The Cape Town Convention’s International Registry: Decoding the Secrets of Success in Global Electronic Commerce

1. Oxford University University of Washington Cape Town Convention Project The Cape Town Convention’s International Registry:Decoding the Secrets of Success in Global Electronic Commerce Roksana Moore Soton

2. Decoding the International Registry’s Success • Introduction • Examples of older global e-commerce systems • Slow, painful process of building a global network • Cape Town Convention • Governance and technology design decisions • Success Factors • Concrete “Value Proposition” • Mandatory, Formal Regime • Collective Action Problems • Mature Technology • Organic Development • Responsive Governance • But is this a model that can be reproduced in other fields?

3. Introduction • Cape Town Convention based on central registry for security interests • Many examples of successful electronic commerce systems for reference • International Registry is uniquely “organic” • Law, technology & business factors all contribute to success • Compare and contrast with other systems to isolate specific success factors

4. Airline Reservation System • Adoption of jet aircraft triggered “paperwork crunch” in airline industry • Isolated islands of computerization inside airlines • Deregulation unleashed competition, airlines with CRS wanted to exploit leverage • National regulators intervened • Rise of Internet travel sites dis-intermediated travel agents • End-to-end electronic processes replace paper • Regulations abolished as competition among “global distribution systems” grows

5. Tested Telex to SWIFT • Banks were early adopters of information & communication technology • Telegraphs transmit instructions, but how to authenticate • Encryption systems based on paper code books, physical controls, separation of functions inside banks • Inefficient but reasonably secure • Bankers for global association to develop global communication network • Only messages, clearing and settlement by other means • SWIFT functions regulated by private law in each country • Service organization supports banks • Continuous innovation in information security and standards

6. Digital Signatures • Technological answer in search of a question • Business case for adoption weak, 1990s electronic signature laws did not create statutory mandate for adoption • US FDA requires signatures on all documentation related to testing of pharmaceuticals before marketing • SAFE BioPharma trade association developed to replace paper with electronic records • US FDA remains silent on compliance • Slow uptake by industry of standards-based solutions • Reinvent SAFE as something else? Cloud computing for electronic health records? • What happened to Identrust? BOLERO? Covisint?

7. Payment Cards • ATM cards permit consumers to access bank services after hours • Slow development and adoption of standards create global network • Credit cards permit consumers to access line of credit for any retail purchase • Slow replacement of paper-based clearing and settlement creates global network • Platform operator of two-sided market sets pricing policies for banks, merchants and consumers • National regulators now intervening to limit prices

8. International Registry I • Governance • CTC authorizes creation of International Registry • No international interest unless recorded in International Registry • CESAIR and AWG provide continuous feedback • Third party customer surveys/market discipline • Organization • 24/7 global access • Notice based registry, mere ministerial function • Registrar liable for negligence, but not responsible for content of documents filed

9. International Registry II • Technology • Classic Public Key Infrastructure • International Registry opens “accounts” for user entities • User entities store credentials on one computer • Loss of computer means new credentials must be issued • Experience since 2006 launch • Initial boom in activity, slow down during Global Financial Crisis, slow recovery • Continuous technological and service innovations in response to stakeholder feedback • Continuously rising customer satisfaction survey results, continuously falling liability insurance premiums

10. Success Factors • Concrete Value Proposition • Like CRS, SWIFT, card networks, unlike digital signatures • Mandatory formal public international law regime • Hard law simplifies technology and business models • Small number of manufacturers and airlines reduce collective action problems • Unlike CRS, SWIFT, card networks • PKI is mature technology that is cheap relative to cost of aircraft equipment • Organic development (“born digital”) • No business process reengineering/migration from paper required • Responsive governance • Transparent processes, active dialogue with stakeholders • Cost recovery, non-profit business model

11. Conclusion • International Registry is an extraordinarily successful global electronic commerce system • Success factors can be readily identified • But are very difficult to reproduce… • Interests in maritime equipment

12. J.K Winn, The Cape Town Convention’s International Registry: Decoding the Secrets of Success in Global Electronic Commerce • http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2118963