Section 5 Paperless trading
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.
Seven electronic trading systems have been approved to date by the International Group of P&I Clubs. These are: essDOCS (previously Electronic Shipping Solutions), Bolero International Ltd (more specifically the Rulebook/Operating procedures September 1999), e-title Solution, Global Share edoxOnline, WAVE BL, CargoX and TradeLens eBL.
Consequently, there are three systems for the purpose of P&I cover: paper, approved electronic systems 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. However, risks under an 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.