Commentary on sections of the Act Section 3: Possession, indorsement and effect of electronic trade documents Interaction with the Scots law relating to the creation of security in the form of pledge over moveable property
Section 3(4) is intended to address the interaction between the Act and the Moveable Transactions (Scotland) Act 2023 (asp 3) (the "MT(S) Act"). The MT(S) Act reforms Scots law relating to the assignation of claims and to security over corporeal moveable property. In relation to security, the rules on possessory pledge for corporeal moveable property are updated and a new "statutory pledge", which will normally be created by registration, is introduced. A statutory pledge will be available for corporeal moveable property and certain incorporeal moveable property (initially intellectual property or an application for, or licence over, intellectual property, with power to the Scottish Ministers to add other categories of incorporeal moveable property).
	Negotiable instruments (such as bills of exchange) are excluded from the scope of the MT(S) Act. However, there remains some crossover between the Act and the MT(S) Act in that certain paper trade documents which fall within the scope of the Act (those which are non-negotiable instruments, including bills of lading) also fall within the scope of the MT(S) Act. The provisions of the MT(S) Act therefore apply to some of the trade documents that the Act is concerned with.
	In light of the policy intention behind the Act, which is to ensure that an electronic trade document is the same in law as the equivalent paper trade document, section 3(4) is intended to ensure that the MT(S) Act will have the same effect as regards an electronic trade document as it would have for the equivalent paper trade document, specifically in relation to the creation of pledges.
	Part 2 of the MT(S) Act allows for corporeal moveable property to be the subject of possessory and statutory pledges. However, it does not envisage the creation of possessory pledges in respect of incorporeal moveable property in any circumstances and, as noted above, statutory pledges can only be created in respect of certain incorporeal moveable property.
	"Pledge" of a bill of lading constitutes a pledge of the underlying goods, which are tangible/corporeal. No special provision is therefore required to allow for this under the MT(S) Act. However, it is at least theoretically possible to deliver a different type of paper trade document with the intention of creating a (possessory) pledge over the document itself, given its tangible/corporeal nature. It should therefore be equally possible to do this with an electronic trade document (or to create a statutory pledge in respect of it under the MT(S) Act) in order to ensure legal parity between electronic and paper trade documents. It is not clear that sections 3(1), 3(2) and 3(3) of the Act are sufficient to allow for the pledge of an electronic trade document itself under Scots law, as the MT(S) Act might be taken to override these provisions. Section 3(4) is included to address this possibility.
	It does so by providing that electronic trade documents should be treated as corporeal moveable property for the purposes of any Act of the Scottish Parliament relating to the creation of a security in the form of a pledge over moveable property.