TRADEWP.4/INF.63

 

                         Recommendation N 14.

 

   AUTHENTICATION OF TRADE DOCUMENTS BY MEANS OTHER THAN SIGNATURE

 

                         (Geneva, March 1979)

 

        second edition, adopted by the Working Party on Facilitation

                   of International Trade Procedures

 

 

 

The Working Party on Facilitation of International Trade Procedures, as

subsidiary organ of the United Nations Economic Commission for Europe, has

identified certain problems having legal implications in respect of data

flows in international trade arising from a need for authentication by

signature of trade data or documents used in international trade. A study

of these problems by an informal team of experts, convened by the

International Chamber of Commerce (ICC), during which the Belgian and

Norwegian members gave special attention to the problem and worked closely

with the convener. indicated the possibility of replacing signatures by

different, alternative methods of authentication.

 

These findings, presented in a draft recommendation and a study, were

submitted to the Working Party's Group of Experts on Data Requirements and

Documentation which discussed them at its eighteenth and nineteenth

sessions. The Group of Experts forwarded the draft Recommendation to the

Working Party at its ninth session in March 1979 when it was adopted.

 

Recommendation

 

The Working Party on Facilitation of International Trade Procedures,

 

Being aware that the requirement for signature is tied to the use of paper

documents and that the increasing use of electronic or other automatic

means of data transfer makes it desirable to find new ways of securing the

data and identifying their source;

 

Noting that the study annexed to the Recommendation shows the possibility

of replacing signatures by different alternative methods of

authentication, as evidenced by Article 14 (3) of the United Nations

Convention on the Carriage of Goods by Sea, 1978 (Hamburg Rules), and of

replacing paper documentation by any other means which would preserve a

record of data transfer, as evidenced by Article 5 (2) of the Montreal

Protocol No. 4 to the Warsaw Convention on International Carriage by Air;

 

Recommends to Governments and international organizations responsible for

relevant intergovernmental agreements to study national and international

texts which embody requirements for signature on documents needed in

international trade and to give consideration to amending such provisions,

where necessary, so that the information which the documents contain may

be prepared and transmitted by electronic or other automatic means of data

transfer, and the requirements of a signature may be met by authentication

guaranteed by the means used in the transmission; and

 

Recommends to all organizations concerned with the facilitation of

international trade procedures to examine current commercial documents, to

identify those where signature could safely be eliminated and to mount an

extensive programme of education and training in order to introduce the

necessary changes in commercial practices.

 

At the ninth session of the Working Party representatives attended from:

 

Austria; Belgium ; Bulgaria; Canada; Czechoslovakia; Denmark; Finland;

France; German Democratic Republic; Germany, Federal Republic of; Hungary;

Netherlands ; Norway; Poland; Romania; Sweden; Switzerland; Turkey; Union

of Soviet Socialist Republics; United Kingdom of Great Britain and

Northern Ireland, and United States of America; and from Australia, Japan

and Kenya.

 

The following specialized agencies, intergovernmental and non-governmental

organizations were also represented:

 

United Nations Food and Agriculture Organization (FAO);International

Maritime Consultative Organization (IMCO); General Agreement on Tariffs

and Trade (GATT); European Economic Community (EEC); Customs Co-operation

Council (CCC); International Chamber of Commerce (ICC); Central Office for

International Railway Transport (OCTI); International Road Transport Union

(IRU); International Union of Railways (UIC); International Organization

for Standardization (ISO); International Chamber of Shipping (ICS);

International Railway Transport Committee (CIT); International Federation

of Freight Forwarders Associations (FIATA) and International Cargo

Handling Co-ordination Association (ICHCA).

 

1. It has long been a requirement in international trade that certain of

the documents which are necessary for a transaction should be signed.

There is now an increasing trend away from paper documentation to

electronic or other automatic means of transmission of information to be

exchanged. When information is sent by these means, it is not possible to

transmit a signature as such. The view has been put forward that the

absence of a signature reduces the value or authenticity of the

information, and that machine-transmitted information is not acceptable,

unless substantiated by a signed document. The requirement of signature

can clearly be an obstacle to trade facilitation.

 

2. This study, which is in two parts, first defines a signature and its

purpose in the context of international trade documentation giving the

background to current requirements for a handwritten signature. It then

examines modern alternative methods, stating the case of acceptance of

information without a signature.

 

Part I - Background to Current Requirements

for a Handwritten Signature

 

Definition of "signature"

 

3. "Signature" has been defined on many occasions, and a number of

definitions given in legal and literary dictionaries are shown in Annex I.

Nearly all definitions require that the signatory write his name by hand.

In court hearings the decision as to what constitutes a signature, is a

question of fact which the judge decides himself. Some legal decisions

about what constitutes a signature, taken from Belgian jurisprudence, are

shown in Part 2 of Annex I. Although the United Nations Convention on the

Carriage of Goods by Sea, 1978 (Hamburg Rules), states in Article 14 (3)

that a signature may be in handwriting, printed in facsimile, perforated,

stamped, in symbols or made by any other mechanical or electronic means

(if not inconsistent with relevant national law), this study is based on

the generally-accepted meaning given to the word in international trade

and legal circles.

 

Function of signature

 

4. A signature on trade documents serves three main purposes:

 

     (i) It identifies the source of the document, i.e. the writer;

     (ii) It confirms the information in the documents; and

     (iii) It constitutes proof of the signatory's responsibility for the

     correctness and/or completion of the information in the document.

 

The signature gives an element of proof which virtually amounts to

undisputed legal validity of the document and the data transferred.

Whereas the formal requirement is for a signed document, the essential

function is that of authentication of data content. The need for

verification may in certain cases also lead to requirements of composite

authentication - that is to say, not only is the signature of the

responsible part required, but also a signed declaration by some official

or semi-official body endorsing the signature.

 

Requirement of signature

 

5. A signature may be required by virtue of a formal legal requirement,

either in national law or international convention. It may serve a

specific purpose, or the requirement may simply be based on commercial

practice. Where there is a mandatory requirement, a signature is needed

unless the law is amended or repealed. In order to make data transferred

by electronic means acceptable as valid documents in law, the signature

must be replaced by an alternative method of authentication.

 

6. In general, the following interests are affected: (a) commercial, (b)

transport, (c) financial, and (d) official. Problems arise mainly with

"documents that travel", often called "shipping documentation", i.e.

documents that transfer data which are only available at dispatch and

which are necessary for the clearance of goods at destination. Certain

documents which actually accompany the goods, such as the ships' manifest

or dangerous goods documentation, may not constitute problems. It should

also be recalled that the information in some documents may be of interest

to more parties than the originator and final recipient of the documents.

 

Commercial documents

 

7. The main principle of international trade law is that there is no

formal requirement for a signature. Subject to an exceptional requirement

of signature in national law, documents required for the practical

performance of a contract, such as a commercial invoice, or a certificate

regarding quality and quantity, need not therefore be signed. The parties

concerned are mainly interested in identification of the documentation and

verification of data content, which can be obtained from other sources and

are not dependent on a signature. The same is true for the shipping

advice/notification called for in most trade terms. There is therefore no

reason to include a requirement of signature in the requirements for

commercial information which is now often the case. Even if old habits are

difficult to change, re-education is clearly the answer to this problem.

 

Transport documents

 

8. Some international conventions prescribe signatures on transport

contracts. Others, like the CIM for transport by rail, have dropped this

requirement, which would seem to indicate that here is no legal need for

authentication in such a document, except in instances where a signature

is required by national law. The problem can then only be solved by action

on the lines mentioned in paragraph 4 above, such as repeal of the legal

requirement or the acceptance by the relevant authorities of data produced

by electronic or other automatic means. In transport the position is,

however, further complicated by the number of parties involved apart from

the carriers themselves: exporters, importers, financiers, insurers and

authorities. There would also appear to be several functions involved

which give rise to demands for signed documents:

 

     (a) evidence of the contractual undertaking of transport;

     (b) evidence that goods have been accepted for transport;

     (c) evidence of details of the goods transported; and

     (d) evidence that the goods have been received in good condition.

 

As mentioned in paragraph 3 above it is, rather, the verification of the

data content conveyed by the signature than the signature per se that is

needed, and various alternative methods of meeting this need are described

in Part II of the present study.

 

9 The (negotiable) bill of lading poses a special problem since it

constitutes a transport contact which is also a negotiable document of

title. This is the classic example of a document which travels and which

is of interest to parties other than the originator and the final

recipient. There is no immediate, obvious solution to the legal problems

involved. The best way to make possible the use of modern methods of data

transmission in sea transport is to make the parties consider whether

their commercial relations are such that they could replace the bill of

lading by a non-negotiable transport document. Experience shows that such

documents are an acceptable alternative in many instances.

 

Financial documents

 

10. Requirements for the authentication of financial documents such as

letters of credit are outside the scope of this study, although problems

could be created by the specific documentary provisions of the credit. The

need to verify whether insurance is in force for a particular shipment

could, in certain circumstances, lead to the need for a signed document.

However, the growing trend for exporters themselves to make out insurance

certificates under cover of a general policy and the availability of

alternative methods of ensuring that adequate cover exists may lead to a

reduction of this particular requirement. As an example, there is a

growing tendency on the part of major exporters merely to state that cover

has been effected under a blanket arrangement, without any specific

document being issued in respect of individual shipments.

 

Official documents

 

11. It would seem that the main need for authentication and acceptance of

responsibility to meet official demand occurs at import in the country of

final destination. These needs, however, often have a direct bearing on

action in the country of purchase at the time of dispatch, or

subsequently. Import procedures are usually based on a compulsory form

which incorporates a declaration to be made by the importer or his agent,

and thereby constitutes a legal undertaking of responsibility. Since this

document is created and signed in the country of importation, it does not

necessarily in itself constitute an obstacle to international trade

facilitation. Moreover, there is a trend towards the speed removal of

goods from the place of importation, under simplified documentation,

associated with physical examination of the goods in inland premises when

the complete documentation is available. This in itself is a great step

forward in Customs facilitation. Nevertheless, the position is often

complicated by demands for supporting documents, most of them "documents

that travel", such as certificates or invoices.

 

12. Customs authorities in some countries insist on a signed invoice, in

the form of a commercial invoice, a consular invoice or a so-called

Customs invoice. Where there is a legal requirement for a signed invoice,

the need for such a document can only be overcome by the repeal of the

relevant regulation. In other instances, import authorities, who have wide

discretionary powers, may themselves educate traders and promote

procedures to facilitate trade. The work in the Customs Co-operation

Council contributes effectively to this objective.

 

Note: In May 1979 the Customs Co-operation Council adopted a

Recommendation concerning Customs Requirements regarding Commercial

Invoices; the Recommendation intends, on the one hand, to encourage

Customs authorities to accept commercial invoices produced by any process,

including the one- rune method and, on the other, to induce Customs

administrations to waive the requirement of a signature, for Customs

purposes, on the commercial invoice which must be presented to Customs in

support of the goods declaration. The Recommendation is reproduced in

Annex II.

 

It must be said, however, that clearance procedures are often complex. The

Customs authorities must not only be satisfied as to the identity and

content of the goods but also as to the relevant economic criteria to be

applied. In addition, they are often requested to examine goods to ensure

that they meet requirements laid down for a variety of "non-Customs"

reasons, such as health or safety. However, as to signatures, it would

seem to be perfectly possible to solve the problem by the use of

alternative methods.

 

Signature and proof

 

13. If it is perfectly possible to envisage replacing the signature, why

are people still so attached to it? The explanation may be found in the

value of proof which a signature provides. Documents produced before a

Court of Law are only legally valid in so far as they are acknowledged by

the person said to have signed them. A handwritten signature can be

particularly useful in this respect. While forgeries are possible and a

person may refuse to recognize a signature, it must be said that it is

more difficult to deny responsibility for a document which bears a

signature than for one which does not.

 

14. Whilst a signature is not usually indispensable on commercial

documents, it is quite often required for official purposes. Because there

are so many different national provisions, participants in international

trade - fearing nonfulfillment of possible requirements - play safe by

putting a signature on most documents. The guarantees thought to be

provided by a signature mean that they are frequently used also on

commercial documents, although less frequently, perhaps, when the parties

are well known to each other.

 

Summary of Part I

 

15. It may be seen from the above that signatures are widely used, and

will continue to be used, for a variety of reasons;

 

     (i) on commercial documents: mainly to secure proof in a Court of

     Law, often to comply with existing (or presumed) requirements in

     national trade laws;

     (ii) on transport documents: often to comply with existing national

     and/or international provisions requiring signatures on transport

     contracts and other transport documents;

     (iii) on official documents: generally to secure proof of data

     content by identification of a (legal) person responsible for the

     information as provided

 

16. The usage or the requirement of a signature presents major problems

for modern high-technology data transfer in those instances where the data

are transmitted from the country of purchase to the country of (final)

destination and where the signature must be available at the clearance of

the goods. National legislation and international conventions should be

changed wherever they impose signature as a guarantee for the