Australian and regional regulatory responses to the key challenges of consumer protection in electronic commerce (March 2008)

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4.2. Electronic contracting

• 4.2.1. The UN Convention on Electronic Contracting
• 4.2.2. ASEAN

4.2.1. The UN Convention on Electronic Contracting

The United Nations Commission on International Trade Law (UNCITRAL) has finalised its Convention on electronic contracting following over three years of deliberations. The Convention has been formally titled the Convention on the use of electronic communications in international contracts. It is the first UN Convention addressing legal issues created by the digital environment.

The Convention seeks to enhance the legal certainty and commercial predictability of international electronic transactions by setting out a number of interpretive rules for the use of electronic communications in negotiating and forming contracts.

18 countries have now signed this UN Convention, including China, Korea, Philippines, Russia and Singapore.

The new Convention is likely to establish a default standard for electronic transactions. Even if a country does not ratify the Convention (once it is brought into force) it will still influence the terms of a transaction; particularly where the other contracting party is from a country that is a signatory to the Convention.

The Convention on electronic contracting also seeks to harmonise national law regarding how electronic contracts can be made. Harmonised domestic legislation will overcome the legal uncertainty in international business transactions where contracting parties are from different countries. A more certain legal environment will increase confidence in conducting electronic transactions, and in turn participation in e-commerce.

However, the complex provisions in the Convention on scope, exclusions, party autonomy and declarations may undo some of the good intentions of the Convention, and this paper raises concerns about the management of these exclusions and declarations in practice.

The Convention contains provisions enabling the two principles at the core of any electronic transactions legislation:

• Functional equivalence – paper documents and electronic transactions are treated equally by the law; and
• Technology neutrality – the law does not discriminate between different forms of technology.

Of these two principles it is the former that is of the greatest importance, allowing the legal requirements of paper-based documents such as writing and signature to be readily translated into electronic equivalents. The interpretative nature of functional equivalence provisions allows the general application of these rules without necessitating amendment of all laws containing provisions on writing, signature or other form requirements.

The Convention refrains from including too many substantive provisions as it was felt by UNCITRAL that these were best left to national legislators to address. In any case most substantive issues would also apply to paper-based trade.

4.2.2. ASEAN

The ASEAN E-Commerce Project has been assisting ASEAN meet targets set in the Roadmap for Integration of e-ASEAN Sector (the e-ASEAN Roadmap), The Roadmap is a comprehensive list of measures to be implemented by 2010 to realise the e-ASEAN vision.

The overall goal of the E-Commerce Project is to assist ASEAN to integrate into one market for goods, services and investment.

During the project, E-Commerce Project Guidelines have been developed that build on the common objectives and principles for e-commerce legal infrastructure. These Guidelines include prescriptive information on implementation steps, and a timeline. The Guidelines were developed by Galexia in collaboration with project participants and technical experts from ASEAN Member Countries. The Guidelines have been endorsed by the ASEAN E-Commerce and ICT Trade Facilitation Working Group.

The Guidelines cover numerous e-commerce issues, and electronic contracting is one priority issue in ASEAN. All Member Countries have enacted legislation or have draft legislation in place on electronic contracting.

When selecting a model for harmonisation, ASEAN Member Countries also wanted to ensure that their legal infrastructure would be compatible with international developments. The project guidelines for electronic contracting legislation are therefore based on the UN Convention on the Use of Electronic Communications in International Contracts 2005 (the ECC).

Whether or not a particular country signs the Convention, the text is likely to reflect minimum standards for most cross-border transactions. The text of the Convention will likely become the default standard for e-commerce law, and ASEAN Member Countries may wish to ensure that their own laws and practices are compatible with it. Becoming a party to the Convention would further support trust and certainty in cross-border contract formation and electronic transactions.

When ASEAN makes a consensus decision to take action – for example their decision to implement harmonised e-commerce laws – the next challenge is to implement this decision at the domestic level. In the area of e-commerce legal infrastructure, the diversity amongst Member Countries is most noticeable in regards to the different levels of development, as ASEAN includes both highly developed countries with mature e-commerce infrastructure (such as Singapore) and developing countries with only rudimentary e-commerce infrastructure (such as Laos).

However, a positive aspect of the E-Commerce Project is that it is having a direct impact on the development of domestic e-commerce legal infrastructure in ASEAN Member Countries - sooner than anticipated in the project design. This impact can be seen in the following table.

Table 1: E-Commerce Legislation in ASEAN Member Countries

Source: ASEAN E-Commerce Project, Internal project materials, ASEAN Secretariat and Galexia.

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