In response to growing interest from the dry cargo market (in particular, dry bulk charterers) in the use of electronic documentation, and a general drive towards developing electronic solutions for facilitating trade in shipping, BIMCO have developed a specific clause for charterparties (the BIMCO e-Bill Clause) which seeks to address the use of electronic bills of lading (e-Bills) documentation.

Developed in consultation with owners/charterers’ groups, the UK P&I Club and electronic systems providers, Bolero and ESS, the BIMCO e-Bill Clause provides:

“(a) At the Charterers’ option, bills of lading, waybills and delivery orders referred to in this Charterparty shall be issued, signed and transmitted in electronic form with the same effect as their paper equivalent.

(b )For the purpose of Sub-clause (a) the Owners shall subscribe to and use Electronic (Paperless) Trading Systems as directed by the Charterers, provided such systems are approved by the International Group of P&I Clubs. Any fees incurred in subscribing to or for using such systems shall be for the Charterers’ account.

(c) The Charterers agree to hold the Owners harmless in respect of any additional liability arising from the use of the systems referred to in Sub-clause (b), to the extent that such liability does not arise from Owners’ negligence.”

Sub-clause (a) provides that e-Bills have the same status and effect as paper bills. The aim here is clear: to replicate the functional equivalence between paper and e-Bills, and to seek to avoid (as far as possible) the legal limitations potentially imposed under English common law and the Carriage of Goods by Sea Act 1992 (in particular, the issues raised as to whether e-Bills amount to documents of title or not). As their use is at charterers’ option, and there is no timeframe within which to exercise this option, charterers appear to be in the driving seat.

Sub-clause (b) obliges owners to subscribe to the electronic trading system(s) approved by the International Group of P&I Clubs (currently, Bolero and ESS). Significantly, charterers may direct owners to subscribe to more than one approved system – providing charterers with a degree of flexibility – although there is no obligation for owners to notify their P&I Club. At present, neither Bolero nor ESS charge shipowners to register/use the electronic system. Those charges are borne by charterers and the sub-clause reflects this.

All parties involved in the charter chain must sign up to the electronic system(s) as there is no participation without registration. The registration process itself establishes a contractual relationship between the third party system provider for user authorisation and access to data essential to enable the electronic documentation process to function.

Sub-clause (c) provides a wide indemnity in favour of owners for “additional liability(ies)” arising from the use of the approved systems (save for those arising out of owners’ negligence). This was introduced in response to owners’ concerns about unidentified liabilities, which might materialise from participating in a process with which they are not familiar.

Overall, the BIMCO e-Bill Clause strikes a reasonable balance between promoting the use of e-Bills and protecting the interests of owners as far as possible. As such, charterers may exercise their option to use e-Bills at any time and owners have to be prepared for this eventuality.

As is often the case, the BIMCO e-Bill Clause probably does not represent a complete answer for parties seeking to use e-Bills, especially outside the charterparty contract. For e-Bills to work, they require the varied number of parties involved in the shipment of goods (who have differing systems and processes in place) to be party to the electronic system.

It has also been suggested that the effect and recognition of an e-Bill in other jurisdictions remain unclear. For example, the suggestion is that difficulties may arise in respect of electronically recorded arbitration agreements in jurisdictions which apply the New York Convention (which only recognises agreements in writing) and this may affect the recognition and enforcement of an award.

In relation to any liabilities which would equally have arisen in relation to paper bills of lading, cover is available for P&I liabilities in the ordinary way when using e-bills. If liabilities have arisen solely due to the use of an e-Bill, cover will be available provided the electronic trading system has been approved by the International Group. However, risks associated with the use of computer systems (such as hacking, theft of information, viruses) are not covered by P&I clubs and any owner wanting this specific extra cover will need to make separate arrangements.

The BIMCO e-Bill Clause is, however, certainly a step in the right direction, and is likely to develop over time. It remains to be seen whether the container sector will now follow suit in adopting a similar provision.