On 4 January 2021, the Electronic Transactions (Amendment) Bill (Bill No.1/2021) (Bill) was read in Parliament for the first time and subsequently passed on 1 February 2021. The Bill seeks to make changes to the Electronic Transactions Act (ETA) (Chapter 88 of the 2011 Revised Edition).

The changes to the ETA reflect Singapore’s drive towards becoming a Smart Nation by allowing for the digitising of trade-related documents. This is a welcomed move, especially for the maritime industry, given that instruments such as bills of lading and bills of exchange were previously excluded from the scope of the ETA. Much productivity can now be gained through the use of trade facilitation systems.

The amended ETA now, in effect, adopts the UNCITRAL Model Law on Electronic Transferable Records (2017). This Article summarises four (4) key changes to the ETA.

1. “Electronic Transferable Records” are legally recognised

Legal recognition is now given to electronic bills of lading, promissory notes and bills of exchange.

• An “electronic transferable record” (ETR) is not to be denied legal effect, validity or enforceability solely because it is in an electronic form.
• An “electronic transferable record” is defined as an electronic record that (a) contains information that would be required in a transferable instrument (such as a bill of lading); and (b) where a reliable method is used to (i) identify the electronic record as an authoritative electronic record; (ii) render the electronic record capable of being subject to control during its validity; and (iii) retain the integrity of the electronic record. Electronic bills of lading would likely fall within the definition of an “electronic transferable record” if the aforementioned requirements are met.
• Matters previously excluded from the scope of ETA (e.g. bills of exchange, promissory notes, consignment notes and bills of lading) are now no longer precluded.

Once the amendments are in force, organisations (especially those in the maritime industry), may now consider the use of electronic bills of lading, bills of exchange and promissory notes to enjoy the benefits of using such electronic instruments (e.g. faster speeds of transmission and higher security as compared to paper equivalents).

With the launch of pilots such as TradeTrust and other similar trials involving the use of digital bills of lading (e.g. the Networked Trade Platform between Singapore and two ports in China (Qinzhou and Tianjin)), the use of such electronic instruments will only continue to increase. To prepare for such an uptick, organisations should examine their technological capabilities to use or exploit these electronic instruments. This would involve not only logistical considerations of relevant software / hardware but also the readiness and competency of the other stakeholders such as staff members.

2. Writing and Signature Provisions in the ETA apply to Electronic Transferable Records

ETRs may now satisfy “written” or “in writing” requirements and that ETRs can be signed electronically.

• An electronic transferable record can satisfy any requirement for information to be in writing if the information contained in the ETR is accessible in order to be usable for subsequent reference.
• The amendments provide that an electronic signature on an ETR is legally recognised as the equivalent of a wet-ink signature. This is only if a reliable method has been used to (a) identify the person making the signature; and (b) indicate that person’s intention in respect of the information contained in the ETR. In considering if a method is reliable, several factors such as the security of hardware and software, the assurance of data integrity and applicable industry standards would be considered.

Organisations can now rely on electronic bills of lading and/or bills of exchange to satisfy regulatory or legal requirements requiring bills of lading in writing.

Organisations should undertake an assessment of the reliability of their method(s) used for electronic signatures. This is to avoid and mitigate against the risk of an invalid electronic signature for their electronic transferable records. In assessing reliability, organisations are encouraged to examine the security of their hardware and software as well as to engage in regular and extensive audit to examine the security of electronic signature methods.

3. Uses of Electronic Transferable Records

ETRs may replace physical transferable instruments (e.g. bills of lading) and may also be transferred to another party by transferring control over the ETR.

• ETRs may replace a physical transferable instrument if a reliable method for the change of medium is used. Two requirements have to be satisfied: (1) all the information contained in the original physical document must be accurately reproduced in the ETR; and (2) a statement indicating a change of medium must be inserted into the ETR.
• Once the ETR is issued, the original physical transferable document or instrument ceases to have effect or validity, and must be made inoperative.
• Any requirement requiring possession of a physical transferable instrument (e.g. a bill of lading) is satisfied by an ETR provided that a reliable method is used to (a) establish exclusive control of the ETR by a person; and (b) to identity that person as the person in control. Further, transfer of possession of a physical transferable instrument can now be satisfied through the transfer of exclusive control over an ETR to another person.
• The amendments also provide for the conversation of an ETR into a physical transferable document.

Organisations should consider reviewing and improving their internal processes / capabilities to allow for a greater reliance on electronic transferable records and for paper documentation (such as physical bills of lading) to be increasingly digitised. Crucially, organisations should consider how to meet the new requirements in the amended ETA such as ensuring that all the information in the original document is accurately reproduced in the ETR or transferable instrument (as the case may be).

Externally, organisations may explore the possibility of facilitating their cross-border transactions through the transfer of ETRs. In this regard, organisations should invest in technologies / methods that allow for the transfer of exclusive control over the ETRs.

4. Regulation of Providers of ETR Management Systems

The Minister is empowered make regulations to govern the conduct of providers of ETR management systems.

• The Minister may make regulations for a range of purposes relating to providers of ETR management systems which include, without limitation, (a) the registration, licensing or accreditation of providers of an ETR management system; (b) the accreditation of ETR management systems; and (c) to prescribe the duties and liabilities of a provider of an ETR management system. Contravention of these regulations may incur a fine not exceeding $50,000 or with imprisonment for a term not exceeding 12 months or both.
• Foreign providers of an ETR management system may be recognised in Singapore provided that they are registered, licensed or accredited under a foreign scheme and their business is carried out in accordance with regulations that are at least comparable to the requirements in the ETA (or the ETA’s regulations).
• The Controller may give directions to a registered, licensed or accredited provider of an ETR management system. Non-compliance with the Controller’s direction may result in a fine not exceeding $50,000 or imprisonment for a term not exceeding 12 months or to both.
• The Controller or an authorised officer can conduct investigations into the activities of a provider of an ETR management system to ensure compliance with the ETA and its regulations. These providers may be required to produce copies of records, accounts, data and documents.

Organisations should be aware of the registration, licensing and accreditation regimes for providers of ETR management systems in Singapore. When engaging providers, organisations should carry out due diligence and accountability checks to ensure that these providers are registered, licensed or accredited. This gives organisations some assurance that these providers are reliable and are subject to regulatory oversight. Organisations may also consider foreign providers if they meet the regulatory requirements.

If you have any questions regarding this article, please contact Gilbert Leong.

Dentons Rodyk thanks and acknowledges Associate Sherman Poon and Practice Trainee Kimberly Boo for their contributions to this article.