Bolero

Bolero is a company that offers buyers, sellers, banks, carriers, and insurance agents to freely exchange trade and transport-related documents over a common digital network.

However, Bolero is not only a company that provides services for the utilization of electronic documents but also an ecosystem that combines regulation, technology, and commerce. By understanding the structure and working mechanism of the Bolero, a more vivid view about the private regulatory system can be achieved.

Bolero originated from a research initiative of the European Community in 1995. The aim of this initiative is to find a solution to dematerialize cross-border trade process. The Bolero Association Ltd. (BAL), which is the first entity of the Bolero Project, was founded on July 27, 1995 with enrolled members not only from Europe but also from America and Asia.³¹³ BAL is a non-profit entity that acts as a club for its members.³¹⁴ The leap to the business world was taken by BAL a few years later. In cooperation with the Society for Worldwide Interbank Financial Transactions (SWIFT) and the Through Transport Mutual Insurance Association Limited (TT-Clib), the Bolero Project was commercialized in 1998. The result of this cooperation is the Bolero International Ltd. (BIL), which was linked to BAL through the registrar contract that states that the latter should perform the tasks of a registrar for the former.

Users willing to employ the Bolero electronic documents must sign service contracts with BAL and the BIL to outline the rights and obligations. In addition, all current and future participants are bound by the so-called “Bolero Rulebook,”³¹⁵ in which the legal structures of transactions undertaken via the Bolero are manifested (Structure of the Bolero see Figure 4 below). Through this rulebook, the users of the Bolero are governed by a common set of rules. BIL is in charge

313 See DiMatteo, Larry A., International business law and the legal environment: a transactional approach, Routledge, 2016.

314 See BAL Memorandum of Association para 3(4) and para 4.

315 Bolero Rulebook (1st ed., September 1999) Available: <http://www.bolero.net> (Bolero Rulebook).

of providing users with access to the Core Message Platform and the Title Registry, wherein the users can exchange messages and transfer ownership with each other. The messages exchanged via the Core Message Platform are equipped with digital signatures,³¹⁶ which will guarantee the authenticity of all messages and enable the messages to be traced back to the sender.

The most notable features of the Bolero are not the intricate corporate structure but the regulatory structures built to realize its legal purpose. The Bolero has created its own regulations parallel to the International Conventions and domestic laws to skirt the legal uncertainty and used a democratic method to vest the regulations with higher legitimacy. The first issue is embodied in the transfer of rights through a B/L. As mentioned in chapter 1, the B/Ls represent the ownership of the goods and the rights under the contract of carriage. By endorsement or transfer of the physical possession of the tangible B/Ls, the attached rights are transferred as well.³¹⁷ This condition has been a problem for electronic B/Ls because the laws in most countries are still unsettled about the legal effect of transferring the electronic B/Ls.

The Bolero Rulebook deals with this problem by using novation. The rulebook stipulates that if the Bolero B/L is transferred to a new party, then a new contract of carriage based on the old one will exist between the new party and the carrier, and the new party shall have the same rights and obligations contained in the Bolero B/Ls.³¹⁸ The appendant problems of the legal effect of electronic documents and digital signature, as well as the admissibility as evidence before courts, are solved using no-challenge clauses. Article 2.2.2 of the Rulebook stipulates that “No User shall contest the validity of any transaction, statement or communication made by means of a Signed Message, or a portion drawn from a Signed Message, on the grounds that it was made in electronic form instead of by paper and/or signed or sealed.”³¹⁹ To prepare for the possibility that a court denies the effect of electronic evidence produced by the Bolero system, the Rulebook reads: “Each User agrees that a Signed Message or a portion drawn from a Signed Message will be admissible before any court or tribunal as evidence of the Message

316 Operating Procedures, Operational Rule 5.

317 See Chapter 1, Section A, II (1).

318 See the Bolero Rulebook, 3.5.1.(1) and (2).

319 See the Bolero Rulebook, 2.2.2(3).

or portion thereof.”³²⁰

The abovementioned regulations can serve as because these regulations do not conform to every national law regarding transfer of rights under carriage of goods contract and electronic evidence. For example, using novation as a means to transfer rights under carriage of goods contract maybe acceptable under English law but not under German law.³²¹ The electronic evidence provided via Bolero Core Message Platform may fulfill the requirements of the eIDAS Regulation but will be deemed to be invalid under Chinese law because digital verification service is not permitted by Chinese authorities.³²² Ultimately, the legal authority of the Bolero Rulebook derives from contract, not the statue.³²³ If the rules set out by the Bolero are presented before a court, then the rules may be invalidated according to national laws. Bolero is fully aware of this risk even before publishing the Rulebook. In 1997, Bolero entrusted the international law firm Allen & Overy to conduct a legal feasibility study concerning the use of electronic B/Ls. The 18 jurisdictions that were examined proved that the situation in some countries were uncertain, that is, “It is not possible to predict whether German courts, faced with Bolero, would be prepared to accept computer evidence and, in any event, it is believed that the highest standard of proof of the accuracy of the data and the authenticity of a document’s origin would be required.”³²⁴ The question is why does Bolero still published the Rulebook with terms that may be invalidated by state laws?

This doctoral thesis holds that the confidence behind this lies with the fact that the Rulebook has never been challenged by the users before courts. In terms of corporate organization, BAL is responsible for revising the Rulebook, which is owned by all users. This has clearly provided an unsatisfactory user, if any, with an alternative to variate the rules he does not like. At the same time, members of the rulemakers should respect the rules.

320 Ibid, 2.2.3(1).

321 See Eckardt, Tobias, The Bolero Bill of Lading under German and English Law, Sellier, European Law Publ., 2004, on pp. 114–140.

322 See Article 17 of the People‘s Republic of China on Electronic Signature.

323 Gaskell, Nicholas, Bills of Lading 2e: Law and Contracts, Routledge, 2017, on p. 26.

324 Legal Feasibility Study, at 56.

Figure 5: Structure of the Bolero