This blog article is based on a paper I presented at the Digital Assets Project (DAP) Annual Conference 2025 at the University of Oxford on 4 July 2025. I would like to thank the organisers, Professor Louise Gullifer, Professor Jennifer Payne and Javier Paz Valbuena, for the opportunity to present at this conference, and the commentator of this presentation, Professor Andrew Dickinson, for his valuable and helpful comments. I also would like to thank the conference participants for their feedback at the conference. The opinions expressed in this article are of mine and may not represent the views of any advisory, working or expert groups I am part of on digital assets. Any errors and omissions are of mine.
I. Introduction
The Electronic Trade Documents Act (ETDA) 2023 is an innovative UK-wide piece of legislation which gives electronic forms of certain trade documents, such as bill of lading, bill of exchange and promissory notes, the same legal status as their paper counterparts if they satisfy certain criteria set out in the Act (see sections 1-3). Influenced by the UNCITRAL Model Law on Electronic Transferable Records 2017 (MLETR) and its principles, including functional equivalence and technology neutrality, the ETDA 2023 was designed to complement other existing laws as relevant to trade documents rather than providing a comprehensive stand-alone legal regime for them. It came into force on 20 September 2023 and applies to trade documents issued from that date (see section 8).
Trade documents have crucial importance in international trade and their cross-border use raises private international law (PIL) questions. The Law Commission of England and Wales (LCEW), in its law reform project leading to the enactment of the ETDA 2023, had decided to consider the PIL aspects of digital assets, including electronic trade documents (ETDs), in a separate project (see LCEW, Electronic Trade Documents: Report and Bill (Law Com No 405, 2022), ch. 8). Accordingly, the ETDA 2023 has no provision expressly defining its sphere of application or clarifying its interaction with existing PIL rules and this raises uncertainties regarding its cross-border dimension (see A Dickinson, “Electronic Trade Documents and the Conflict of Laws in the United Kingdom” (2024) LMCLQ 55).
In particular, there are concerns that it is not clear whether ETDs governed by a law other than one of the jurisdictions of the UK can be recognised and given legal effect under the ETDA 2023 (which seems to be related to the absence of a provision in the ETDA 2023 corresponding to Article 19 of the MLETR regarding foreign electronic transferable records (ETRs)) or whether the ETDA 2023 is applicable only in relation to ETDs governed by the law of England and Wales, or Scotland, or Northern Ireland (see B Yüksel Ripley, A Macpherson and L Carey, “Digital Assets in Scots Private Law: Innovating for the Future” Edinburgh Law Review, vol. 29, no. 2 (May, 2025) 175, pp. 202-203).
Given that there is no PIL provision concerning ETDs in legislation and at common law in the UK, it is also uncertain how the applicable law will be determined. In England and Wales, the LCEW has been examining how PIL operates in the context of ETDs as part of its substantial law reform project on digital assets and ETDs in PIL and has recently published a consultation paper with provisional reform proposals for England and Wales to modernise section 72 of the Bills of Exchange Act 1882 which applies to bills of exchange and to promissory notes with modifications.
The PIL aspects of ETDs/ETRs are also receiving international attention, particularly in parallel to the enactment of legislation by states based on or influenced by MLETR. The HCCH’sDigital Tokens Project includes a separate workstream on the MLETR as a use case for the project, with work to be done in coordination with UNCITRAL (see HCCH, Report on Exploratory Work: Digital Tokens Project, Prel. Doc. No 4 of November 2024, paras 17-18).
Against this background, this article makes propositions on the conflict of laws aspects of ETDs first from a broader perspective and then for the UK. For the UK propositions, the article also gives attention to the LCEW’s recently published reform proposals for England and Wales.
II. General Propositions on the Conflict of Laws Aspects of ETDs from a Broader Perspective
In concerning the conflict of laws aspects of ETDs, it would be helpful to start with some general propositions from a broader perspective.
(1) The conflict of laws treatment of ETDs needs to differ from that of (other classes of) digital assets.
Digital assets is a broad umbrella term that is often used to refer to various classes of assets which have emerged with the use of technology. Although ETDs may fall under this broad umbrella term depending on how a digital asset is defined, ETDs are substantially different than other classes of digital assets, such as cryptoassets, in terms of their features and functions. Most notably, an ETD, if its form is changed to paper, can have a physical existence as an equivalent paper trade document outside of an ETD system within which it has been created and/or transferred. The change of form from electronic to paper, or vice versa, is usually possible under ETD systems to accommodate potential technology-related issues or legal barriers and is recognised in the MLETR (see Articles 17 and 18) and the ETDA 2023 (section 4). Therefore, in the context of ETDs, the system can be simply viewed as a facilitator for the transfer of ETDs from one party to another whose identities are known to each other. Considering functional equivalence between paper and electronic form of trade documents and the possibility of change of form, the conflict of laws treatment of ETDs, therefore, needs to differ from that of (other classes of) digital assets.
(2) There are benefits for parties to ETDs to agree on both jurisdiction and the applicable law.
It will be important where the dispute relating to ETDs is litigated. In determining the law applicable to ETDs, the starting point for a court would be its relevant applicable law rules. Courts in different jurisdictions can, therefore, reach different conclusions on the applicable law, affecting the outcome of the case. The difference in the outcome might be particularly significant, depending on whether the forum is a jurisdiction that recognises and gives legal effect to ETDs or not.
From this perspective, there are benefits for parties to ETDs to utilise party autonomy fully where possible and agree on both jurisdiction and the applicable law through choice of forum and law agreements respectively that are aligned with each other.
III. Propositions for the UK on the Determination of the Law Applicable to ETDs
Before suggesting propositions for the UK, it would be helpful to explain the PIL terminology and approach adopted in this article. Regarding a single instrument/transaction, with a foreign element, that consists of or is linked to a series of interrelated contracts (which may be a trade document), the applicable law or governing law of that instrument/transaction refers to the law, determined through the contractual conflict of laws rules, to apply to or govern issues relating to the instrument/transaction (compare this to LCEW, ETDs in private international law: FAQ (2024), pp.7-10). Which issues that law would govern depends on the scope of the applicable law. It may be the case that a particular issue in question arising from that instrument/transaction is characterised, for example, proprietary and be subject to a different law.
(1) Whether the ETDA 2023 applies to an ETD or not depends on the applicable law.
The provisions of the ETDA 2023 do not constitute (overriding) mandatory rules that are applicable to any situation falling within their scope irrespective of the applicable law (see section 5 and also LCEW, Electronic Trade Documents: Report and Bill (Law Com No 405, 2022), para 8.113). The application of the ETDA 2023 to an ETD, therefore, seems to depend on the applicable law and that law can be the law of one of the jurisdictions of the UK or a foreign law.
If the applicable law is the law of one of the jurisdictions of the UK (i.e. England and Wales, or Scotland, or Northern Ireland), the ETDA 2023 would no doubt apply (as part of the applicable law) to an ETD falling into its scope (see also LCEW, ETDs in private international law: FAQ (2024), para 1.62). This includes situations where parties have agreed on the law of England and Wales, or Scotland, or Northern Ireland as the applicable law for their ETD, for example, by inserting into their ETD a choice of law clause designating one of those laws, or by agreeing to use a system which designates in its user agreement (or rulebook etc) one of those laws to apply to ETDs where the system is used (see A Dickinson, “Electronic Trade Documents and the Conflict of Laws in the United Kingdom” (2024) LMCLQ 55, p.71). The systems would, however, be reluctant to interfere with the underlying relationships between the transacting parties, therefore it would be more likely for those systems to designate a governing law for only the issues relating the use of the system (not for the ETDs).
If the applicable law is a foreign law and the ETDA 2023 or its provisions have been chosen by the parties to apply to their ETD, this would possibly constitute incorporation by reference and the provisions of the ETDA 2023 could be applied subject to the applicable foreign law.
(2) In the absence of any conflict of laws rules on ETDs or particular types of ETDs, conflict of laws rules provided for types of trade documents should, in principle, apply to the electronic form of those documents.
There is no conflict of laws rule for ETDs or particular types of ETDs (e.g. electronic bill of exchange) in legislation and at common law in the UK. There are, however, conflict of laws rules provided for types of trade documents (e.g. bill of exchange). Given that those rules do not limit their scope of application to ‘paper’ form of those documents only, they should, in principle, also apply to the electronic form of those documents (see also LCEW, Electronic Trade Documents: Report and Bill (Law Com No 405, 2022), paras 8.97 and 8.109). Considering the possibility of change form from paper to electronic, or vice versa, in section 4 of the ETDA 2023, this would also enable that the paper and electronic forms of the same trade document are governed by the same law to ensure legal certainty and predictability during the lifecycle of the trade document.
(3) Some of the existing conflict of laws rules provided for types of trade documents would require a different interpretation when they are applied to the electronic form of those documents.
The existing conflict of laws rules provided for types of trade documents were developed for paper documents and, therefore, they include some connecting factors reflecting that a paper document has physical existence, e.g. the place of issue of the document. Such connecting factors would pose localisation difficulties for electronic form of those documents which have no physical existence (see B Yüksel Ripley, A Macpherson and L Carey, “Digital Assets in Scots Private Law: Innovating for the Future” Edinburgh Law Review, vol. 29, no. 2 (May, 2025) 175, p.203) and require a different interpretation that is suitable for the electronic nature of the documents. Examples include the ones in section 72 of the Bills of Exchange Act, which the LCEW proposes to reform (see LCEW, Digital assets and (electronic) trade documents in private international law: Consultation paper (No 273, 2025), ch. 7), and the location (situs) of a trade document as relevant at the common law depending on the issue in question.
Professor Andrew Dickinson made a suggestion for fixing the location of an ETD or transactions relating to it, depending on whether the system in question uses a central registry or DLT. His suggestion is that, for systems with a central registry, it is the country in which the central management and control of the registry function is located at the relevant time; for DLT-based systems, it is the transferor’s residence or place of business at the relevant time (A Dickinson, “Electronic Trade Documents and the Conflict of Laws in the United Kingdom” (2024) LMCLQ 55, pp.65-69). Considering technological neutrality and the possibility of change of form, this article suggests an alternative approach that the location (situs) can be identified with reference to the person who is the holder of the ETD at the relevant time, irrespective of whether the system used is with a central registry or is DLT-based.
(4) Where parties have chosen the applicable law, there would be less difficulties in applying the existing conflict of laws rules to ETDs, depending on the limits of party autonomy.
An ETD has the same effect as an equivalent paper trade document under section 3(2) of the ETDA 2023. Subject to the limits of party autonomy in relation to the issue in question, the determination of the applicable law would, therefore, pose less difficulties for trade documents which typically contain a choice of law clause designating the law of one of the jurisdictions of the UK. For example, it seems very common for bills of lading to contain an English choice of law clause and, in such case, an electronic bill of lading would be governed by English law as the chosen law for its paper equivalent as per section 3(2) of the ETDA 2023, provided that the relevant requirements set out in section 2 of the ETDA 2023 are met (see B Yüksel Ripley, A Macpherson and L Carey, “Digital Assets in Scots Private Law: Innovating for the Future” Edinburgh Law Review, vol. 29, no. 2 (May, 2025) 175, p.203).
For trade documents, which typically do not contain a choice of law clause or where there is limited or no party autonomy to choose the applicable law, such as bills of exchange and promissory notes, complications would arise in determining the applicable law. Jacqueline Cook observed deriving from English legal practice that choice of law clauses designating English law are being inserted into bills of exchange and promissory notes to ensure that their electronic form will be recognised as equivalent to their paper form via the application of the ETDA 2023 (see B Yüksel Ripley, A Macpherson and L Carey, “Digital Assets in Scots Private Law: Innovating for the Future” Edinburgh Law Review, vol. 29, no. 2 (May, 2025) 175, p.203). Given that section 72 of the Bills of Exchange Act 1882 does not provide for party autonomy, it is uncertain if such clauses would be given effect and, if so, to what extent. The authors of Dicey, Morris and Collins suggest that if such a choice appears on the face of the instrument, there is no compelling reason why the choice would be unacceptable although they also acknowledge that the suggestion is controversial (Lord Collins of Mapesbury et al, Dicey, Morris & Collins on the Conflict of Laws, 16th edn (2023), para 33.359).
As noted in the general propositions above, it would be highly advisable for parties to insert into their trade documents not only a choice of law (governing law) clause but also a choice of forum (jurisdiction) clause that are aligned with each other to increase legal certainty and predictability for their transactions.
(5) A UK-wide PIL reform can increase legal certainty and predictability for the cross-border use of ETDs.
Uncertainties around the applicable law issues and potential difficulties that may arise from applying the existing conflict of laws rules, which were developed for paper trade documents, to ETDs, can be addressed through a PIL reform (see A Dickinson, “Electronic Trade Documents and the Conflict of Laws in the United Kingdom” (2024) LMCLQ 55, p.71 and B Yüksel Ripley, A Macpherson and L Carey, “Digital Assets in Scots Private Law: Innovating for the Future” Edinburgh Law Review, vol. 29, no. 2 (May, 2025) 175, p.204 and 209). Given that the ETDA 2023 and some other relevant legislation (e.g. the Bills of Exchange Act 1882) are applied across the UK, there are benefits of a possible UK-wide law reform and collaboration in this area building on the LCEW’s timely and important law reform project examining ETDs in PIL for England and Wales (B Yüksel Ripley, A Macpherson and L Carey, “Digital Assets in Scots Private Law: Innovating for the Future” Edinburgh Law Review, vol. 29, no. 2 (May, 2025) 175, p.203).
In relation to trade documents, the LCEW’s provisional proposals for law reform are only concerned with section 72 of the Bills of Exchange Act 1882. The LCEW aims to modernise that section more generally to reflect the conflict of laws developments since its drafting about 150 years ago while keeping in mind the use of trade documents in both paper and electronic contexts (see LCEW, Digital assets and (electronic) trade documents in private international law: Consultation paper (No 273, 2025), para 7.19). Some of the provisions of section 72 are also difficult to understand and open to different interpretations (e.g. section 72(2)). Therefore, this would be a welcome reform (for the initial suggestion of reforming section 72 as part of that ongoing project, see A Dickinson, “Electronic Trade Documents and the Conflict of Laws in the United Kingdom” (2024) LMCLQ 55, p.71).
For the purposes of this article, some further points are worth highlighting regarding the LCEW’s provisional proposals (LCEW, Digital assets and (electronic) trade documents in private international law: Consultation paper (No 273, 2025), ch. 7):
(i) The proposed conflict of laws rules apply to bills of exchange (and promissory notes) regardless of whether they are in paper or electronic form. The proposals introduce suitable connecting factors to facilitate this and avoid difficulties with localisation. This is a very sensible approach given the functional equivalence between paper and electronic form of trade documents and the possibility of change of form.
(ii) The proposed approach preserves the ‘several laws theory’, meaning that each contract that the instrument embodies will be subject to its own applicable law and it is very likely that these laws will be different laws. This contrasts with the single law approach, where such contracts would be governed by a single (and the same) law. The proposed approach may receive divergent views given that, as per the consultation paper, many of the stakeholders and market participants seem to support the single law approach (see paras 7.171- 7.7.176). The LCEW, however, thinks that adopting the single law approach would be a very significant decision that requires consideration of the entire Bills of Exchange Act 1882 that is beyond the scope of its project (para 7.177).
(iii) The proposals provide for party autonomy for the law applicable to contractual obligations arising from a bill of exchange in section 72(2) for each contract that the bill embodies. It is proposed to be “the law chosen by the party incurring the obligation, as indicated on the bill alongside their signature” (see paras 7.183, 7.185, and 7.223). Allowing party autonomy aligns with the modern contractual conflict of laws approaches. However, a choice of law indicated by each party to a bill alongside the signature, as currently proposed, does not appear to be a common (or existing) practice in international trade. It could also give rise to uncertainties and unnecessary complications arising from, for example, the wording of such a choice of law clause, or the extent to which it would constitute a choice of law ‘agreement’ between the relevant parties. An alternative approach, as suggested by Ian Clements and Alexender Hewitt and noted at para 7.173 of the consultation paper, would be preferable in the provision of party autonomy to enable that if the original parties to a bill or note choose the applicable law by inserting a choice of law clause on the face of the bill or note, this choice of law would, in principle, bind them and also anyone who subsequently becomes a party to the bill or note. In that case, becoming a party to the bill or note could, in principle, demonstrate the party’s consent to the choice of law on the face of the bill or note. Considering the proposition in Dicey, Morris and Collins at para 33.359 noted above, such a choice on the face of the instrument may not be unacceptable even under the current law. It would be, therefore, preferable if section 72(2) is reformed to enable or clarify that a choice of law on the face of the instrument shall be given effect and be, in principle, binding on all parties to the instrument. In addition, section 72(2) could also provide that the validity of the choice of law is to be determined by the chosen law.
(iv) The proposals set out conflict of laws rules to apply in the absence of a (valid) choice of law in section 72(2). The LCEW does not propose an escape clause to apply where the contract is manifestly more closely connected with the law of a country other than that indicated in the proposed rules. This is because the LCEW considers that an escape clause is neither necessary nor desirable in its proposed framework (see paras 7.214-7.221 and para 7.226). This is a departure from the modern contractual conflict of laws approaches. Article 4(3) of the Rome I Regulation provides an escape clause and, as acknowledged in Recital 20 therein, resort to the escape clause can be justified for linked contracts. This may be particularly the case where the linked contracts that an instrument/transaction consists of are governed by different laws and this causes serious issues or inconsistencies regarding the rights or obligations of the parties to the instrument/transaction. In such cases, an escape clause can be justified and have been used by courts to make the linked contracts subject to the single and the same law (see further B Yüksel, Uluslararası Elektronik Fon Transferine Uygulanacak Hukuk [The Law Applicable to International Electronic Funds Transfer] (Istanbul, XII Levha 2018) pp. 157-165). English courts have used this method for letters of credit under Article 4(5) of the Rome Convention (see e.g. Bank of Baroda v. Vysya Bank [1994] 1 Lloyd’s Rep 87). In reforming section 72(2) of the Bills of Exchange Act, it could be therefore useful if an exception clause (drafted based on Article 4(3) and Recital 20 of the Rome I Regulation) is included to the proposed framework, particularly to help with addressing potential problems that might arise from the application of the several laws theory, if to be retained, in the absence of a (valid) choice of law.
(v) The proposals introduce alternative options for the law applicable to formal validity in reforming section 72(1), by adopting a “pro-formal validity menu approach” (paras 7.227-7.2241). This means that if a contract is formally valid in accordance with one of these options, it will be upheld as formally valid. This is a very sensible approach and aligns with the modern contractual conflict of laws approaches on formal validity.
IV. Concluding Remarks
The ETDA 2023 is an important piece of legislation, which has been described by some industry experts as a “game-changer” and “the missing piece in the jigsaw” in digitalisation of trade. If concerns and uncertainties around the applicable law are addressed, this would help with building the relevant sectors’ trust in using ETDs and achieving the realisation of the ETD law reform’s full potential in the UK.
Clarity is still needed regarding to the ETDA 2023’s cross-border dimension and its (territorial) sphere of application. The LCEW’s consultation paper does not have any proposals to clarify this question. There is not much clarity regarding the identification of the location (situs) of an ETD either, for example for the issues governed by the lex situs (see LCEW, Property and permissioned DLT systems in private international law FAQs (2025)). The LCEW’s provisional proposals are only concerned with section 72 of the Bills of Exchange Act. Modernising conflict of laws rules in that section in a way to align with the modern conflict of laws approaches and to apply to both paper and electronic bills of exchange (and promissory notes) would be a welcome reform (subject to points suggested above for reconsideration in finalising the reform proposals).
Further questions which deserve more attention for the conflict of laws purposes in the UK and internationally include the identification of location (situs) for ETDs, the role or weight to give to ETD systems in determining the law applicable to ETDs, the operation of party autonomy and importance of agreeing on both jurisdiction and the applicable law for (electronic) trade documents that are aligned with each other, and the need to differentiate ETDs from (other types of) digital assets for conflict of laws purposes. These questions are of importance not only for the UK but also for any country which has adopted or will adopt legislation based on or inspired by MLETR. Consideration of the topic by the HCCH under its Digital Tokens Project in coordination with UNCITRAL is, therefore, timely and valuable.
