United Nations Convention on negotiable cargo documents pilot projects

Since 2022, Working Group VI of the United Nations Commission on International Trade Law (UNCITRAL), a subsidiary organ of the UN General Assembly, has been developing a new international convention on negotiable cargo documents.

While bills of lading have been widely used as documents of title in the maritime sector, transport documents issued by rail, road and air carriers (often known as “consignment notes”), which are typically non-negotiable, cannot serve that function. The new instrument intends to create a new type of document of title entitled “negotiable cargo document”, which could perform an analogous function as a maritime bill of lading for the carriage of goods by any mode of transport in a multimodal or unimodal context. Negotiable cargo documents could increase trade flexibility and function as a credit enhancement tool in the context of trade finance. Being able to switch to alternative modes of transportation in case of disruption of shipping routes without diminishing the value of collateral in the context of trade finance or losing the ability to sell goods in transit is another reason for shippers to use negotiable cargo documents.

Negotiable cargo documents will exist in a digital form, known as “negotiable electronic cargo records”. The draft instrument will thus provide a legal framework for the issuance and use of a single electronic record that could cover door-to-door transportation, thereby simplifying the documentation process and increase efficiency in operations.

UNCITRAL Working Group VI, consisted of delegates from UN member States as well as invited IGOs and NGOs, met at the United Nations Offices in Vienna from 9 to 13 December to continue inter-governmental negotiations on the draft international convention. It is expected that the draft convention on negotiable cargo documents will be finalized and presented to the UN General Assembly for adoption in late 2025. One question often asked was how fast do you think different States could get up to speed if the UN Convention is adopted in 2025? The question should be rephased - how fast the industry could get up to speed? The convention does not provide for any rights or impose any obligations on States; instead, it provides a legal framework for transport operators to issue negotiable cargo documents/electronic records at the request of shippers/consignors. Let's spread the word and help the industry get ready for new business opportunities, particularly in a multimodal context!

On 9 December, a side event was held during the Working Group VI session to showcase pilot projects. Four pilot projects for the issuance of negotiable cargo documents and negotiable electronic cargo records were reported to the Working Group. These pilot projects involved the carriage of goods from Kazakhstan to China and from Turkmenistan to Romania. The issuers were freight forwarders registered in China and Switzerland. Details of these pilot projects can be found in the attached PDF files.