Section 5 Paperless trading

4.5.1 General

This Rule was introduced after cooperation between the Group Clubs when reviewing the electronic trading systems proposed by Bolero and Electronic Shipping Solutions (ESS). These systems intend to establish a technological environment in which paper bills of lading and other trade documents may be replaced by secure electronic versions. The aim of the Clubs has been to ensure that liabilities arising under an electronic transaction is the same as would arise under a paper transaction. However as long as there is a risk of exposure of certain liabilities which are not of a traditional P&I nature Members need to be aware that other insurance arrangements may be required.

4.5.2 Cover of electronic trading system

According to the Rule an electronic trading system replaces negotiable paper documents, which are documents of title, entitling the holder to receive cargo and to transfer the rights and obligations to a third party by electronic versions.

Up until 20 Febraury 2025, the International Group of P&I Clubs approved each electronic bill of lading system (hereafter “e-bill system”). The International Group of P&I Clubs maintains a list of approved e-bill systems on its website.

From 20 February 2025, all International Group Clubs changed their rules. The rule change followed the introduction by the United Kingdom of the the Electronic Trade Documents Act 2023. The Act, for the first time, recognised e-bills as a special species of bills of lading.

To enable automatic recognition of e-bills systems that adhere to the requirements of the Electronic Trade Documents Act 2023, Rule 4, section 5(c) was introduced. Following this rule change, there is no need for an e-bill provider to obtain International Group of P&I Club approval provided that a) the e-bill system adheres to either the Electronic Trade Documents Act 2023 of the United Kingdom or UNCITRAL’s Model Law on Electronic Transferable Records and b) meets the evidential requirements set out in Rule 4, section 5(c).

Following this introduction, there are four systems for the purpose of P&I cover: (a) paper, (b) approved electronic systems, (c) automatically approved electronic systems that adheres to the requirements of Rule 4, section 5(c) and (d) and non-approved systems.

Risks under a non-approved system are covered only if the same liability would have arisen had a paper bill been issued.

Risks under an a) approved system and b) automatically approved system are covered even if the risk would not have arisen had a paper bill been issued.

The position can be illustrated by the following example: The member receives a claim under an electronic bill of lading in a jurisdiction which does not acknowledge that the Hague- Visby Rules have been incorporated into the bill, even though the system provides for the incorporation of those Rules. Investigations show that had a paper bill been issued the court would have acknowledged and applied the Hague-Visby Rules to the claim. If the member has used a non-approved system, there is no cover for the liabilities in excess of the Hague-Visby Rules. If the member has used an approved system, on the other hand, there is cover for all liabilities of the member following the court’s decision, including liabilities in excess of the Hague-Visby Rules.

One further thing to note in respect of electronic bill of lading systems is that the normal cover areas etc. for P&I Insurance have not changed. There is still cover for P&I liabilities but risks arising as a result of using an electronic system, i.e. “cyber risks”, are not covered and the member may need additional insurance for such risks.