Digitalization of International Trade

On March 30, 2021, the discussion session “Digitalization of International Trade” was held on the LF Talks   online platform. The event was organized by the United Nations Commission on International Trade Law (UNCITRAL), the Ministry of Economic Development of the Russian Federation, and the International Comparative and Law Research Center (ICLRC).

The ICLRC General Director Victoria Manko in her welcome address thanked Secretary of UNCITRAL Anna Joubin-Bret and Deputy Minister of Economic Development of the Russian Federation Alexey Khersontsev for initiating the event and pointed out that digitalization has become even more relevant due to the COVID-19 pandemic. The increase in electronic interaction should facilitate the recovery of the global economy. This means that collaborative effort should be put into creating the appropriate legal regulation in order to protect the market participants and at the same time prevent the unjustified obstacles to application and appearance of new digital instruments and platforms. Victoria pointed out that the importance of creating effective homogenous regulation in digital trade has long been evident. “The activity of UNCITRAL Working group IV, in which our Center is going to participate as an observer, can serve as proof of that,” she noted.

State Secretary — Deputy Minister of Economic Development of the Ministry of Economic Development of the Russian Federation Alexey Khersontsev spoke about the steps made by the Russian Federation in order to integrate digital technologies into trade, including the Concept of developing relationship regulation in the field of AI technologies and robotics until 2024. “One of the principles of the Concept is the person-oriented approach which provides that the ultimate goal of AI technological development should be the security of human rights and freedoms guaranteed by Russian and international law, as well as taking into account both positive and negative international experience of legal regulation,” the State Secretary said.

In her welcome address, Secretary of UNCITRAL Anna Joubin-Bret spoke about the work of UNCITRAL on analyzing the probability of creating an online platform that would allow the states to exchange their experience in legislative actions aimed at reacting to and recovering after the COVID-19 pandemic, as well as on developing a single legal standard, which has been in the making for more than 25 years, that would make concluding digital transactions easier. The Secretary pointed out that UNCITRAL encompasses various projects connected with the topic of the discussion, including the development of a new international document on a negotiable multimodal transport document for cross-border overland trade and the research on legal matters concerning new instruments of digital trade such as AI, blockchain, smart contracts, and the flow of data.

Speakers of the first panel, the moderator of which was Marina Rozhkova, discussed the legal regulation of digital trading platforms activity.

Teresa Rodríguez de las Heras Ballell pointed out that platforms could qualify as private legal systems with their own jurisdiction, regulations, and the internal system of dispute resolution. This inevitably poses the question of their relationship with the State.

In her speech, Hong Xue focused on the role of platforms in providing cross-border recognition and security of international trade by means of authentication services, rating systems, and cybersecurity. She agreed with the fact that a private platform should not substitute state regulation.

Lise Alm pointed out the difference in perceiving a legal platform as a digital intermediary not involved in trade and responsible only for their actions and as a market regulator which is responsible for its users’ actions. She also noted the tendency towards disregarding the differences in regulating the relations between consumers and entrepreneurs within the platform and concurred that there was a need for developing international standards of platforms’ actions and responsibilities as a legal basis for national legislation.

In conclusion, the speakers discussed questions asked by the audience about the possibility of using blockchain on a private trade platform, the impact of distributed registry technologies on the platform’s status as an independent subject of law, the legislation applicable to trades concluded with using a platform.

The second panel, the moderator of which was Liudmila Terenteva, was dedicated to electronic cross-border transactions and trade documents. Liudmila pointed out the importance of differentiating on international level between the processes of status harmonization and unification of a deal concluded electronically and spoke on various aspects of the disposability of the UN Convention on the Use of Electronic Communications in International Contracts.

Igor Furgel described the basis of creating an effective international legal mechanism for cross-border recognition of identification data management systems and trust services, as well as the validity of electronic signatures in various jurisdictions.

Alexandra Fasakhova concentrated in her speech on legal problems in concluding and executing of cross-border financial transactions in virtual format (more precisely, a complex of bilateral agreements between various parties), the interaction of such agreements’ parties with the state authorities whether they are notaries, registry holders, or judicial authorities. Alexandra also focused on the efficiency of international regulation in this sphere.

Raoul J Renard talked in his speech of the importance of such digital documents as waybills, bills of lading, promissory notes, warehouse certificates. He touched upon the issues of recognition of such documents in digital format, decreasing the risk of fraudulent activities, and realization and transfer of rights by such documents.

Nicolas Rouiller noted that legal challenges of developing digital technologies are the most essential, but the reforms are not as important as the absence of unjustified bans and obstacles in using electronic documents. The panel ended with the discussion on authentication services and the possibility of their usage in the relations with the States.

Automated contracting was the topic of the third panel which was moderated by Christiane Wendehorst. She noted that the legal community used to be concerned with recognizing the conclusion and validity of the automated contract, whereas now the focus is on the requirements to security, supervision, and responsibility of automated contracting by AI, as well as redefining the contractual law as automated contracting.

Denis Kartamyshev began the discussion by pointing out the need of party identification in the name of which the agreement is concluded, and marking the importance of being authorized to do so. In the situation when the business and the State have conflicting objectives (generating profit and exercising control over digital rights, collecting taxes), or in case of two or more States in one information system, the question arises of how the principles of the agreement conclusion algorithms should be defined, how they should be overseen, who and how defines the criteria of the agreement’s effectiveness, the speaker remarked.

Mateja Durovic spoke on foreign approaches to regulating smart contracts which are to enable their application and at the same time prevent mistakes in the algorithms for their conclusion.

André Janssen focused on using smart contracts when concluding cross-border purchase deals, the ways of applying the premises of the United Nations Convention on Contracts for the International Sale of Goods to smart contracts, and different approaches to answering the question of whether cryptocurrency is a payment means according to the Convention.

After their presentations, the speakers discussed different approaches to governmental and international regulation of the smart contracts as instruments of cross-border trade.