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

Global Electronic Commerce

Roksana MooreSoton

Oxford UniversityUniversity of Washington

Cape Town Convention Project

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?

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

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

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

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?

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

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

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

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

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

• 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