International Regulation of Electronic Commerce

The emergence of new technologies raises issues about the extent to which a balance has to be maintained between government regulation to protect the consumer and self-regulation. In 1997 the Clinton administration outlined a framework for global e-commerce and un­derlined the need for regulation and negotiation of international agreements on electronic commerce. It states:

In some areas, government agreements may prove necessary to facilitate elec­tronic commerce and protect consumers—Where government intervention is necessary to facilitate electronic commerce, its goal should be to ensure compe­tition, protect intellectual property and privacy, prevent fraud, foster transparency, support commercial transactions and facilitate dispute resolution (principle 3). (White House, 1997)

The framework also emphasizes the need to avoid undue restrictions, recognize the unique qualities of the Internet, and support and enforce a predictable, minimalist, consistent, and simple legal environment for commerce on a global basis. The United Nations Commission on International Trade Law (UNCITRAL) adopted a model law on electronic commerce in 1996 that is acceptable to states with different economic and social systems. The model has been adopted by several countries and influenced the development of uniform e-commerce laws in the United States and Canada.

The UNCITRAL model law is based on the following basic principles:

• Functional equivalence: The model law attempts to extend the same level of recogni­tion to electronic documents as to corresponding paper documents with respect to concepts such as “writing,” “signature,” or “originals.” In cases where the law requires information to be in writing, that requirement is satisfied by an electronic message if the information is accessible to be used for subsequent reference.

In order to ensure that a message that is required to be authenticated is not denied legal recognition because it was not done in a manner peculiar to paper documents, the model law establishes general conditions under which electronic documents will be considered authentic, credible, and enforceable if they require a signature. To be valid, electronic documents must identify the originator and confirm that the originator ap­proved the content of the message.

Certain international trade documents such as insurance certificates and quality or in­spection certificates are usually accepted only if they are “original” in order to reduce instances of alteration that would be difficult to detect. The model law sets minimum requirements for acceptance of electronic documents if (a) there exists a reliable assurance as to the integrity of the information from the time when it was first generated in its final form and (b) informa­tion is being capable of being displayed to the person to whom it is to be presented.

• Technology neutrality: The rules should provide equal treatment to paper-based and electronic transactions. They should neither require nor assume a particular technol­ogy. It also extends similar treatment to different electronic transactions such as telex, e-mail, or Electronic Data Interchange.
• Party autonomy: The model law recognizes the primacy of party agreement on whether and how to use e-commerce techniques. It also allows the parties to determine the se­curity level appropriate for their transactions.

Part 2 of the model law deals with specific uses of e-commerce such as EDI messages as substitutes for transport documents. The transfer of any right or obligation that is to be con­veyed by paper documents can be equally conveyed by electronic means, provided a reliable method is used to transfer them.

Other international initiatives on e-commerce include:

• UNCITRAL Model Law on Electronic Signatures (2001): This model law establishes cri­teria for technical reliability to establish an equivalence between electronic and hand­written signatures as well as basic rules of conduct that may serve as guidelines for assessing duties and liabilities for the signatory, the relying party, and trusted third parties intervening in the signature process.
• United Nations Convention on the Use of Electronic Communications in International Contracts (2005): The Electronic Communications Convention aims at facilitating the use of electronic communications in international trade by ensuring that contracts con­cluded and other communications exchanged electronically are as valid and enforceable as their traditional paper-based equivalents. The convention applies to all electronic communications exchanged between parties whose places of business are in different states when at least one party has its place of business in a contracting state (Art. 1). It may also apply by virtue of the parties’ choice. Contracts concluded for personal, family, or household purposes, such as those relating to family law and the law of succession, as well as certain financial transactions, negotiable instruments, and documents of title, are excluded from the convention’s scope of application (Carr, 2010).
• International Chamber of Commerce (ICC) Guidelines on E-Commerce (1997 and 2001): The ICC sets out best practices for adoption by businesses in order to promote trust in e-commerce by focusing on issues such as authentication, certification, public key certificates, and record keeping (Carr, 2010).

Regional initiatives on e-commerce include:

• EU directive on e-commerce (2000): The directive sets up an internal market framework for electronic commerce, which provides legal certainty for business and consumers alike. It establishes harmonized rules on issues such as transparency and information requirements for online service providers, commercial communications, electronic contracts, and limitations of liability of intermediary service providers (Carr, 2010).
• EUdirective on e-signatures (1999): This directive establishes the legal framework at the European level for electronic signatures and certification services. The aim is to make electronic signatures easier to use and help them become legally recognized among the member states.

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.