France unveils a fresh legal framework to fuel the expansion of global commerce
France has taken a significant step towards digitalising trade finance transactions with the introduction of the "Loi relative à l'introduction du titre transférable et à la promotion de la numérisation des transactions de financement du commerce" (Law on the introduction of the transferable title and the promotion of the digitization of trade finance transactions).
The new law, which comes under the umbrella of the Competitiveness Law, establishes the principle of legal and functional equivalence between paper-based and electronic transferable documents. This means that an electronic transferable document will have the same validity as a paper-based one, provided it meets the necessary conditions.
The law introduces the concept of "exclusive control" to address the challenges of dematerialisation. The holder of the electronic transferable document is the person having exclusive control over it, enabling them to claim the performance of rights, modify it, and transfer it.
An electronic transferable document must contain all mandatory information which would be required in the paper-based transferable document. The Competitiveness Law allows for the creation, signing, and storage of transferable documents electronically. An electronic transferable document is transferred from one holder to another by transferring the exclusive control over it.
The conditions in articles 1366 and 1367 of the French Civil Code ensure the validity and integrity of both paper and electronic documents. To maintain the integrity of the electronic transferable document throughout its lifecycle, a reliable method must be used for the cumulative demonstration of its uniqueness, control, identification, and integrity.
The holder of an electronic transferable document has equivalent rights to those of the holder of a paper-based transferable document, given the conditions set out in the Competitiveness Law are satisfied. This move is expected to boost the digitalisation of trade finance transactions in France, making the process more efficient and secure.
In summary, the new law in France aims to promote the digitisation of trade finance transactions by establishing the legal and functional equivalence between paper-based and electronic transferable documents. It introduces the concept of "exclusive control" to manage the challenges of dematerialisation and sets out conditions for electronic transfer documents to have the same effects as their paper counterparts. The law is expected to enhance the security and efficiency of trade finance transactions in France.
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