Authored By: Mani Ranjkesh Faraji
Allameh Tabataba'i University
Introduction
According to an Iranian official E-commerce reporter, most businesses and vendors are using digital technologies for both advertising and sales.[1] Bills of lading, bills of exchange, and promissory notes serve as the infrastructure of commercial trade: they represent title to goods, evidence a debt, and function as substitutes for cash, allowing goods and payments to move without physical currency changing hands. A bill of lading also confers a right of possession over the goods it covers, making it central to shipping and international sale contracts. These documents all indicate control over property.
Electronic versions (e-bills of lading, electronic promissory notes, digital signatures) aim to replicate the same legal functions transferability, evidentiary value, and “possession” while cutting processing time and fraud risk. The main legal challenge has been replicating the possession/control function electronically, which frameworks like the UK’s ETDA 2023 address.
This article examines the legal status of electronic trade documents under Iranian law, identifies the limitations of the existing framework, considers relevant approaches from other legal systems, particularly the UNCITRAL Model Law on Electronic Transferable Records and the UK Electronic Trade Documents Act 2023, and proposes a possible framework for reform in Iran.
Electronic Documents
With the expansion of technology and the need for speed in transactions, electronic documents began replacing paper documents from the 1990s onward. In Iran, the Electronic Commerce Act laid the foundation for the formal recognition of these documents in order to guarantee the security and validity of digital transactions. Today, electronic documents play a key role in the legal system owing to their lower costs, transparency, and ease of tracking. The acceptance of these documents is a necessary step in keeping pace with global developments. Under the Electronic Commerce Act (enacted 2003), such documents carry legal validity equal to that of paper documents, provided that they satisfy the conditions laid down in the Act.
Within the Iranian legal system, electronic documents perform a number of functions. First, they may be relied upon as evidence before the courts: Article 12 of the Electronic Commerce Act expressly recognizes the evidentiary value of these documents. Second, they facilitate commercial relations and reduce transaction costs.
The electronic signature, as one of the important elements of electronic documents, is defined in Article 10 of the Electronic Commerce Act; to be recognized as valid, such a signature must satisfy conditions such as attributability to the signatory, the authenticity of the document, and the integrity of its content.
The principal challenges relating to electronic documents concern security, authentication, and social acceptance of such documents; nevertheless, their advantages — including speed, accuracy, and traceability — have caused the Iranian legal system to move toward wider acceptance of these documents.
Definition and Legal Basis:
Electronic commercial documents refers to all data messages that, provided the legal conditions are satisfied, possess legal validity equal to that of written documents. The most important legal bases for these documents in Iran are as follows
The Electronic Commerce Act (enacted 2003), in particular Articles 6 to 12, concerning the validity of data messages.
The Consumer Protection Act (enacted 2009), guaranteeing the security of online transactions.
The Electronic Signature Executive Regulation (enacted 2005), setting out the technical requirements for digital signatures.
2. Types of Electronic Commercial Documents
In Iran, these documents are divided into several categories:
(a) Electronic Payment Documents
Electronic cheque: the digital version of the traditional cheque, issued under the supervision of the Central Bank.
Payment cards: such as credit cards, digital wallets, and cryptocurrency.
(b) Identification and Authentication Documents
Digital signature: based on asymmetric encryption, valid under Article 10 of the Electronic Commerce Act.
Electronic certificates: issued by recognized authorities such as the Iranian Certification Authority (housed within the Ministry of Information and Communications Technology).
Comparative perspective:
The UNCITRAL Model Law on Electronic Transferable Records (MLETR):
The UNCITRAL Model Law on Electronic Transferable Records (MLETR), adopted in 2017, was designed to address a specific problem: rights associated with transferable commercial documents such as bills of exchange, promissory notes, and bills of lading are traditionally exercised through physical possession. However, when these documents take the form of digital data, the concept of physical possession no longer applies, because a digital file, unlike a sheet of paper, can be copied.
To address this issue, Article 10[2] of this Model Law establishes a general rule of functional equivalence[3]: an electronic document is recognized as legally equivalent to its corresponding paper document when a reliable method satisfies three conditions: first, it makes the document specifically identifiable; second, it maintains the ability to exercise control over the document throughout its lifecycle; and third, it guarantees the integrity of its content.
Article 11[4] of this Model Law goes a step further and directly addresses the issue of possession.[5] Under this article, where a country’s national law makes the exercise or proof of a right conditional upon possession of a document, this requirement is satisfied in the case of an electronic document when a reliable method establishes exclusive control over that document for a specific person and identifies that person as the holder of such control. In other words, within this framework, “control” is regarded as the functional equivalent of “possession,” rather than something distinct from it. Furthermore, under this same logic, the transfer of an electronic document from one person to another occurs through the transfer of this exclusive control, just as the transfer of a paper document is accomplished by physically handing it over to another person.
This is precisely why the condition of “exclusivity” of control is so significant: electronic control can be considered the true equivalent of physical possession only if the system in question can guarantee that, at any given moment, a single person holds that control; otherwise, the fundamental problem of the replicability of digital documents, which the MLETR was essentially designed to resolve, would persist.
In the Rentaequipos S.A.S. v. El Pomar S.A.S. case, a Colombian civil court interpreted Article 10&11 of the UNCITRAL MLETR to decide what actually means control over electronic records. In this case, the plaintiff (Rentaequipos S.A.S) sought recovery of money against the defendant. The lawsuit was based on screenshots of an electronic sales invoice which was shown in the RADIAN platform, a Colombian platform for registering invoices. The court’s main issue was whether screenshots are eligible under the UNCITRAL MLETR parameters. The court announced that registration in the RADIAN platform is a reliable solution to understand who really has control over records, although it’s not the only way. The award was clear and well-reasoned. The award indicated that screenshots are not eligible under MLETR article 10&11, and no reliable method was identified to verify their uniqueness, control, and integrity. In this case we can barely see that the concept of “control” regarding an electronic document must fulfill the same function as “possession” in the case of a paper document. Furthermore, the criterion for proving control is not a specific technology, but rather “trustworthiness.” This is embodied in the ETDA of the United Kingdom.
The United Kingdom:
The United Kingdom’s legal system took a major step toward the formal recognition of digital documents with the enactment of the Electronic Trade Documents Act 2023 (ETDA 2023). This Act, adopting a revolutionary approach, treats electronic documents as equivalent to paper documents as regards their legal effects, provided that four essential conditions are satisfied:
Content equivalence — preservation of all the information contained in the paper version.
The use of reliable systems, meeting stringent security requirements.
Exclusive control — the ability to manage and transfer the document resting solely with the authorized holder.
Identifiability of the holder — valid digital authentication.
Key innovations:
Removal of the requirement for the physical existence of the document: for the first time, electronic documents are recognized as ‘possessable’ without the need for printing.
Acceptance of new technologies: the use of blockchain and advanced digital signatures to guarantee the authenticity of the document.
Extension of legal effects: the transfer of an electronic document produces the same legal effects as the transfer of the physical document (such as the transfer of title to goods under a bill of lading).
While the United Kingdom has addressed this problem through the ETDA 2023, Iranian law has not yet adopted an equivalent solution. Several Iranian scholars have nonetheless proposed approaches to closing this gap.[6]
Before addressing that question, possession must first be defined under Iranian law. Possession is ‘a customary dominion and authority which a person exercises in exercising his right over property.’[7] However, the concept of possession is not altogether clear as regards negotiable and transferable commercial documents, since the special rights arising from these documents are conferred upon the holder on the basis of a mechanism under which the realization of possession requires that the paper document be under the person’s control.
For example, control over a paper bill of lading is an essential element in the realization of possession of it and in the recognition of the person in control of such a document as its holder.[8] Even following the amendment of the cheque-issuance legislation on the basis of the Sayad system, presentation of the physical body of the cheque remains necessary in order to claim the rights set out therein. This means that electronic commercial documents cannot be possessed and cannot be made to bear the same effects as are borne by their paper counterparts.
Reform consideration
To resolve this problem, several proposals have been put forward, among them the proposal to establish a settled rule governing the relationship between the right of possession and electronic documents[9]. Authors suggest two main solutions:
First, the approach based on laying down requirements for the creation of the electronic commercial document and equating the institution of ‘control’ over electronic commercial documents with the institution of ‘possession’ of paper commercial documents; and second, the approach of treating electronic commercial documents as possessable where they meet specified requirements.
Conclusion:
A comparative analysis of the experience of various countries in the field of electronic commercial documents shows that advanced legal systems have responded to the challenges of this field by means of two principal approaches: the approach of equating digital control with physical possession (such as UNCITRAL’s MLETR), and the approach of directly recognizing electronic documents (such as the UK’s ETDA). This experience indicates that successfully implementing electronic documents depends on adherence to three key principles: content integrity, the security of digital systems, and exclusive control. Studies show that countries such as the United Kingdom, by adopting new technologies such as blockchain, have taken a major step in the development of e-commerce. In contrast, more traditional legal systems face implementation challenges. For developing countries such as Iran, drawing on these experiences and considering local infrastructure can facilitate the path of digital transformation. Ultimately, international convergence in legal standards will be the key to the development of e-commerce in the digital era.
Reference(S):
Cases:
Rentaequipos S.A.S. v. El Pomar S.A.S. (Colombia)
Legislation:
Electronic Commerce Act 1382 (2003) (Iran).
Civil Code (Iran).
Cheque Issuance (Amendment) Act (Iran).
UNCITRAL Model Law on Electronic Transferable Records
Official Commentary on UNCITRAL MLETR
Electronic Trade Documents Act 2023 (England)
Secondary Sources:
Books:
Emami, Seyed Hassan, Civil Law, vol 1 (Eslamiyeh Publications 1391 [2012]).
Bana Niaseri, Mashallah, The Law of Documentary Credits (Commercial and Guarantee), vol 1 (1395 [2016]).
Katouzian, Nasser, Specific Contracts, vol 4 (1392 [2013]).
Articles:
Arbabi, Masoud and Hatamipour, Navid, ‘A Comparative Study of the Functions and Contractual Role of the Marine Bill of Lading in Iranian and English Law’ Legal Research Quarterly (1396 [2017]).
Elsan, Mostafa and Amini, Vahid, ‘A Comparative Study of the Replacement of the Paper Bill of Lading with the Electronic Marine Bill of Lading’ (1393 [2014]).
Hazeqi Aghdam, Mohammad Reza and Elsan, Mostafa, ‘A Comparative Study of the Legal Requirements of Electronic Commercial Documents’, Comparative Law Research Journal.
Adib, Ali Akbar, ‘Electronic Documents in Iranian Law, Private Law Research Journal (Ordibehesht 1394 [April/May 2015]).
Baharlouyi, Abdollah, ‘The Nature of Commercial Documents’ Ma’refat Journal (Tir 1400 [June/July 2021]).
[1] I.R.Iran E-commerce Business Union, Report of 2025, for more information: https://drive.google.com/file/d/1kvuJgfUm5YoouW1fmqHhSxOViLkzdjZr/view
[2] 1. Where the law requires a transferable document or instrument, that requirement is met by an electronic record if: (a) The electronic record contains the information that would be required to be contained in a transferable document or instrument; and (b) A reliable method is used: 10 UNCITRAL Model Law on Electronic Transferable Records (i) To identify that electronic record as the electronic transferable record; (ii) To render that electronic record capable of being subject to control from its creation until it ceases to have any effect or validity; and (iii) To retain the integrity of that electronic record. 2. The criterion for assessing integrity shall be whether information contained in the electronic transferable record, including any authorized change that arises from its creation until it ceases to have any effect or validity, has remained complete and unaltered apart from any change which arises in the normal course of communication, storage and display.
[3] UNCITRAL Model Law on Electronic Transferable Records (MLETR), Art.10 & Official Commentary on Art.10
[4] 1. Where the law requires or permits the possession of a transferable document or instrument, that requirement is met with respect to an electronic transferable record if a reliable method is used: (a) To establish exclusive control of that electronic transferable record by a person; and (b) To identify that person as the person in control. 2. Where the law requires or permits transfer of possession of a transferable document or instrument, that requirement is met with respect to an electronic transferable record through the transfer of control over the electronic transferable record.
[5] Official Commentary on Art.11
[6]Notably Dr Mohammad Reza Hazeqi Aghdam and colleagues, and Dr Mostafa Elsan.
[7]Nasser Katouzian (1390 [2011]) 196
[8]Masoud Arbabi and Navid Hatamipour, ‘A Comparative Study of the Functions and Contractual Role of the Marine Bill of Lading in Iranian and English Law’ Legal Research Quarterly (1396 [2017]) 131–132.
[9]Mohammad Reza Hazeqi Aghdam and Mostafa Elsan, ‘A Comparative Study of the Legal Requirements of Electronic Commercial Documents’ Comparative Law Research Journal (spring 1403 [2024]).
