Electronic Commerce
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This article is written by Ananya Garg, from Chanakya National Law University. This article analyzes the objectives fulfilled by Model Law on E-commerce. It gives a brief history of how MLEC came to be and discusses all the key provisions of the Model Law. Lastly it talks about the implementation of Model Laws with the help of various judicial interpretations.

Introduction

In today’s world, a large number of international trade transactions are carried out by electronic data interchange and other means of communication, commonly known as “electronic commerce”. It uses alternatives to paper-based methods of communication and storage of information. The United Nations Commission on International Trade Law (UNCITRAL), by the means of Model Law on Electronic Commerce (MLEC), sought to provide a set of internationally acceptable rules with an aim to remove legal obstacles and increase legal predictability for e-commerce. It has further improved the efficiency in international trade by providing equal treatment to paper based and electronic information, thus enabling the use of paperless communication.

The model law is not a comprehensive, code-like articulation of the rules for the electronic transactions. It does not intend to govern every aspect of electronic contracting. It adopts a limited framework approach and enables and facilitates e-commerce. It has adopted the following fundamental principles of the modern electronic-commerce law:

  • The principle of non-discrimination – It ensures that any document would not be denied legal validity, effect, and enforceability solely on the basis that it is in electronic form. 
  • The principle of technological neutrality – It mandates the adoption of such provisions which are neutral with respect to technology used. This aims at accommodating any future developments without any further legislative work.
  • The functional equivalence principle – It sets out the specific requirements that e-communication ought to meet in order to fulfill the same functions that certain notions ,in traditional paper based system, seek to achieve, for example, “writing”, “original”, “signed”, and “record”. 

All the states have given favourable consideration to the model law while enacting or revising their laws so that uniformity of the law applicable to the alternatives to the paper-based methods of communication is facilitated. This article deals with a brief history and key provisions of the Model Law of E-commerce to better understand the objectives of MLEC and how they are achieved. 

History

With the advent of globalization and rapid increase in digitization of work, a major change in the mode and method of communication between businesses was witnessed. This was the introduction of the electronic mode of communication and storage of information. UNCITRAL decided to prepare the Model law in response to such change, thus, giving the nations an internationally acceptable set of rules for the evaluation and modernization of their laws and practices in the field of commercial relationships involving the use of computerized mode of communication. It also helped in establishment of relevant legislation where none existed and promotion of harmonization and unification of international trade laws. Thus, the UNCITRAL Model Law of E-commerce was adopted by the United Nations Commission on International Trade Law in 1996.

Chain of events which led to the creation of the Model Law

In 1984, at its seventeenth session, the Commission considered a report of the Secretary-General which talked about the legal aspects of automated data processing. This report identified a number of legal issues related to the legal value of computer records and the requirement of written authentication, general conditions, liability, bills of lading, etc. A report of the working party on the facilitation of the international trade procedures suggested that the legal problems arising in this field were essentially those of international trade law. Since the Commission was the core legal body in the field of international trade law, it seemed appropriate for it to undertake necessary action. Thus, work on legal implications of automatic data processing to flow of international trade began.

In 1985, a report by the Secretariat noted that the legal obstacles to the use of computers in international trade arose out of the requirement that documents had to be signed or be in paper form. Following this report, the Commission adopted a recommendation expressing to review the legal requirements of written form of trade documents and transactions, handwritten signature and authentication requirements, written form of the documents being submitted to government, and the requirement of such provisions relating to written form of documents as a condition for enforceability, etc. 

Yet, little progress was made in removal of provisions in national legislation requiring the use of written documents and authentication. 

In 1988, the Commission proposed to examine the need to provide legal principles applicable to formation of international commercial contracts by electronic means.

After consideration of the reports “Preliminary study of legal issues related to the formation of contracts by electronic means” and “Electronic data interchange” and much deliberation, it was concluded that problems existed due to following of local laws by different parties which prevented uniformity in the legal perspective, functionality, as well as practices. Thus, the process of preparation of the Model Law came into being. 

The UNCITRAL Model Laws for E-commerce

The Model Law has been divided into two parts. The Part I relates to the general provisions relating to e-commerce, it legislates the three principles of non-discrimination, technological neutrality, and functional equivalence. Besides establishing uniformity in the laws regarding e-commerce and legal relevance for data communicated through electronic mode, MLEC also establishes rules for formation and validity of e-contracts, for data message attribution, for receipt acknowledgement and for determining receipt of data messages, etc. 

The Part II of the Model Law deals with specific provisions for e-commerce in certain areas.

Key Provisions

General Provisions

Article 2 of the Law provides six definitions, the most important one is of “Data message”. It is defined as information generated, sent, received, or stored by electronic, optical, or similar means.This definition has been attributed after taking into consideration the future technological developments as well, which is the reason for inclusion of the term similar means. This wide definition includes the notion of a record and even revocation and amendment. The sphere of application that Article 1 talks about, is for the information in the form of data messages, in the context of commercial activities. 

The Model Laws give the interpretational tools(Article 3) which call for a standard of international origin and uniformity in application of general principles of law. There can be variation in the communication of data messages by the agreement of the parties(Article 4).

Application of legal requirement to data messages

The principle of non-discrimination has been enforced by the means of Article 5 which specifies that the information communicated via electronic mode, i.e., in the form of data messages cannot be denied legal validity and effect. Information by the way of reference has also been given legal validity(Article 5 bis) and thus, the application of this law has been considerably widened. This is of utmost importance in the context of international law.

The nations required the documents to be in writing and validation was only given to the hand written signature as a form of authentication. By the means of provisions in Articles 6 & 7, the Model has done away with both of the above obstacles. Accessibility of data messages does not require the document to be in writing, and recognition of digital signature marks the approval of the full structure of the contract. This provision is termed relevant for every circumstance including a relevant agreement.

The notion of originality is defined in Article 8 which provides that data messages can fulfill the legal requirement of presentation and retention of information in its original form subject to the assurance of integrity and presentability of data messages. Presentability meaning the ability to display the information where required. Article 9 specifies that the data messages cannot be denied admissibility in the court of law solely on the basis that the information is in the form of a data message. Thus, evidentiary value has been granted to data messages. The requirement of retention of information is also met by retention of information in the form of data messages subject to the accessibility, accuracy and originality of format and identity of origin(Article 10). 

Communication of data messages

Offer and acceptance of offer, when communicated in the form of data messages, cannot be denied legal validity and enforceability solely on the grounds that they are in the form of data messages. Thus, the formation of a valid contract was made possible through the means of data messages.(Article 11)

Acknowledgement in the form of receipt of data messages has also been granted legal validity.(Article 12)

The data message is attributed to the originator if it is sent by him or by a person authorised by him(Article 13).

Article 14 provides that the receipt of the data message and its acknowledgement can also be agreed upon by the parties beforehand.

The transaction ensues when the information goes out of control of the sender. The place of dispatch is the place of business and the time is when the acceptance enters the system of the addressee(Article 15).

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Specific provisions

Articles 16 & 17 talk about carriage of goods and transport documents. They enforce the ability to achieve carriage of goods by the means of data messages and fulfillment of the requirement of transport documents through the same as well. It is imperative for the objective of furtherance of international trade. This part has been complemented by other legislative texts such as the Rotterdam Rules and it may be the object of additional work of UNCITRAL in the future.

Implementation & Judicial Interpretations across the globe

The Model Law of Electronic Commerce was adopted to facilitate the international trade through electronic modes of communication. It aimed at encouraging national legislators to adopt a set of internationally acceptable rules regulating e-commerce. Thus, Model Law is accompanied with a guide which provides background and explanatory information to assist the states in preparing the necessary legislative provisions. 

Different states enacted laws based on the principles of this Model Law. Thus, the courts have interpreted the provisions of their domestic laws according to the Model Law. 

Khoury v. Tomlinson is a landmark case decided by the Texas Court of Appeal. The facts of this case are such that an agreement was entered via e-mail which was not signed but only the name of the originator appeared in the ‘from’ section. Referring to the principles in Article 7 of the Model Law, the court found sufficient evidence that the name in the ‘from’ section establishes the identity of the sender. 

Chwee Kin Keong and others is a case dealt with by the Singapore High Court. There was the issue of unilateral mistake in this case as the wrong price was quoted on the seller’s website for a product. The server of the seller automatically sent a confirmation mail when the buyers placed an order. All the elements of the contract were established but with a mistake which eliminated consensus ad idem. Referring to the Singapore Electronic Transactions Act based on Model Laws, the court found that human errors, system errors, and transmission errors could vitiate a contract.

Martha Helena Pilonieta v Gabriel Humberto Pulido Casas is a case dealt with by the Supreme Court of Justice of Columbia. The court found that the electronic message by a spouse was not relevant on the ground of evidential thresholds.

Thus, the Model Laws became the basis for a number of legislative texts enacted by various governments across the globe and it gave a uniformity to the laws concerning the information communicated by the electronic mode of communication. 

Conclusion

Citing the ambiguity and heterogeneity in law regarding the contracts formed via electronic modes of communication and the threats it posed to the international trade, the United Nations Commission on International Trade Law took the initiative to draft a set of internationally acceptable rules regarding legal validity and enforceability of the information communicated via e-modes. This Model Law has been globally accepted and has been successful in enforcing the principles of non-discrimination, technological neutrality, and functional equivalence regarding the data messages. This has helped in furtherance of international trade and helped homogenising various legal perspectives regarding this subject. MLEC has achieved the following:

  • Validation and recognition of contracts formed through electronic means,
  • Validating originality and retention of documents in electronic form,
  • Provided acceptability to electronic signatures for legal and commercial purposes,
  • Support to the admission of computer evidence in courts and arbitration proceedings;

This Model Law has immensely facilitated the transition of the trade from traditional paper based contracts to e-commerce. The need and acceptance of such legislative text has clearly reflected the importance of laws based on homogenous principles for international trade. 


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