the goods in transit need to be resold, it is usually impossible to actually deliver them.

Possession at civil law systems means having actual control, and indirect possession is also recognized as possession (Chang et al., 2023). Based on the delivery effect of the B/L, possession of B/Ls is equivalent to indirect possession of goods, and delivery of B/Ls is also equivalent to symbolic delivery of goods, which can meet the delivery required in transfer of property rights of goods. This makes it possible to substitute delivery of goods with the delivery of B/Ls (Kobayashi et al., 2022). There are different theories on the delivery effect of B/Ls, such as Representation Theory, Strictly Relative Theory and Absolutely Theory. According to the Representation Theory as mainstream theory, possession of a B/L is also the basis for a B/L to have delivery effect. Therefore, there is no substantive difference between common law systems and civil law systems on this problem, and possession of B/Ls is the premise to play the value of negotiable cargo documents.

One of the legal difficulties of eB/Ls is that the traditional concept of possession requires actual control over the object. But the essence of an eB/L is information, and it does not have the physical form like a traditional paper B/L. For example, Article 2 of the MLETR provides that electronic record means information generated, communicated, received or stored by electronic means. Intangible objects are excluded from the scope of possession in most jurisdictions. This entails ensuring that the electronic document can embrace the notions of delivery and possession that are bound up in the paper version of B/Ls and which have established for centuries. Likewise, the use of B/Ls to transfer possession and pass property may be difficult to achieve electronically unless proper provision is made for this (Girvin, 2022). Functional equivalence is one of the basic principles of e-commerce legislation, and how to deal with the functional equivalence of possession is one of the key points of eB/Ls legislation.

Under the CMI rules, a Holder means the party who is entitled to the rights described in Article 7(a) by virtue of its possession of a valid Private Key (Article 2). The control is used in the term “right of control”, which includes a series of rights that the holder of a paper B/L has, including claim delivery of the goods, nominate the consignee or substitute a nominated consignee for any other party, transfer the right of control, instruct the carrier on any other subject concerning the goods in accordance with the contract of carriage [Article 7(a)]. In this sense, the “control” used by CMI rules refers to a substantive controlling rights over the goods (Jiang, 2023). Therefore, it is not or not only a functional equivalent concept to possession of B/Ls.

The Rotterdam Rules were the first to create the concept of “electronic transport record” in the legislations on international transport of goods. Article 8(b) of the Rotterdam Rules sets out in terms the principle of equivalence, i.e. the principle that the “issuance, exclusive control or transfer of an electronic transport record has the same effect as the issuance, possession or transfer of a transport document”. The phrase “exclusive control” is nowhere defined but is used in the definition of the word “issuance” at Article 1.21, where “issuance” is defined as the “issuance of the record in accordance with procedures that ensure that the record is subject to exclusive control from its creation until it ceases to have any effect or validity” (Baatz et al., 2009). Nevertheless, exclusive control should be considered as a functional equivalent of possession.

The main obstacle to the transfer of electronic transferable transport documents is the need to create a way for the holder of a legitimate transfer to feel assured that there is indeed a document, that there are no defects on the surface of the document, and that the signature or other substitute is genuine and that the document is transferable. This approach makes control of the electronic document equivalent to physical possession of the paper document in law. Whether it is possession or control, the purpose is to avoid conflicts of interest between parties over the same goods. Two people cannot own a certain product or hold a certain transport document at the same time. Possession or control ensures the orderliness of the chain of transfer of goods and documents. The purpose of the Rotterdam Rules is to replace this function by establishing an electronic system that ensures that at any given point in time, only one person can exercise exclusive control over a negotiable electronic transport record by linking the transferability of the electronic transport record to established procedures. However, since the Rotterdam Rules do not specifically define “exclusive control”, they are unable to provide definitive guidance for commercial practices. In addition, the Rotterdam Rules have not yet come into effect, and the electronic transport record system established therein has also lacked the opportunity to be tested in practice.

In addition, the Rotterdam Rules also provide for a similar concept, i.e. the right of control of the goods, which consists of the right of disposal of the goods while in transit (Berlingieri, 2014). Although both contain the expression “control”, the object of control of eB/Ls is eB/Ls as information, while the object of the right of control is goods. The right of control applies to both situations where a paper B/L or an electronic B/L is issued. Therefore, the right of control and the control of eB/Ls are two completely different concepts.

The MLETR is the latest legal instrument proposed internationally as a way of enabling the use of electronic functional equivalents to negotiable instruments and documents of title, including eB/Ls. There are three main functional equivalence provisions laid down by the MLETR designed to enable this transition. Article 11 is one of them, which is the requirement that exclusive control be given over the electronic substitute and that the person in control be identifiable (Goldby, 2019). The concept of “control” is also one of the core concepts of the MLETR. 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. The concept of “control” is not defined in the MLETR since it is the functional equivalent of possession, which, in turn, may vary in each jurisdiction (United Nations, 2018).

It can be seen that the approach taken by the MLETR to solve the “possession problem” of eB/Ls is to create a new concept as the functional equivalent of possession, so as not to affect the concept of possession that has been formed in various legal jurisdictions over a long period of time. This option is obviously more feasible for international legislation than expanding the concept of possession or its scope of application.

Paragraph 1 of Article 11 provides that: “Where the law requires or permits the possession of a transferable document or instrument, that requirement is met with respect to an electronic transferable record if a reliable method is used: (a) To establish exclusive control of that electronic transferable record by a person; and (b) To identify that person as the person in control.” Paragraph 1(a) use the same expression “exclusive control” as the Rotterdam Rules, and the requirement for “exclusive” is obviously intended to correspond to the concept of possession. Paragraph 1(b) requires the person in control of the electronic transferable record to be reliably identified as such. The person in control of an electronic transferable record is in the same legal position as the possessor of an equivalent transferable document or instrument (United Nations, 2018), such as the B/L holder.

Paragraph 2 of Article 11 provides that: “Where the law requires or permits transfer of possession of a transferable document or instrument, that requirement is met with respect to an electronic transferable record through the transfer of control over the electronic transferable record.” Under this provision, transferring control of an eB/L will have the same effect as transferring possession of a paper B/L, which is also equivalent to symbolic delivery of goods. Therefore, the eB/L can have the function of the paper B/L as a document of title under the common law systems, as well as the delivery effect under the civil law systems.

In the current discussion, there is little criticism of the creation of the concept of possession, because from the perspective of the hypothetical effect, the concept of control is indeed an ideal choice and is also in line with the principle of functional equivalence in e-commerce legislation. This can be easily seen from the fact that many jurisdictions are currently following the MLETR. However, creating the concept of control is not difficult; all that is needed is a few lines of legislation. What is more important is how to implement control so that it can be effectively identified in practice and not apply overly cumbersome processes, because what international trade and shipping value most is transaction efficiency. It may be acceptable for the MLETR not to define controls, but the criteria for controls should be a key issue in ensuring that the control regime is effective. Although Article 12 of the MLETR has made some provisions on the general reliability standard, it is still only a principle provision in general, and its operability is still unknown. What is certain is that the identification of control, especially the implementation of the reliability standard, must be based on sufficient electronic information technology support, and the issues involved are probably far more complicated than the law.

The law of England and Wales – like that of many other significant trade jurisdictions around the world – does not recognize intangible things as being amenable to possession. This means that electronic documents, which are considered to be intangible, cannot be possessed and therefore cannot presently function in the same way as their paper counterparts (Law Commission, 2022).

The UK has enacted the Electronic Trade Documents Act 2023 (hereinafter referred to as “ETDA”) as a separate act to regulate electronic trade documents including bills of lading. The ETDA did not directly transplant the provisions of the MLETR, but rather redesigned some provisions based on the purpose of the MLETR. According to the ETDA, a paper trade document is a document of a type commonly used in connection with trade in or transport of goods, or financing such trade or transport, and possession of the document is required as a matter of law or commercial custom, usage or practice for a person to claim performance of an obligation [Article 1(1)]. It can be seen that the requirement for possession is also one of the basic characteristics of the paper trade document that the electronic trade document is used to replace.

Article 3 of the ETDA provides that a person may possess, indorse and part with possession of an electronic trade document, and an electronic trade document has the same effect as an equivalent paper trade document. Anything done in relation to an electronic trade document has the same effect in relation to the document as it would have in relation to an equivalent paper trade document. This section is intended to remove the legal blocker that historically has prevented trade documents in electronic form from being possessed. As a result of this section, electronic trade documents are capable of possession (Great Britain, 2023). Therefore, the approach of the ETDA to solving the “possession problem” is different from the MLETR, and it does not create a new concept such as control that is functionally equivalent to possession, but chooses to expand the concept of possession so that its object can cover electronic trade documents that are intangible objects, including eB/Ls.

As the MLETR and the Rotterdam Rules do not provide for a definition of control, the ETDA does not set out what constitutes possession of an electronic trade document. Since possession is a relative and fact-specific concept, what constitutes possession of an electronic trade document in any particular context will be assessed as a matter of common law. The common law approach to establishing possession as a matter of fact considers two elements: factual control and intention. Who has possession of something at any one time will therefore depend on the type of control they have in respect of it and their intentions in relation to it, assessed against the control and intentions of other people who may also have a claim. Although existing case law concerning possession relates to tangible assets, many of the principles are capable of application to electronic trade documents (Great Britain, 2023).

Singapore enacted the Electronic Transactions (Amendment) Act 2021 in February 2021, amending the Electronic Transactions Act 2010 (hereinafter referred to as “ETA”). The latter thus was inserted a new Part 2A “Electronic Transferable Records”. The ETA was first enacted in 1998 to provide legal certainty for digital transactions, which supports legal enforceability of electronic records and signatures, the ETA provides for the legal recognition of electronic records, and expressly allows for them to satisfy any requirement for writing in the written law (Hsu, 2021).

After the amendment, the ETA adopts most of the provisions of the MLETR, and the wording of most articles is basically consistent with the MLETR. According to Paragraph 2(a) of Article 16A of the ETA, in the interpretation of any provision of Part 2A, regard is to be had to the international origin of the MLETR and the need to promote uniformity in its application. Article 16B also provides that: “(1) This Part adopts the Model Law in its application to an electronic transferable record in accordance with the provisions of this Part. (2) Unless otherwise provided, nothing in this Part affects the application to an electronic transferable record of any rule of law governing a transferable document or instrument.”

Article 16I of the ETA basically transplants Article 11 of the MLETR, but an obvious difference is that it uses “Requirement for possession or transfer of possession” instead of “control” as the title. However, the actual term used in the article for ETRs is still “control”. Therefore, the ETA essentially still creates a new concept of “control” for eB/Ls as the functional equivalent of possession. According to the explanation in the Explanatory Note to the MLETR, the title of article 11 refers to “control” and not to “possession”, thus departing from the naming style of other articles of the MLETR, since the notion of “control” is particularly relevant in the MLETR. While a notion of “control” may exist in national legislation, the notion of “control” contained in article 11 needs to be interpreted autonomously in light of the international character of the MLETR (United Nations, 2018). Similar to MLETR, the ETA also does not specify the definition of control.

After the revision of 2007, Article 862 of Korean Commercial Code is the provision on eB/Ls. Paragraph 1 provides that an eB/L shall have the same legal effect as a B/L. Paragraph 5 provides that: “Eligibility requirements for a designated registry agency of electronic bills of lading, electronic methods for the issuance and endorsement thereof, detailed procedures for receiving cargo, and other necessary matters shall be prescribed by Presidential Decree.” Thus Korean law first stipulates the basic validity of eB/Ls, while other specific issues regarding eB/Ls will be stipulated by Presidential Decree. This model can take into account both the efficiency and flexibility of legislation.

The Regulations on Implementation of the Provisions of The Commercial Code Regarding Electronic Bills of Lading (hereinafter referred to as “Presidential Decree”) took effect on August 4 2008, nearly a decade earlier than the MLETR, and has been amended for three times in May and November 2010 and March 2013. Based on the Presidential Decree, South Korea established a central registry system that is completely different from the MLETR. According to Article 3 to 5 of the Presidential Decree, the law recognizes only the registry method of granting exclusive control, because only eB/Ls managed in the electronic title registry set up by the law itself are granted functional equivalence. The operators of the system, Korea Trade Net (KTNET) and KL-Net, were selected by the Korean Ministry of Justice as the title registry in accordance with the Presidential Decree, under which the Ministry also has the authority to supervise the registry operator and audit its operations. Therefore, in order to be functionally equivalent to a paper B/L under Korean law, an eB/L must be registered in a quasi-public registry operated by a state-selected operator and supervised by the state (Goldby, 2019). When a carrier intends to issue an eB/L, he should transmit an application for issuance and registration by an electronic document, containing the required information, to a registry agency along with the carrier’s certified digital signature affixed thereon and a document (including an electronic document) that certifies that the shipper has consented to the issuance of the eB/L (Paragraph 1 of Article 6).

This model of central registry removes the need to create a functional equivalent of possession so as to determine the priority of various rights and obligations that accompany the electronic alternative to the document of title; in effect, this model creates an independent system governing the electronic alternative, and neither need, nor attempt, to fit the electronic alternative into the existing legal framework (Goldby and Yang, 2022). At the same time, there is a problem that there is no mechanism to guarantee the international convertibility even in the Presidential Decree. If the eB/L is involved in international trade, a foreigner should record it as a party in the title registry (Kim, 2017). This is actually a traditional problem in the electronicization of B/Ls. According to an admittedly outdated survey report commissioned by the United Nations Conference on Trade and Development (UNCTAD) in 2003, the biggest obstacles to adoption included a need for more suitable infrastructure and market readiness, legal uncertainty, security concerns, high costs and confidentiality issues. In particular, the inability of users to trade with non-members, anyone who wants to use the eB/L must join a closed system and a group of participating members (Ioannou, 2023).

The advantage of the centralized registry system lies in fostering potential users’ confidence in the emerging system through state support (Goldby, 2019). Taking the Korea Trade Network (KTNET), one of the electronic bill of lading registration agencies designated by the Minister of Justice of South Korea, as an example, the KTNET system records each step of the circulation of electronic bills of lading to ensure their secure transfer. The record of rights transfer on the electronic bill of lading register has the legal effect of transferring rights, thus establishing the proprietary nature of the electronic bill of lading. However, some scholars in South Korea have highlighted drawbacks in the current centralized registry system. Notably, the closed nature of the electronic bill of lading system is seen as conflicting with the principle of technological neutrality and lacking in the concept and requirements based on functional equivalence (Lee, 2023). Moreover, as mentioned previously, the law does not provide a conversion mechanism for domestic electronic bills of lading recognized internationally. Consequently, foreign parties using electronic bills of lading in international trade must also register with South Korea’s centralized registry (Kim, 2017), creating inconvenience for international trade participants.

The transport and maritime sections of Japanese Commercial Code were revised in 2018, but eB/Ls are not included in the revision. The contents related to electronic transport documents focused on invoices and sea waybills. Paragraph 2 of Article 571 provides that: “In lieu of issuing an invoice, the shipper referred to in the preceding paragraph may provide the information that is required to be contained in an invoice by electronic or magnetic means (meaning a means of using an electronic data processing system, or of otherwise employing information and communications technology, which is specified by Ministry of Justice Order; the same applies hereinafter), with the carrier’s consent, pursuant to the provisions of Ministry of Justice Order. In this case, the shipper is deemed to have issued an invoice.” And Paragraph 3 of Article 770 also allows for the issuance of sea waybills by electromagnetic means. But this provision does not apply to B/Ls. Although electronic services provided by Bolero International Ltd and essDOCS Exchange Ltd have recently seen some use in the Japanese market mainly due to demand from shippers, their legal position is unclear as there are no provisions in the Japanese Commercial Code or publicized court precedents dealing with the subject (Kobayashi et al., 2022).

Japan launched the legislation on eB/Ls in April 2022, with the goal of regulating eB/Ls by amending laws including Japanese Commercial Code and the International Carriage of Goods by Sea Act, and the Interim Draft for Reviewing Regulations Related to Bills of Lading (hereinafter referred to as “Interim Draft”) was released in March 2023. Preparing an interim draft is a common legislative practice in Japan. The Interim Draft did not directly transplant the provisions of the MLETR, but instead amended the existing provisions of the Japanese Commercial Code and the International Carriage of Goods by Sea Act with reference to the MLETR, and added a few new provisions.

The formal name used in the Interim Draft for eB/Ls is “electronic bill of lading record”. Similar to the MLETR, the Interim Draft creates the concept of “control” as the functional equivalent of possession. The reasons are mainly in four aspects: (1) electronic records cannot be recognized as “things”, as defined as tangible things under the Japanese Civil Code, and therefore, they cannot be subject to possession; (2) it would be inappropriate to apply the concept of quasi-possession, such as for intangible property rights (bonds, patents, etc.), in governing the legal relationship involving electronic records, as it would complicate matters further; (3) it is necessary to conceptualize the state of exclusive control to recognize the functional equivalence between paper and electronic records; and (4) the adoption of the concept of control can be harmonized with the approach of the MLETR (Pejović and Lee, 2024).

The Interim Draft also creates the concept of control as a functional equivalent of possession, and provides two legislative options for the definition of control. According to the first option, control of an eB/L is defined as a state in which exclusive use can be made of the eB/L record. The second option does not set a legal definition for the control of eB/Ls, and the main considerations are three aspects: (1) The MLETR does not define “control”. (2) Although there are currently no examples of the use of the concept of control in relation to electromagnetic records in Japanese law, there are concepts such as “control of operations”, “control of activities” and “control of shipping” that are used to evaluate objects other than physical objects, and most of these laws do not define “control”. For example, Paragraph 3 of Article 7 provides that: “To control or interfere with the formation or management of a labor union by workers or to give financial assistance in paying the labor union’s operational expenditures;” (3) The term “exclusive right” is widely used in Japanese law for intellectual property rights such as patents and copyrights, which are intangible property rights. However, the law also does not define the concept of “exclusive right”, but instead leaves it to legal interpretation (Counselor’s Office et al., 2023).

Part II (Articles 14 to 17) of the Law No.2024-537 of June 13, 2024 Aimed at Increasing Business Financing and the Attractiveness of France (1) (hereinafter referred to as “Law No.2024-537”) is “Facilitating the International Growth of French Companies Through the Dematerialization of Transferable Securities”, which incorporates the main provisions of the MLETR. According to Article 14, a transferable security is a document that represents property or a right and that gives its bearer the right to demand performance of the obligation specified therein and to transfer this right, including B/Ls to order or to bearer governed by Section 2 of Chapter II of Title II of Book IV of Part V of the French Transport Code.

The Law No.2024-537 also created the concept of “control”. The provisions of Article 11 of the MLETR are reflected in Paragraph 2 of Article 15 and Paragraph 1 of Article 16 of the Law No.2024-537. According to these provisions, the bearer of the electronic transferable title is the person who has, for himself or for a third party, exclusive control over it. This control allows him to exercise the rights conferred by this title, to modify it or have it modified and to transfer it, under the conditions provided for in this title. The electronic transferable title has the same effects as the transferable title established on paper when it contains the information required for a transferable title established on paper and a reliable method is used to: (1) Ensure the uniqueness of the electronic transferable title; (2) Identify the bearer as the person who has exclusive control over it; (3) Establish the bearer’s exclusive control over this electronic transferable title; (4) Identify its signatories and successive bearers, from its creation until the time when it ceases to produce its effects or to be valid; (5) Preserve its integrity and attest to any modifications made to it, such as additions or deletions permitted by law, customs, usage or the agreement of the parties, from its creation until the time when it ceases to produce its effects or to be valid.

Except for the United Kingdom, Singapore and France, the legislations on eB/Ls of other seven jurisdictions that have adopted the MLETR have all directly transplanted the provisions of Article 11 of the MLETR, and created the concept of control as the functional equivalent of possession. ¹ For a comprehensive overview of the current legislative status of electronic bills of lading across various countries and the influence of the MLETR, please refer to Table 1 .