Posted: November 5th, 2022

Developing a Blockchain Solution to Digitize Bill of Lading Processes Between Chinese and Australian Ports

Developing a Blockchain Solution to Digitize Bill of Lading Processes Between Chinese and Australian Ports

Blockchain technology is a revolutionary innovation that has the potential to transform various industries, including the maritime sector. One of the most promising applications of blockchain technology is the digitization of bill of lading processes, which are essential for international trade and transport. A bill of lading is a document issued by a carrier or its agent to acknowledge the receipt of cargo for shipment. It serves as a contract of carriage, a receipt of goods, and a document of title that can be transferred to the rightful owner of the cargo. However, the traditional paper-based bill of lading system is plagued by inefficiencies, risks, and costs. Paper bills of lading are prone to loss, damage, fraud, and human error. They also require physical delivery, which causes delays, extra expenses, and environmental impact. Moreover, paper bills of lading are subject to different legal regimes and interpretations in different jurisdictions, which may create uncertainties and disputes.

To address these challenges, blockchain technology offers a new generation of electronic bills of lading (eBL) that can provide a secure, transparent, and efficient solution for the digitalization of bill of lading processes. Blockchain is a distributed ledger technology that enables peer-to-peer transactions without the need for intermediaries or central authorities. Blockchain transactions are recorded in immutable blocks that are linked together by cryptographic hashes, forming a tamper-proof chain of data. Blockchain also allows the use of smart contracts, which are self-executing agreements that can automate business processes and enforce contractual obligations.

Blockchain eBLs can bring several benefits to the maritime industry and international trade. First, blockchain eBLs can enhance security and trust by preventing fraud, forgery, and unauthorized access. Blockchain eBLs can be issued and transferred on a blockchain platform that verifies the identity and authenticity of the parties involved. Blockchain eBLs can also be encrypted and digitally signed to ensure their integrity and validity. Second, blockchain eBLs can improve efficiency and speed by eliminating paper documents and manual processes. Blockchain eBLs can be transmitted instantly and seamlessly across borders and jurisdictions, reducing administrative costs and delays. Blockchain eBLs can also be integrated with smart contracts that can automate tasks such as payment, delivery, inspection, and insurance. Third, blockchain eBLs can increase transparency and traceability by providing real-time visibility and accountability of the cargo movement. Blockchain eBLs can record the entire history and status of the cargo on a shared ledger that is accessible to all authorized parties. Blockchain eBLs can also enable data sharing and collaboration among different stakeholders in the supply chain, such as shippers, carriers, consignees, banks, customs, and regulators.

However, blockchain eBLs also face some challenges and barriers that need to be overcome before they can be widely adopted in the maritime industry. One of the main challenges is the lack of a clear and harmonized legal framework that recognizes and regulates blockchain eBLs. Currently, there is no uniform international convention or national legislation that specifically addresses blockchain eBLs. The existing legal instruments that govern paper bills of lading or electronic documents may not be applicable or adequate for blockchain eBLs. For instance, the Hague-Visby Rules, which are widely adopted as the international regime for carriage of goods by sea, define a bill of lading as “a document which evidences a contract of carriage by sea”. However, blockchain eBLs may not qualify as documents in the traditional sense, as they are not physical or tangible objects that can be possessed or delivered. Moreover, the Hague-Visby Rules require the carrier to issue “one original bill” or “if there are more originals than one” to mark them accordingly. However, blockchain eBLs may not have a single or identifiable original copy, as they are replicated and distributed on multiple nodes in the network.

Therefore, there is a need for a new legal framework that can accommodate and facilitate the use of blockchain eBLs in international trade and transport. Such a legal framework should provide legal certainty and recognition for blockchain eBLs as valid contracts of carriage, receipts of goods, and documents of title. It should also establish clear rules and standards for the issuance, transfer, endorsement, presentation, surrender, and cancellation of blockchain eBLs. It should also address issues such as liability, jurisdiction, dispute resolution,
and enforcement in relation to blockchain eBLs.

One possible way to develop such a legal framework is to adopt an international convention or model law that specifically regulates blockchain eBLs. This would require cooperation and consensus among different countries and stakeholders in the maritime industry. Alternatively, another possible way is to amend or adapt existing legal instruments that govern paper bills of lading or electronic documents to include provisions for blockchain eBLs. This would require interpretation and application of existing rules in light of new technological developments.

In conclusion, blockchain technology offers a promising solution for the digitization of bill of lading processes, which can bring significant benefits to the maritime industry and international trade. However, blockchain technology also poses some legal challenges and uncertainties that need to be resolved before blockchain eBLs can be widely adopted and accepted. Therefore, there is a need for a clear and harmonized legal framework that can support and regulate blockchain eBLs in a consistent and effective manner.

Works Cited

Wang, Feng. “Blockchain Bills of Lading and Their Future Regulation.” NUS Law Working Paper No. 2021/008, NUS Centre for Maritime Law Working Paper 21/01, 2021. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3817112.

Kawasaki, Koji. “Blockchain Bills of Lading: A New Generation of Electronic Transport Documents.” Journal of International Maritime Law, vol. 26, no. 3, 2020, pp. 173-189. https://kyushu-u.elsevierpure.com/en/publications/blockchain-bills-of-lading-a-new-generation-of-electronic-transpo.

Kim, Seongcheol. “Blockchain Technology and Electronic Bills of Lading.” Doshisha University Global Business Review, vol. 20, no. 2, 2019, pp. 1-17. https://www1.doshisha.ac.jp/~tradelaw/PublishedWorks/BlockchainTechnologyElectronicBL.pdf.