"Blockchain Technology for Letters of Credit and Escrow Arrangements" - published.

Here is the published version of my article "Blockchain Technology for Letters of Credit and Escrow Arrangements" (2018)135-2 Banking Law Journal pp.89-103.

The analysis is multi-layered, with up to three levels of headings. To aid readability, I gave chapter numbers in my original manuscript (See the unedited version attached to my previous post). But because the numbering is not compatible with the journal's style of headings, the experienced editor has come up with an alternative solution. Though it may have compromised readability somewhat, I hope that the structure of the article is still clear to the readers.

Blockchain Technology for Letters of Credit and Escrow Arrangements

Here is an article I have written on the basis of my presentation at the conference “Supply Chain Finance and the Changing Landscape of International Trade” held at the Gothenburg University (Sweden) on 23 October 2017.


An additional note (25 Nov 2017): This article has been accepted for publication from the Banking Law Journal and, after editing, is scheduled (tentatively) to appear in the February 2018 issue. The unedited Word version is kept here with permission.

Blockchain Technology for Letter of Credit and Escrow Service

Here are the slides I used for my presentation at the Gothenburg University (Sweden) on 23 October 2017.
Very many thanks to Abhinayan Basu Bal for his invitation.

Two aspects of the blockchain technology

The blockchain technology enables the synchronisation of distributed ledgers without the involvement of a trusted intermediary. For this reason, it is often called "distributed ledger technology.” It helps enhance the security and integrity of data. Those benefits accrue in both public and private blockchains. Most of the recent initiatives of using blockchains in financial sectors tap into this aspect of the technology.

The blockchain technology is, however, not just about generating ledgers or a special way of doing it. Its greater potential for disrupting the society lies in the fact that it creates an online platform which enables the trustless P2P (peer-to-peer) trading of cryptocurrencies and other tokens. The core innovation of the Bitcoin's blockchain relates to this aspect of the technology. This feature is less conspicuous with private blockchains. Although the recent trend seems to lean in favour of private blockchains, the full potential of the blockchain technology would not be exploited if this aspect were neglected.

Powerpoint file: Implications of the blockchain technology for the UNCITRAL works

I prepared (but not actually used) a powerpoint file for my presentation at the UNCITRAL's 50th Anniversay Congress on 5th July. It is here.

Implications of the Blockchain Technology for the UNCITRAL Works

I will be presenting my thoughts on the subject above in the upcoming Congress of the UNCITRAL for the celebration of its 50th anniversary (4-6 July 2017).

My paper currently on the Congress website is a version which I sent to the UNCITRAL Secretariat some months ago and which no longer represents my latest thinking in some significant respects. I am asking the Secretariat to replace it with the latest version, to which I make a link from here. 

The paper gives a particular emphasis on the topic of proprietary restitution of blockchain-based tokens as an area which calls for a globally unified solution.

Postscript: As from 16 June, the Congress website carries the latest version. Many thanks to the Secretariat for swiftly acting on my request. 

Relevance of the blockchain technology to the draft Model Law on Electronic Transferable Recores (as acknowledged by the latest official document)

My article, "Blockchain Technology and Electronic Bills of Lading", has examined the draft Model Law on Electronic Transferable Records and the Rotterdam Rules to see whether it is possible to interpret them in a manner compatible with blockchain-based bills of lading. What follows will note how the relevance of the blockchain technology has come to be acknowledged in the latest official document (A/CN.9/920 (2017)) which contains the draft Model Law with the draft explanatory notes.

The draft Model Law accommodates various types of electronic transferable records based on the principle of technology neutrality. The draft explanatory notes explain that reference in the Model Law to electronic transferable record management systems does not imply the existence of a system administrator or other form of centralized control (Para. 167). 

Nothing in the draft Model Law requires a person to use an electronic transferable record without that person’s consent (draft Article 6(2)). The draft explanatory notes state that consent to using distributed ledger based systems may be inferred by circumstances such as the exercise of control on the electronic transferable record or performance of the obligation contained in the electronic transferable record (Para. 48).

The draft Model Law is based on the principle of functional equivalence. Thus, where the applicable law provides for the endorsement of a transferable document, the draft Model Law treats an electronic transferable record as functionally equivalent to a transferable document only if the information required for the endorsement is “included in” the electronic transferable record (draft Article 16 on endorsement). The draft explanatory notes state that the words “included in” have been chosen to encompass instances when the information is logically associated with or otherwise linked to the electronic transferable record (Para. 141). This wide interpretation would accommodate the endorsement of a blockchain-based token through its transfer from one address to another on the blockchain.

Where there is a legal requirement of a signature of a person, an electronic transferable record can meet that requirement only if a reliable method is used to identify that person (draft Article 9 on signature). The draft explanatory notes acknowledge that certain electronic transferable records management systems, such as those based on distributed ledgers, may identify a signatory by referring to a pseudonym rather than a real name (Para. 60). The notes suggest that an identification by a pseudonym and the possibility of linking it to a real name, if need be, would satisfy the requirement to identify a signatory (Para. 60). The explanatory notes further suggest that linking of a pseudonym to a real name may be based on factual elements to be found outside distributed ledger systems (Para. 60). The same interpretation may be given to the notion of "identification" of the person in exclusive control of an electronic transferable record, a requirement which must be met to establish functional equivalence to the possession of a transferable document (draft Article 11(1) on control).