Electronic Transactions (Amendment) Bill passed to provide for electronic transferable records and electronisation of negotiable instruments, documents of title and bills of lading

9 February 2021

On 1 February 2021, the Electronic Transactions (Amendment) Bill (“Bill”) was passed in Parliament to amend the Electronic Transactions Act (“ETA”) to adopt with modifications the UNCITRAL Model Law on Electronic Transferable Records adopted by the United Nations Commission on International Trade Law (UNCITRAL) on 13 July 2017 (“Model Law”). The Bill was tabled for first reading on 4 January 2021.

In conjunction with the adoption of the Model Law, which will enable the creation and use of electronic transferable records, item 2 of the First Schedule to the ETA will be deleted. This means that Part II of the ETA, which contains provisions supporting the legal enforceability of electronic records and signatures, will apply to negotiable instruments, documents of title, bills of exchange, promissory notes, consignment notes, bills of lading, warehouse receipts or any transferable document or instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of a sum of money. Currently, certain kinds of documents and transactions such as wills, indentures, trusts and powers of attorney, negotiable instruments and other transferable documents or instruments, contracts for immovable property and conveyance of immovable property (as listed in the First Schedule to the ETA) are excluded from the scope of operation of Part II of the ETA.

The adoption of the Model Law, together with the deletion of item 2 of the First Schedule to the ETA, is part of a wider and ongoing initiative by the Singapore Government to review and support the electronisation of various types of instruments or transactions, including the other matters specified in the First Schedule. These other matters will be deleted when the legislative and administrative frameworks supporting the electronisation of these other items are ready to be enacted or implemented. The Ministry of Social and Family Development will soon be tabling the Mental Capacity (Amendment) Bill in Parliament, which will allow Lasting Powers of Attorney (“LPA”) to be made and registered electronically. Once the necessary safeguards are in place, including those covered by the Mental Capacity (Amendment) Bill, LPAs will also be consequentially removed from the First Schedule to the ETA.

Electronic bills of lading

The Bill will introduce a new Part IIA in the ETA to adopt the Model Law with certain modifications. The Model Law enables the creation and use, domestically and internationally, of electronic forms of transferable documents or instruments, otherwise known as electronic transferable records. These transferable documents or instruments are used extensively in international trade, in industries such as shipping, logistics and finance. For example, a bill of lading is often used in maritime trade as a transport document and as a document of title over goods in transit. The ETA amendments will, among other things, enable the creation and use of electronic bills of lading (“eBLs”) that are legally equivalent to paper-based bills of lading.

With eBLs, the transmission of documents will be instantaneous, and time spent on verification and rectifying errors will be reduced. With digital authentication technologies such as digital signatures, centralised ledgers, or blockchain, eBLs also improve security against forgeries. Compared to the use of paper-based bills of lading, the adoption of eBLs will enable the shipping industry to benefit from faster transactions, cost savings (e.g. reduced administrative cost of cargo holding and document processing), and lowered fraud risks (through the use of digital authentication systems).

As stated in the Opening Speech by Mr S Iswaran, Minister for Communications and Information, at the Second Reading of the Bill, one commercial advantage in using an eBL is that a trade financing bank can obtain collateral security over the eBL which is legally equivalent to a paper bill of lading. This may allow the bank to obtain regulatory capital relief in respect of its trade finance exposure, and to pass some of the benefits to its clients in the form of lower fees.

Singapore has been encouraging the adoption of eBLs and has conducted technical trials through the TradeTrust digital utility.

Chair of the Legal and Insurance Committee of the Singapore Shipping Association (“SSA”), Gina Lee-Wan, who is also Partner and Co-Head of Allen & Gledhill’s Maritime & Aviation Practice said:

“The SSA is heartened that our engagements with the authorities have been mutually gainful and welcomes the latest amendments to the ETA to cement the legality and promote further acceptance of eBLs for shipping transactions. The SSA has and will continue to work with the Maritime and Port Authority of Singapore and other agencies to advocate the wider adoption of eBLs due to its huge potential in significantly reducing the administrative costs associated with printing, delivering and authenticating printed copies amongst the different trading parties and the authorities. Coupled with the implementation of modern technology, eBLs promise greater protection and assurance for stakeholders against fraud and tampering as compared to the conventional hardcopy documents. As the global trading economy becomes increasingly digitalised, the SSA looks forward to our members and the wider global maritime community embracing eBLs as the part of the new normal for international trade transactions.”

Other amendments

The Bill also amends section 13 of the ETA to achieve consistency with Article 10 of the United Nations Convention on the Use of Electronic Communications in International Contracts (“ECC”). Section 13(4) provides that an electronic communication is presumed to be capable of being retrieved by the addressee when it reaches the electronic address of the addressee for the purposes of section 13(3). Section13(3) provides the rule for determining the time of receipt of an electronic communication at an electronic address in a case where the electronic address has not been designated by the addressee. However, in accordance with Article 10 of the ECC, the presumption should also apply in determining the time of receipt of an electronic communication at an electronic address in a case where the electronic address has been designated by the addressee, which is the subject of section13(2). Section 13(4) will be amended to be consistent with Article 10 of the ECC.

The Bill also makes consequential and related amendments to the Bills of Lading Act and the Contracts (Rights of Third Parties) Act.

Reference materials

The following materials are available on the Parliament website www.parliament.gov.sg, Ministry of Communications and Information website www.mci.gov.sg and the Info‑communications Media Development Authority website www.imda.gov.sg: