The International Trade and Forfaiting Association (ITFA) has established the Digital Document (dDOC) specifications, laying out the mechanisms and requirements for digital original documents to achieve regulatory compliance. These specifications make use of E-signatures, cryptography, and distributed ledger technology (DLT) to create digital documents that effectively replicate many legally necessitated properties of paper. 

By applying these specifications to digital documents that replicate negotiable instruments, such as bills of exchange or promissory notes, the ITFA has created a type of digital negotiable instrument (DNI) that is referred to as an electronic payment undertaking (ePU). 

This hub examines the steps that are needed to establish the certainty of these ePUs under English law. English law has been selected as a primary focal point due to its widespread influence around the world, with nearly 40% of the world’s legal systems being based on or inspired by the English system.

As English law stands today, such an instrument does not comply. This is due to the heavily criticized legal precedent that one cannot possess an intangible. This makes it impossible to deliver, which is done through the transfer of possession to another party, an inherently intangible ePU, a legal requirement for such an instrument under the Bill of Exchange of 1882 (BoE 1882). 

To overcome this obstacle, lawmakers could adopt the UNCITRAL Model Law on Electronic Transferable Records (MLETR) or similar eCommerce legislation that would establish digital documents under English law. Another solution would be to formally change the definition of what it means to deliver something under the BoE 1882, establishing certainty for intangible ePUs.

Both of these, however, are expected to be longer-term solutions. In the interim, it should be possible to create an electronic instrument that has the features of a negotiable instrument and that is an enforceable debt obligation but that is not a negotiable instrument for the purposes of the BoE 1882.  Utilizing such an instrument would alleviate the need to consider the transfer of possession under the BoE 1882.

The specifications outlined in this paper offer policymakers the opportunity to refer to a vendor-agnostic industry-wide framework when considering the parameters of change and the necessary governance to guide change.