The United Nations Commission on International Trade Law (UNCITRAL) is a subsidiary organ of the United Nations General Assembly, established in 1966 to further the progressive harmonization and modernization of international trade law. UNCITRAL prepares and adopts legislative and non-legislative instruments in key areas of international trade law. These instruments are negotiated through an international process involving a variety of participants, including all UN member States, invited IGOs and NGOs (such as the TT Club). 

In 2019, the UNCITRAL secretariat started exploratory and preparatory work on the development of an international instrument on negotiable cargo documents in order to open up opportunities for trade finance and facilitate international trade.  It is envisaged that the instrument could apply to any mode of transport in a multimodal or unimodal context.  Currently negotiable bills are only possible in maritime transport.  The application of this draft instrument to the maritime context has not yet been decided. 

Why embark on the project? 

The reasons for embarking on this project include:  

1. Often in international trade, goods are not sold directly to the end user but to intermediaries such as commodity traders. In commodity trade, it is often that goods are sold multiple times while in transit. A negotiable cargo document, once developed, could allow goods being carried by any mode of transport in a multimodal or unimodal context to be sold while in transit. Such sale could be further facilitated when negotiable electronic cargo records are issued.
2. The flexibility to sell goods to another buyer is becoming an important part of building resilience into supply chains by shippers at times of disruption. For example, the decision by many shipping lines to reroute vessels away from the Red Sea and Suez Canal has prompted the development of new services combining shipping services with road, rail and/or air transport. Switching between modes at this time, having sold goods to another buyer is of potential interest to shippers, depending on their assessment of risk in their supply chains.
3. In China for example, buyers often faced difficulties with obtaining trade finance, particularly letters of credit, when sellers in Europe chose to transport goods by railway. Letters of credit are essentially guarantees issued by banks to promise that banks will pay the seller the full amount as long as certain documents are presented. This is known as “payment against documents”, no other conditions. Banks can mitigate risks in letter of credits requiring negotiable transport documents evidencing ownership by taking these documents as collateral based on the established legal framework, or decreasing banks’ capital requirements depending on applicable regulations, therefore banks often prefer maritime bills of lading rather than non-negotiable transport documents. 
4. A uniform legal framework in the form of an international treaty could provide the same legal standards on the recognition and use of negotiable electronic cargo records and thus could support digital transformation and facilitate interoperability of data exchange models.

The project was assigned to UNCITRAL Working Group VI in 2022. Since then, four Working Group sessions have taken place in Vienna and New York. Representatives of the TT Club have been involved in this global law-making process since 2023 and the TT Club was officially accredited as an observer in early 2024 to advise Working Group VI on matters relating to the marine liability insurance industry.    

Key issues of importance 

The key issues of importance that have been raised by the TT Club are: 

• The additional risks which will arise for a transport operator who issues a negotiable cargo document and how to mitigate these risks, as well as the impact this may have on the operator’s liability insurance cover. 
• The intended interaction of this convention with the liability regimes under existing transport conventions, and how to deal with any conflicts which may arise. 

Next steps 

The next session of Working Group VI will take place in December 2024, and the TT Club will be reviewing the latest draft of the proposed instrument in the light of the issues raised and providing comments if necessary.  The draft instrument is currently in the form of an international convention. It may be presented to the Commission in July 2025 for approval and then the General Assembly for adoption in late 2025.