With the passage of the Electronic Trade Documents Act 2023, English law now recognises the possibility for various types of trade instruments, which previously were necessarily in paper form, to adopt a dematerialised, electronic character. Many kinds of trade documents are covered by the new Act, but the one that is of relevance to notaries is the bill of exchange.
Bills of exchange are negotiable instruments with a very long history. Antecedents to modern negotiable instruments are found in classical history, and bills of exchange were certainly in use in England by the 14th century. The law relating to them in England was codified in the Bills of Exchange Act 1882, which remains in force today. Although their use is generally confined to international trade, most readers will be familiar at least with one type of bill of exchange – the cheque.
Where a foreign bill, which is to say one drawn or payable outside the British Islands, is dishonoured, in order to preserve the liability of antecedent parties on the bill the holder is required to have the bill protested. (There are also other circumstances where it is possible, though not mandatory, to protest a bill.) The formal presentment and protest of a dishonoured bill is a function peculiar to notaries; indeed, in former times it was a regular and substantial part of the practice of the notaries operating in the City of London. With the advent of electronic banking and the consequent decline in the use of the bill of exchange in international trade, the volume of bills being notarially protested has, unsurprisingly, declined. However, notaries remain competent to handle such instruments, should the need arise.
The procedure for notarial presentment and protest, set down in the 1882 Act, takes for granted that a bill of exchange will be a paper instrument having a material, physical existence. In the case of an electronic bill, this assumption does not apply; uncertainty has therefore arisen concerning how the time-honoured ceremony of notarial presentment should be carried out in the digital age. Regrettably, the 2023 Act does not give any guidance. The Act does allow an electronic bill to be converted into paper form, such paper bill then assuming all the special character previously imbued in the electronic bill (s.4); doubtless such converted bill could then be protested in the usual way. But it is perhaps an open question whether it is possible to present or protest an electronic bill itself directly, without converting it, and if so how. It is to be hoped that this question may be cleared up soon, either by the courts or by further legislation, since we understand that such electronic bills are already circulating in the market.
We will be keeping a close eye on developments in this area and will provide clients with updates as appropriate, in the meantime for further details please contact jake.humbles@cheeswrights.com or your usual Cheeswrights contact.