Consultation to inform options for implementing the Model Law on Electronic Transferable Records in Australia

Closes 28 Oct 2024

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The MLETR in an Australian context (Questions 20–28)

We are interested in preliminary views on how the MLETR’s key provisions could interact with Australian law and existing transferable record practices. These key provisions state how the ‘possession’ and ‘transfer’ of paper transferable records under law could be met by an electronic transferable record – and also how other functions (like signing a record) could be done electronically. 

Please note that subject to government approval of an MLETR implementation option, we will likely undertake further consultation on more targeted questions relating to the approved implementation option.

MLETR – transferable records covered (Questions 20–23)

We are interested in preliminary views about what kinds of records the MLETR should apply to, and whether any transferable records should be considered out-of-scope, including whether the MLETR should be limited in application to trade-based transferable records, exclude financial and investment records, or whether it should also apply to a broader range of non-transferable records, for example, straight bills of lading.

Please refer to Part 4.1 of the Consultation Paper which informs Questions 20–23. 

MLETR – functional equivalence (Questions 24–25)

We are interested in preliminary views about whether the MLETR approach to ‘functional equivalence’ would provide sufficient certainty to stakeholders that electronic transferable records are legally valid under Australian law.

In particular, articles 10 and 11 of the MLETR state how the ‘possession’ and ‘transfer’ of paper transferable records under law could be met by an electronic transferable record, including the requirement that a ‘reliable method’ be used to subject the electronic record to ‘exclusive control’.

Please refer to Part 4.2 of the Consultation Paper which informs Questions 24–25.

MLETR – technology neutrality (Questions 26–28)

We are also interested in preliminary views about how an Australian option for MLETR should provide flexibility for trade participants to use available technology or electronic systems, whilst also ensuring minimum levels of security and reliability. In particular, article 12 of the MLETR sets factors for the necessary ‘reliability’ of electronic transferable record systems, without limiting these to any specific technology.

Please refer to Part 4.3 of the Consultation Paper which informs Questions 26–28.

20. In your view, should securities like shares and bonds, investment instruments, and letters of credit be excluded from any Australian implementation of MLETR?

Please expand on your answer. For example, what particular issues do you foresee if these financial instruments were included or excluded?

(Please select one)

21. Please share your views about whether any other records should be specifically included or excluded from Australia’s implementation of MLETR?
22. Should an Australian option for MLETR extend to documents like straight bills of lading, or other documents which must generally be physically possessed, but need not be transferable?

Please expand on your answer. For example, what other documents may be possessable but not transferable? Do you foresee any issues if these were included or excluded?

(Please select one)

23. Should an Australian option for MLETR be limited to transferable records which are used specifically in the context of international trade?

Please expand on your answer. For example, do you foresee any particular issues if MLETR were limited to international trade only?

(Please select one)

24. Would adoption of the MLETR in its current form provide you with confidence that electronic transferable records are just as legally valid as paper versions of those records for the purpose of Australian law?

Please expand on your answer. For example: what, if any, modifications or clarifications would be necessary to provide you with confidence in the legal validity of electronic transferable records.

(Please select one)

25. Please share your preliminary views about whether there is anything under Australian law which you think justifies a unique approach to confirming the functional equivalence of transferable records (that is, as distinct from the MLETR)?
26. To what extent does the approach to reliability under article 12 of the MLETR appropriately balance stakeholder confidence (that is, confidence in the legal validity of a particular electronic method) and flexibility (that is, flexibility to use a technology or method of the stakeholder’s choice).

Please explain your answer, especially what other factors might be relevant to determining reliability, or any other changes which you consider might achieve this balance.

(Please select one)

27. In your view, do the factors under article 12 sufficiently promote stakeholders trust and security in the use of electronic transferable records (including the prevention of fraud and the security of data relating to electronic transferable records)?

Please explain your answer, especially what other factors might be relevant to promoting trust and security in the use of electronic transferable records.

(Please select one)

28. Please share any views you have about whether an Australian MLETR implementation option should utilise an accreditation system to specify that certain electronic transferable record management systems are sufficiently reliable?