E-Commerce and Online Dispute Resolution

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E-Commerce and Online

Dispute Resolution

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A mio nonno Pietro, la persona che più di tutti avrebbe voluto vedermi raggiungere questo traguardo.

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Index

 Abstract  Introduction

1. Chapter 1: E-commerce 1.1 Brief History of the Internet 1.2 The Origins of E-Commerce

1.3 Definition and types of Electronic Commercial

Transactions

1.4 Electronic Commerce in the European Union 1.5 Technical and legal barriers to E-commerce 1.6 The Importance of Trust in E-commerce 1.7 E-Commerce Regulatory Framework within

International Organizations and the EU

1.7.1 The Regulatory Framework at UN level 1.7.2 The Regulatory Framework at EU level 1.8 E-Commerce Regulatory Framework outside of

EU

1.8.1 E-Commerce in the United States

1.8.2 E-Commerce in Asia (Singapore and China) 1.8.3 E-Commerce in Australia

2. Chapter 2: ADR

2.1 ADR Definition and Types 2.2 Mediation

2.2.1 The European Mediation Directive

2008/52/EC

2.2.2 Mediation in Italy. The Implementation

of Directive 2008/52/EC and the Introduction of Mandatory Mediation

2.2.3 Mediation in Ireland

2.3 Advantages of ADR over traditional Litigation 2.4 Obstacles to ADR

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2.6 The ADR Directive - 2013/11/UE

3. Chapter 3: ODR

3.1 The origins and evolution of ODR 3.2 ODR as "Online ADR"

3.3 Definitions of ODR

3.4 Technology as a fourth party

3.5 Katsh and Rifkin’s ‘Convenience, Trust and

Expertise-triangle’

3.6 ODR & Trust

3.7 eBay and PayPal Resolution Centres

3.8 The importance of Language in ODR - The Face

Theory

3.9 Regulatory Framework 3.10 The ODR Platform

3.11 Enforcement of ODR Decisions

 Conclusions  Bibliography

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Indice

 Abstract  Introduzione

1. Capitolo 1: E-commerce 1.1 Breve storia di Internet 1.2 Le origini dell’ E-Commerce

1.3 Definizione e tipologie di transazioni elettroniche 1.4 L’E-Commerce all’interno dell’Unione Europea 1.5 E-commerce: Le barrier tecniche e legali

1.6 L’importanza della fiducia nell’E-commerce 1.7 La disciplina dell’E-Commerce all’interno delle

Organizzazioni Internazionali e nell’Unione Europea

1.7.1 La Regolamentazione dell’E-Commerce

all’interno delle Nazioni Unite

1.7.2 La Regolamentazione dell’E-commerce a

livello Europeo

1.8 La Regolamentazione dell’E-Commerce al di

fuori dell’Unione Europea

1.8.1 L’ E-Commerce negli Stati Uniti 1.8.2 L’ E-commerce in Asia

1.8.3 L’ E-Commerce in Australia

2. Capitolo 2: I meccanismi di Risoluzione Alternativa delle Controversie

2.1 ADR: Definizione e Tipologie 2.2 Mediazione

2.2.1 La Direttiva 2008/52/CE del Parlamento

Europeo e del Consiglio relativa a determinati aspetti della Mediazione in materia civile e commerciale

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2.2.2 L’attuazione in Italia della Direttiva

2008/52/CE e l’introduzione della Mediazione Obbligatoria

2.2.3. La Disciplina della Mediazione in

Irlanda

2.3 I vantaggi della Risoluzione Alternativa delle

Controversie rispetto al Contenzioso Tradizionale

2.4 Gli ostacoli allo sviluppo dell’ADR 2.5 La Disciplia dell’ADR in Europa

2.6 La Direttiva 2013/11/UE del Parlamento Europeo

e del Consiglio sulla Risoluzione Alternativa delle Controversie dei Consumatori

3. Capitolo 3: La Risoluzione delle Controversie Online

3.1 ODR: Origini ed Evoluzione

3.2 ODR: La Risoluzione Alternativa delle

Controversie “Online”

3.3 ODR: Definizioni e significato

3.4 Il ruolo della tecnologia come “quarta parte” 3.5 ‘Convenienza, Fiducia ed Esperienza’ – Il

Triangolo di Katsh e Rifkin

3.6 Il ruolo della Fiducia all’interno dell’ODR

3.7 Primi Esempi di ODR: Il centro risoluzione eBay

e PayPal

3.8 L’importanza del linguaggio nella Risoluzione

delle Controversie Online – La teoria della Percezione

3.9 Disciplina dell’ODR

3.10 La Piattaforma Europea per la Risoluzione

delle Controversie Online

3.11 L’esecuzione forzata della Proposta Transattiva

 Conclusioni  Bibliografia

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Abstract

Il presente lavoro, dedicato al fenomeno dell’Online Dispute Resolution (ODR), ha come obiettivo quello di ripercorrere l’evoluzione di questo strumento, analizzarne la situazione attuale, ed immaginarne possibili evoluzioni, nell’auspicio che il Cyberspazio possa divenire per gli operatori del diritto uno spazio privilegiato (o addirittura l’unico spazio), per la risoluzione delle controversie che in esso possono generarsi. Dall’analisi effettuata è emerso come i tradizionali strumenti di composizione giudiziaria delle controversie si dimostrino spesso inadeguati in relazione alla risoluzione di dispute generatesi nello spazio del commercio elettronico. Queste ultime, infatti, coinvolgono, il più delle volte, piccoli importi e necessitano pertanto di procedure rapide, poco costose, e che siano in grado di offrire soluzioni anche innovative. Le controversie generate online, possono altresì coinvolgere soggetti appartenenti a stati diversi e sottoposti pertanto a diverse giurisdizioni.

In relazione a casi simili, la difficoltà risiede nell’individuare chi abbia la competenza e la giurisdizione nel caso concreto. I tradizionali principi del diritto internazionale privato e processuale, che forniscono soluzione ai problemi di conflitto tra leggi di ordinamenti diversi e tra giurisdizioni, storicamente elaborati pensando ad un determinato spazio fisico e territoriale, si dimostrano insufficienti se applicati ad atti e comportamenti appartenenti ad uno spazio virtuale. Lo scopo di questo elaborato è appunto quello di dimostrare come invece la composizione delle controversie per vie elettroniche adeguate si presenti come la soluzione più naturale nell’ambito del commercio elettronico, consentendo di superare problemi connessi alla non-territorialità e delocalizzazione, ed offrendo, in ultima analisi, una più

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rapida ed efficace alternativa ai tradizionali metodi di composizione giudiziaria delle controversie.

Verrà infine analizzata la regolamentazione dell’ODR vigente in ambito comunitario, con particolare riguardo all’introduzione della Piattaforma Europea per la Risoluzione delle Controversie Online, descrivendone il suo funzionamento, ed esaminandone le criticità, ed i possibili sviluppi.

Introduction

“It is common to hear the argument that technology isolates us and drives us apart. But an equally, if not more, persuasive argument is that technology brings us together in different

ways.”1

One thing technology can do is shorten the distances between people. Technology allows us not only to communicate with people from other countries, but also to establish business relationships with them.

With Internet becoming every day more accessible, many companies have gradually moved their business from offline to online, and have therefore largely increased their ability of reaching end users from everywhere in the world.

“The merger of the physical world with the virtual world has brought with it a broad range of novel, complex and valuable

transactions and relationships.”2

1 Rainey, D., (2014), ‘Third-Party Ethics in the Age of the Fourth Party’, International

Journal of Online Dispute Resolution, 2014 (1) 1, pp. 37-56.

2 Rabinovich-Einy, O. & Katsh E., (2014), ‘Digital Justice. Reshaping Boundaries in

an Online Dispute Resolution Environment’, International Journal of Online Dispute Resolution, 2014 (1) 1, pp. 5-36.

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New types of disputes have also began to appear, including disputes with parties situated miles away one from the other, engaging in conflicts created online, with no reasonable ability to pursue resolution in traditional ADR or legal channels.

“Digital technology is transforming the landscape of dispute resolution: it is generating an ever growing number of disputes and at the same time is challenging the effectiveness

and reach of traditional dispute resolution avenues.”3

The analysis that follows intends to demonstrate that this new landscape has also brought with it a need for new dispute resolution and prevention processes, and that traditional distress mechanisms such as litigation, and traditional alternative dispute resolution systems most of the times are inadequate to solve online conflicts.

Online Disputes are, in fact, mostly related to low-value amounts, and therefore a quick and cost effective solution is essential.

Also, ODR mechanisms have proven to be the most adequate solution to online cross-border digital disputes, which often raise questions as to which court should hear the case, or whose law will apply. ODR solutions, instead, consent to circumvent the applicable jurisdiction impasse, and allow parties from anywhere in the world to participate to the procedure, from the comfort of their homes, and in their own time, with as simple as an Internet connection and a personal computer.

While technology has been considered by many a “disruptive

force in the field”, it also holds a promise for “an improved dispute resolution landscape, one that is based on fewer physical, conceptual, psychological and professional

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boundaries, while enjoying a higher degree of transparency,

participation and change.”4

It is, in fact, possible, to use many of the same forces that contribute to online disputes (network’s rapid communication and information processing capabilities) to resolve those same conflicts.

ODR tools are designed to handle high volume of disputes with as little human intervention as possible. Taking advantage of the Internet, they facilitate the communication between parties belonging to different countries, speaking different languages, and subject to different legislations. Their streamlined process, together with the implementation of technology, consent quicker and cheaper resolution than traditional procedures, therefore making ODR the most suitable distress mechanism for online disputes.

Conscious of the growing importance of ADR and ODR, the European Union has decided to intervene through a two-pronged approach to facilitating consumer access to ADR bodies: a Directive regulating the use of ADR in general, and an ODR Regulation, to mandate the institution of an ODR Platform.

The following dissertation will deepen into the evolution of the European Legislation in the field of ADR and ODR, with particular attention to the Italian and the Irish experience through the years, and will describe the functioning of the recently launched European ODR Platform.

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Chapter 1 E-COMMERCE

1.1 Brief History of the Internet

The Internet is “an open network which permits communications between parties without the need for both to subscribe to the same closed network"5.

Although today the internet penetrates our lives to an unprecedented extent, and we find it difficult to imagine life without it, Internet has been part of our reality for only less than three decades.

Established in the early 1970s, as the first trans-Atlantic computer networks were linked6, Internet was, in fact, initially mainly used by the military governmental and academic sectors7.

It is believed8 that the origins of the Internet can be linked to the American Defence Advanced Research Projects Agency (DARPA) that, during the Cold War, was committed to finding a way to re-establish their supremacy over Russia, that had in the meanwhile launched the first artificial satellite: the so called Sputnik.

The first recorded description of the social interactions that could be enabled through networking was a series of memos

5 Reed, C. and Angel, J. (2007), Electronic Commerce, ‘Computer Law: The Law

and Regulation of Information Technology’, 6th_{ed. (Oxford: Oxford University}

Press), p.198.

6 Terrett, A. and Monaghan, I. (2000), ‘The Internet – An Introduction for Lawyers’,

in L. Edwards and C. Waelde (eds), Law and the Internet: A framework for

Electronic Commerce, end ed. (Oxford: Hart Publishing), p.2.

7 Lloyd, I.J. (2004), Information Technology Law, 4th ed. (Oxford: Oxford

University Press), p.40.

8 Boscarol M., ‘Storia di Internet e del commercio elettronico’, available online at:

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written by J.C.R. Licklider9 of MIT (Massachusetts Institute of Technology) in August 1962 discussing his "Galactic Network" concept. He envisioned a globally interconnected set of computers through which everyone could quickly access data and programs from any site. In spirit, the concept was very much like the Internet of today.

Licklider has been called "Computing's Johnny Appleseed", for planting the seeds of computing in the digital age; Robert Taylor, founder of Xerox PARC's Computer Science Laboratory and Digital Equipment Corporation's Systems Research Centre, noted that "most of the significant advances

in computer technology—including the work that my group did at Xerox PARC—were simply extrapolations of Lick's vision. They were not really new visions of their own. So he

was really the father of it all".10

The diffusion of this phenomenon that can be considered still “in fieri”, is however to be connected with the Advanced Research Project Agency (ARPA), which between 1960 and 1970 was working on the realization of a calculation system, with the aim to guarantee the communication in case of nuclear attack.

Following the ideas of Leonard Kleinrock, who had published the first paper on packet switching theory in July 1961, Lawrence G. Roberts connected the TX-2 computer in Mass to the Q-32 in California, with a low speed dial-up telephone line, creating the first wide-area computer network ever built.

In 1967, Roberts published his plan for the ARPANET, based on the implementation of the so-called Interface Message Processors (IMP’s).

9 Licklider was the first head of the computer research program at DARPA, starting

in October 1962.

10 Waldrop, M. Mitchell (2001), ‘The Dream Machine: J. C. R. Licklider and the

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The development of the IMPs was assigned to the BBN (Bolt Beranek and Newman) a small company based in Boston, who in 1969 installed the first IMP at UCLA11 and Stanford Universities.

Computers were added quickly to the ARPANET during the following years, and work proceeded on concluding a functionally complete Host-to-Host protocol and other network software. In December 1970 the Network Working Group (NWG), working under S. Crocker, finished the initial ARPANET Host-to-Host protocol, called the Network Control Protocol (NCP). As the ARPANET sites completed implementing NCP during the period 1971-1972, the network users finally could begin to develop applications.

In 1971, Ray Tomlison, a BBN computer engineer, implemented the first email program in the history, a system able to send mail between users on different hosts connected to ARPANET. Previously, mail could be sent only to others who used the same computer. Tomlison, came up with the idea of using the @ sign to separate the user name from the name of their machine, a scheme which has been used in email addresses ever since.12

The Internet matured in the 70's as a result of the TCP/IP architecture that came out of the joint work of Bob Kahn at ARPA, Vint Cerf at Stanford and others throughout the 70's. Their work was published in the IEEE Transactions on Communications Technology in 1974.

The TCP/IP System was later adopted by the Defence Department in 1980 replacing the earlier Network Control Protocol (NCP) and then universally adopted by 1983.

11 University of California, Los Angeles.

12 The Internet Hall of Fame in its account of his work commented: "Tomlinson's

email program brought about a complete revolution, fundamentally changing the way people communicate". Tomlinson is internationally known and credited as the inventor of the email.

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Kahn and Cerf’s protocol transformed the Internet into a worldwide network. Throughout the 1980s, researchers and scientists used it to send files and data from one computer to another.

In 1991 the Internet changed again. That year, a computer programmer in Switzerland named Tim Berners-Lee introduced the World Wide Web: an Internet that was not simply a way to send files from one place to another but was itself a “web” of information that anyone on the Internet could retrieve. Berners-Lee created the Internet that we know today.

In 1992, a group of students and researchers at the University of Illinois developed a sophisticated browser that they called Mosaic (it later became Netscape.) Mosaic offered a user-friendly way to search the Web: it allowed users to see words and pictures on the same page for the first time and to navigate using scrollbars and clickable links.

1.2 The Origins of E-Commerce

After the invention of the World Wide Web, the online population began to grow, as it became easier to acquire Internet access and it was discovered that it was relatively easy to communicate and to obtain large quantities of information online.

Internet became an instrument of paramount importance in the area of communication, as it allowed to communicate and interchange information, overcoming great distances, with great speed, and often at a low cost.

“The reason why it surpassed newspapers, radio, television and other communication media is simple: it allows

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participation. It turns passive consumers into active players

and contributors”13

It soon became clear that the Web could be used for commercial purposes. As a result, companies of all kinds hurried to set up websites of their own, and e-commerce entrepreneurs began to use the Internet to sell goods directly to customers.

Within a few years, Commerce had increasingly moved from traditional offline to online platforms.

It was the beginning of E-Commerce.

Very simply, E-Commerce allows users to buy and sell goods or services over the Internet. The parties of these transactions maintain contact through electronic means rather than traditional ways of communication.

E-Commerce was designed to create a more efficient business environment. It is significant to business, because of its speed and convenience, and the efficiency of the electronic world.

It means for many businesses, even for the smaller ones, possibility to exponentially increase their capacity to reach possible customers, from everywhere in the world. It creates revenue streams, saves costs, and enables business to manage their inventory.

“Communication tools such as texting, electronic mail, message posting, electronic discussion groups, web-based conferencing, and videoconferencing, have made it possible for people to virtually communicate asynchronously and synchronously from almost anywhere. The utilization of these new means of telecommunication, information processing and data storage have facilitated online interactions and

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commerce and m-commerce transactions that take a mere

fraction of a second to be completed.”14

1.3 Definition and Types of Electronic Commercial Transactions

Electronic Commercial Transactions could be defined as

“any form of business transactions in which the parties

interact electronically rather than by physical exchanges”.15

There are two main categories of activities within the Electronic Commerce: one is “the electronic ordering of

tangible goods, delivered physically, using traditional

channels such as postal services or commercial couriers”, and the other is “direct e-commerce including the online ordering of intangible goods and services such as computer software, entertainment content, or information services on a global scale”16

As with traditional commerce, we can identify four types of electronic commercial transactions: Business to Business (B2B) transactions, Business to Consumers (B2C) transactions, Consumer to Business transactions (C2B) and Consumer to Consumer transactions (C2C).

 B2B transactions provide goods or services to other businesses. They can be completed by performance against payment, or performance against performance. One example is manufacturers selling to distributors and wholesalers selling to retailers.

14 Wahab, M. S. A., Katsh, E., and Rainey, D., (2012), Introduction to ‘Online

Dispute Resolution: Theory and Practice. A Treatise on Technology and Dispute Resolution’, Eleven International Publishing.

15 Wang, F. F., (2014),’ Law of Electronic Commercial Transactions’, Routledge

ed., p. 3.

16 ‘A European Initiative in Electronic Commerce’, (1997), COM (97) 157, Chapter

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 B2C consists of businesses selling to the general public through shopping cart software, without needing any human interaction. This is what most people think of when they hear "e-commerce." An example of this would be Amazon or eBay.

 In C2B e-commerce, consumers post a project with a set budget online, and companies bid on the project. The consumer reviews the bids and selects the company. Elance is an example of this.

 C2C transactions take place within online classified ads, forums or marketplaces where individuals can buy and sell their goods. Examples of this include Craigslist, eBay and Etsy.

1.4 Electronic Commerce in the European Union

“Electronic commerce is about doing business

electronically.”17 It is based on the electronic processing and

transmission of data, including text, sound and video, and it involves both products (e.g. consumer goods, specialised medical equipment) and services (e.g. information services, financial and legal services); traditional activities (e.g. healthcare, education) and new activities (e.g. virtual malls).18

With the commercialization of the Internet, cyberspace has become a global e-marketplace, where millions of transnational transactions are completed every minute.

1 (5), accessible online at: https://cordis.europa.eu/pub/esprit/docs/ecomcom.pdf.

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The European Union did not take long in acknowledging the range of opportunities involved in bringing commerce online. At the beginning of 2000, the EU Directive on Electronic Commerce (EU Directive 2000/31/EC)19 recognised the importance of encouraging the development of the Information Society Services in order to eliminating the barriers that divide the European Peoples.20

"The development of electronic commerce within the

information society offers significant employment

opportunities in the Community, particularly in small and medium-sized enterprises, and will stimulate economic growth and investment in innovation by European companies, and can also enhance the competitiveness of European industry, provided that everyone has access to the Internet."21

The Directive mainly intended to answer most of the questions arose from the development of this new phenomenon that was in the meanwhile becoming more and more common.

The wide penetration of the Internet, brought with it many real problems. If a dispute arises, what courts will have jurisdiction? Will consumer be able to avail themselves of their local protective regime? How can online payment be processed?

The Directive was designed to address those issues, but also to provide the ground for competing with the United States in encouraging the use of the Internet in commerce.

1919 The content of Directive 2000/31/EC will be treated in more detail in Chapter

1.7.2.

20 Directive 2000/31/EC of the European Parliament and of the Council of 8 June

2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce'), Official Journal L 178 , 17/07/2000 P. 0001 – 001, Whereas 1.

2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce'), Official Journal L 178 , 17/07/2000 P. 0001 – 0016, Whereas 2.

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It created the basic legal framework for online services, including electronic commerce in the Internal Market, with the purpose to remove obstacles to cross-border online services in the European Union and provide legal certainty to business and citizens in cross-border online transactions. The Directive established harmonised rules on issues such as the transparency and information requirements for online service providers, commercial communications, electronic contracts and limitations of liability of intermediary service providers. It also enhanced administrative cooperation between the Member States and the role of self-regulation. Finally, it set out basic requirements on mandatory consumer information, steps to follow in online contracting and rules on commercial communications (rules on online advertisement and unsolicited commercial communications).22

1.5 Technical and legal barriers to E-commerce

However, eleven years after the EU Directive on E-Commerce was published, the EU Commission admitted that the results achieved so far, were not as positive as it was expected. "The cross-border potential of distance selling,

which should be one of the main tangible results of the internal market, is not fully exploited. Compared with the significant growth of domestic distance sales over the last few years, the growth in cross-border distance sales has been limited. This discrepancy is particularly significant for

22 The content of Directive 2000/31/EC will be treated in more detail in Chapter

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Internet sales for which the potential for further growth is high."23

What are then the barriers that may impede a full development of the Electronic Commerce?

Everyday new technologies are developed and applied in e-commerce industries in the developed countries while some developing countries like China are still emerging. The technologies used in some of the developing countries may lag behind and be incompatible with international standards. This raises conflicting issues in relation for instance to security and, therefore, the validity of electronic transactions, especially when involving cross-border deals. This can be affected by slow access speed, insufficient language information on the web, an inability to protect personal privacy or poor internet service providers.

Technical barriers become challenges to lawmakers, because it is crucial to adjust e-commerce regulations to the development of market and technology.

Lawmakers or law scholars who are non-computer science experts, may not be familiar with the changing e-transaction technical environment, and will find it difficult to get genuine insight into the needs of this new and rapidly expanding industry.

Numerous and complex are also the legal issues. It is in fact frequently difficult to apply traditional contract laws to the online environment, not least because there are no jurisdictional boundaries in cyberspace. Also, there are numerous dispute resolution issues that are specific to the online environment.

23 DIRECTIVE 2011/83/EU of the European Parliament and of the Council of 25

October 2011 on consumer rights, Official Journal L.304/64, 22/11/2011, Whereas 5.

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First questions to be answered when talking about Online Commercial Transactions are: Which Law will apply? Whose court will hear the case?

E-Commerce, in fact, takes place in the cyberspace.

“Cyberspace is not a place; it is many places.” […] “If there is any place where nature has no rule, it is in cyberspace. If

there is any place that is constructed, cyberspace is it”24

The delocalization, or in other words, the impossibility to connect the e-commerce transaction to a specific physical place, represents the main issue faced by law experts when trying to identify the best dispute resolution system to apply to the case.

The technological revolution brought by the Internet has altered the scale according to which human affairs are being conducted and has fostered a new medium that has impacted well-established legal conceptions, especially with respect to dispute resolution. The acceleration of change, the increasing complexity of relationships and transactions, and the lowering of costs of publication and organization are all accompanied by disputes and, in response, there is a growing need for creative technology-assisted dispute resolution processes.

It is, therefore, inevitable for such a highly active, creative and potentially lucrative environment not to generate conflicts.

Cyberspace is a very big space, where no limits exist in terms of who can participate and of the activities that can take place online.

It allows an incredibly high number of interactions and commercial transactions.

24 Lessig, L., (1999), Code and Other Laws of Cyberspace, Basic Books Publisher,

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Eliminating conflicts from the picture is indeed impossible. However, it is possible to reduce their incidence.

It was not easy for Online Dispute Resolution techniques to become wide accepted, as traditional resolution methods were still considered more efficient, and better able to protect individuals.

“Even some of those who did understand that a highly active, creative and potentially lucrative environment would inevitably generate disputes were, at the same time, sceptical that online resources could be used effectively to assist those involved in a dispute. Dispute resolution, at the time, was assumed to require a face to face meeting, whether in or out

of court.”25

Some of the scepticism derived from the fact that, in its early age, the internet was mainly used by users in the academia and the military, and therefore for the first twenty to twenty-five years of its existence there were relatively few disputes, and those were settled informally.

Up until 1992 the national Science Foundation, which was managing the Internet at the time, had in fact banned its use for commercial purposes.

1.6 The Importance of Trust in E-commerce

One of the most important factors within e-commerce industries is Trust.

Trust can be defined as: "The subjective assessment of one

party that another party will perform a particular transaction

25 Katsh, E. (2012), ‘ODR: A Look at History: a Few Thoughts about the Present

and Some Speculation about the Future, Online Dispute Resolution: Theory and

Practice: a Treatise on Technology and Dispute Resolution, Mohamed S. Abdel

Wahab, Ethan Katsh and Daniel Rainey, The Hague: Eleven International Publishing, pp. 9-21.

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according to his or her confident expectations, in an

environment characterized by uncertainty."26

Trust is central to any commercial transaction. Businesses are often chosen according to whether they can be trusted.

With the advent of the internet economy, Trust has become an even more central aspect of commerce.

First of all, it has to be taken into consideration that people may be reluctant to participate to online commercial transactions.

E-commerce is, in fact, perceived to be a high risk from all perspectives. People are reluctant to give private information over the internet, because they are concerned about the validity of e-contracts, misuse of credit cards and dispute resolutions. They wonder if and to what extent new partners introduced through the e-market platform can be trustworthy; if and to what extent the transaction will be executed without problems; if and to what extent the IT system supporting technically the platform is secure; and if and to what extent failures in the execution of transactions can be remedied or compensated.

In order to boost users’ confidence when using their credit card information online some companies act as intermediaries between buyers and sellers, to allow the payment without sharing buyers’ financial information with the merchants.

Within these companies, it is definitely worth mentioning PayPal27, one of the biggest and most famous payment processor.

PayPal, in fact, allows buyers to check out by simply using their email address and password. Users, therefore, feel more confident about buying goods or services online, as they do

26 Ba, S. and Pavlou, P.A. (2002), ‘Evidence of the Effect of Trust Building

Technology in Electronic Markets: price Premiums and Buyer Behaviour’, MIS

Quarterly, vol. 26, No. 3, pp.243, 245.

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not need to type in their card details in order to complete the payment.

On top of that, PayPal offers an extensive buyer protection to their users, by guaranteeing the possibility for them to be refunded in the event of “item not received”, or “item not as described” by the seller.28

Increased trust can prove beneficial for web businesses. Once users feel more secure, they will visit more websites and conduct more transactions online; overall internet traffic will grow.

Building trust and boosting confidence require also legal and technical tools, such as mechanisms for ensuring validity and enforceability of e-contracts, as well as providing security, certification, privacy, redress, users’ training and dispute resolutions.

1.7 E-Commerce Regulatory Framework within International Organizations and the EU

The increased use of electronic e-commerce in international trade has revealed the need for a system of rules to guide countries and private commercial parties through the new developments and issues.

International organizations, and in particular the UN and the EU have responded by enacting a series of directives or model laws, attempting to provide legal frameworks for electronic commercial transactions.

28 PayPal Buyer Protection applies to eligible purchases only.

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1.7.1 The Regulatory Framework at UN level

The UN Convention on the Use of Electronic Communications in International Contracts (the "Electronic Communications Convention", or “ECC”) was adopted by the United Nations General Assembly in 2005 (New York) to provide such a system. The aim of the Convention is to “facilitate international trade by removing legal obstacles or uncertainty concerning the use of electronic communications in connection with the formation or performance of contracts concluded between parties located in different countries”. 29 The Convention sets out criteria for establishing the functional equivalence between electronic communications and paper documents, as well as between electronic authentication methods and handwritten signatures.30

It also defines the time and place of dispatch and receipt of electronic communications, tailoring the traditional rules for these legal concepts to suit the electronic context and innovating with respect to the provisions of the Model Law on Electronic Commerce.31

“The Convention is intended to strengthen the harmonization of the rules regarding electronic commerce and foster uniformity in the domestic enactment of UNCITRAL model laws relating to electronic commerce, as well as to update

29 UNCITRAL (UN Commission on International Trade Law), 2007, Explanatory

note to te UN Convention on the Use of Electronic Communications in International Contracts, New York, 2007, available online at:

http://www.uncitral.org/pdf/english/texts/electcom/06-57452_Ebook.pdf.

note to te UN Convention on the Use of Electronic Communications in International Contracts, New York, 2007, Article 9, available online at:

http://www.uncitral.org/pdf/english/texts/electcom/06-57452_Ebook.pdf.

note to te UN Convention on the Use of Electronic Communications in International Contracts, New York, 2007, Article 10, available online at:

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and complement certain provisions of those model laws in

light of recent practice.”32

The Electronic Communications Convention builds upon earlier instruments drafted by the Commission, and, in particular, the UNCITRAL Model Law on Electronic Commerce and the UNCITRAL Model Law on Electronic Signatures.

The UNCITRAL Model Law on Electronic Commerce

was adopted by UNCITRAL33 on 12 June 1996, with the intention to improve legal certainty and predictability for e-commerce transactions. It is supposed to help states enhance their legislation on electronic communications and to serve as a reference aid for the interpretation of existing international conventions and other instruments in order to avoid impediments to e-commerce.34 Its primary motivation is to remove existing legal obstacles to the recognition and enforceability of e-signatures and records. Electronic signatures and authentication is an encryption technology, which is employed in electronic commercial transactions to ensure online business security. However, the legal uncertainty of the identity recognition of online parties led the UN Commission on International Trade Law to declare that “the risk that diverging legislative approaches be taken

in various countries with respect to e-signatures calls for uniform legislative provisions to establish the basic rules of what is inherently an international phenomenon, where legal harmony as well as technical interoperability is a desirable

objective.”35

32http://www.uncitral.org/uncitral/en/uncitral_texts/electronic_commerce/2005Conv

ention.html

33 The United Nations Commission on International Trade Law (UNCITRAL) is a

subsidiary body of the General Assembly. It plays an important role in improving the legal framework for international trade by preparing international legislative texts for use by States in modernizing the law of international trade and non-legislative texts for use by commercial parties in negotiating transactions.

34 Glatt, C., (1998), ‘Comparative Issues in the Formation of Electronic Contracts

(United Kingdom)’, International Journal of Law and Information Technology, vol. 6, p.57.

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The UNCITRAL Model Law on Electronic Signatures

was adopted by UNCITRAL on 5 July 2001, with the aim to promote the progressive harmonization and unification of measures and policies on e-signatures issues by providing a developed legal framework for certificate service provision within an international operative public key infrastructure. It follows a technology-neutral approach, which avoids favouring the use of any specific technical product. This approach achieves legal neutrality by granting minimum recognition to most authentication technologies, while at the same time incorporating provisions for an authentication technology of choice.36

The UN Convention on e-commerce followed in 2005. The basic principles of the Convention are functional equivalence (paper documents equal electronic ones) and technology neutrality (the law does not discriminate between forms of technology).

The International Chamber of Commerce (ICC) was founded in 1919 with the aim to serve world business by promoting trade and investment, open markets for goods and services, and the free flow of capital. It sets voluntary rules that companies from all parts of the world apply to millions of transactions every year.

Within the international initiatives on electronic contracting, some are definitely worth mentioning: the General Usage for

International Digitally Ensured Commerce (GUIDEC),

attempting to create a general framework for the use of digital signatures in international commercial transactions; the ICC

e-terms 2004, designed to enhance legal certainty of

electronic contracts, by providing parties with two short articles, to be incorporated into contracts, which expressly state that both parties agree to be bound by an electronic contract; the ICC Guide to Electronic Contracting, finally,

36 Moreno, C. (2001), ‘Brief Overview of Selective Legal and Regulatory Issues in

Electronic Commerce’ at International Symposium on Government and Electronic Commerce Development, Ningbo (China), 23-24 April.

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provides a useful explanatory supplement to the ICC e-terms, clarifying how to apply them, what is their legal validity, and what are their limits.

1.7.2 The Regulatory Framework at EU level

In order to keep pace with market developments, the EU created an extensive legal framework on e-commerce, including the “European initiative in Electronic Commerce”, the “E-Commerce Directive”, 2000/31/EC (‘Certain Legal Aspects of Information Services, in particular Electronic Commerce in the Internal Market’), the “E-Signature Directive”, 1993/93/EC (‘A Community Framework for Electronic Signatures’), and the New digital single market contract law Directives.

In 1997 the Commission published the European initiative in

Electronic Commerce, inspired both by the American efforts

and the UNCITRAL Model Law on Electronic Commerce. The Initiative was based on four guiding principles:

- Promote the technology and infrastructure

- Capitalize on the Single Market by ensuring a coherent regulatory framework for e-commerce

- Foster a favourable business environment - Reach a common European position

It also identified important areas for action. Among those were the “access to infrastructure” and the “creation of a legal framework”.

Some guiding principles were introduced in the Initiative, to control the new regulatory framework. According to the general EU principle of subsidiarity, Community harmonization should only happen where other integration mechanisms prove insufficient. Secondly, the new rules

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should be compatible with the Internal Market, and not conflict with it. Thirdly, the new regulation should follow the realities of the business cycle. Finally, public interest should be taken into consideration, including consumer protection. The plan, the true beginning of e-commerce regulation in Europe, was a starting point for a number of legal initiatives. The E-commerce Directive37 was adopted by European Commission on the 8th of June 2000 with the aim to regulate electronic transaction in the internal market, by creating a common legal framework for all member states.

The preparatory work on the Directive, reveals that the Community aimed, in accordance with Article 18 TFEU, to prevent discrimination between Member States of “information society providers”, and to remove other “non-discriminatory obstacles”.

The Directive reflects the “life cycle of electronic commerce activities”38. It starts with the establishment of information society providers, moving on to commercial communication and contracts concluded by electronic means, to end with the liability of intermediary service providers.

The E-Commerce Directive introduces rules such as: a transparency obligation on operators in commercial communications; electronic contracts; limitations of liability of intermediary service providers; provisions for online dispute settlement.

The purpose of the Directive is free movement of information society services between Member States.39

2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market ('Directive on electronic commerce'), Official Journal L 178, 17/07/2000 P. 0001 – 0016.

38 Lodder, A., ‘Directive 2000/31 on Certain Legal Aspects of Information Society

Services, in particular Electronic Commerce, in the Internal Market’, in Lodder, A. and Kaspersen, H. (eds), eDirectives: Guide to European Union Law on

E-Commerce (Kluwer Law International, The Hague, London, New York, 2002),p.69.

39 Article 1(1), Directive 2000/31/EC of the European Parliament and of the Council

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This fits within the general concept of the four freedoms, as they are set out in the TFEU, centred on the prohibition of any restrictions on movement of goods, services, people and capital between Member States.

The Directive applies both to business-to-business (B2B) and business-to-consumer (B2C) transactions.40

Paragraph 2 of Article 1 states that the tool which will be used is the approximation of laws and summarizes the main activity areas in the Directive:

- Establishment of service providers - Commercial communications - Electronic contracts

- Intermediary liability

- Out-of-court dispute settlement

A definition of Information Society Services is contained in Recital 17, stating they are “provided for remuneration, at a

distance, by means of electronic equipment for the processing … and storage of data, and at the individual request of a

recipient of a service”.41

One of the main goals achieved by the Directive is to ease the establishment and operation of information service providers throughout the EU.

“The place at which a service provider is established should be determined in conformity with the case-law of the Court of

Justice”42 on establishment. The concept of establishment is

identified by virtue of the presence of a fixed establishment pursuing activity for an indefinite period.

For Information Society Services which operate through websites, the place of establishment is not the place where the

electronic commerce, in the Internal Market ('Directive on electronic commerce'), Official Journal L 178, 17/07/2000 P. 0001 – 0016.

40 See Chapter 1.3 for a wider description of the different types of e-commerce

transactions.

41 EU Directive 2000/31/EC, Recital 17. 42 EU Directive 2000/31/EC, Recital 19.

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technology supporting the website is located, nor the place where the site is accessible, but rather the place where the provider has several places of establishment or where it is difficult or impossible to determine one, it shall be the place where the provider had a centre of activities relating to the particular service.

Articles 4 and 5 demand that recipients of services be able to quickly and easily understand the kind of service they receive and its source.

Article 4 introduces the principle of exclusion of prior authorization. The taking up and pursuit of ISS43 activities does not depend on any prior requirement.

Article 5 establishes the obligation of the ISS provider to provide information about itself, including its name, address, contact details, authorization details, and so on. Prices should be indicated “clearly and unambiguously” and they must specify whether they are inclusive of VAT and delivery, where applicable.

Articles 6 to 8 of the Directive deals with commercial communications directed at recipients: advertising, marketing, unsolicited emails and similar phenomena. The Commercial Communication must, according to article 6, be identifiable as such, as must be the entity on whose behalf this is provided. The regulation of promotional offers, discounts and similar incentives is left to the Member States, but must be identifiable.

Article 7, dealing with unsolicited commercial communication, (spam) leaves its legality to Member States, provided that they introduce prohibitions which would oblige the sender of a communication to identify it as such as soon as received. It also obliges Member States to take measures to make sure that service providers respect opt-out registers

43 Information Society Service Providers.

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containing the names of those not wishing to receive such communication.

Article 8 covers regulated professions. Services provided by a member of a regulated profession (such as solicitors, notaries, etc.) are allowed, subject to compliance with the general rules but also any professional rules (such as those concerning conduct, secrecy and such).

Section 3 of the E-Commerce Directive covers contracts concluded by electronic means. This section does not intent to harmonize contract law or replace national provisions in this area.

Article 9 imposes a requirement that Member States make it possible for contracts to be concluded by electronic means. Member States are therefore under an obligation to ensure that legal requirements applicable to the contractual process do not create obstacles for the use of electronic contracts nor result in “such contracts being deprived of legal effectiveness and validity on account of their having been made by electronic means”

In order to ensure transparency in the communication, the Directive also requires ISS providers to provide minimum information prior to the conclusion of the transaction, clearly, comprehensibly and unambiguously44, and that ISP acknowledge the receipt of the order without delay, by electronic means. The order and acknowledgement of the receipt are considered to be received when the parties to whom they are addressed are able to access them.45

The Directive adopts the “Country of Origin Principle”, according to which Internet services should be entitled to free movement if they are legal according to the law of the state where they originate. The Country of origin rule can be defined as a rule of International law allocating competence

44 Article 10, Directive 2000/31/EC. 45 Article 11, Directive 2000/31/EC.

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between Member States.46 This rule is however adopted by the Directive, in a creative way. Article 3, in fact, provides that, where the ISS provider is established on the territory of a Member State, that state shall ensure that its national laws apply to the provider. Host states are therefore not allowed to regulate information society services where these originate outside that Member State. Member States are, however, able to derogate from this last prevision, and therefore can impose their own regulation for reason of public policy, public health, public security or protection of consumers. The measure thus imposed must be: necessary, taken against an ISS provider that endangers the mentioned objectives or presents a serious risk to them, and be proportionate. When this is the case, the host state shall require the home state to take the measures in questions, and wait for their outcome. Only if the home state has not taken them, or if they prove to be inadequate will the host state act. The host state will in this case notify the Commission and the home state of the measures that it intends to take. These precautions can only be derogated from in cases of urgency.47

Through these innovative previsions the legislator has proposed a system of communication between Member States, which are therefore supposed to notify each other of contentious areas and resolve possible disputes in an amiable way. The evidence suggests that derogations have, so far, been used very restrictively.48

Overall, the success and importance of the European Directive 2000/31/EC can be summarized in three points:

- It creates a framework for other directives in the field, and forms a basis for an evolving flexible system.

46 Hörnle J., ‘The UK Perspective on the Country of Origin Rule in the E-Commerce

Directive: A rule of Administrative Law Applicable to Private Law Disputes?’ (2004) 12 International Journal of Law and Information Technology 333.

47 Article 3(5), Directive 2000/31/EC.

48 The Report from the Commission on Directive 2000/31/EC, COM(2003), 702

final, Brussels, 21.11.2003, suggests that there have been only five notifications under Article 3, of which only two used the emergency procedure of paragraph 5.

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- It uses the Principle of the Country of Origin creatively, opening up a possibly new avenue of regulation

- It encourages alternative dispute resolution mechanisms

The E-Signature Directive49 is a far more detailed directive and sets out a framework for the recognition of e-signatures and certification service requirements for member states. The aim is to facilitate the use and legal recognition of e-signatures, while ensuring the proper functioning of the internal market.50

In relation to the E-Signature Directive, Frits Bolkestein, the former Internal Market Commisioner, said that ‘the EC Directive is helping e-commerce to take off in the International Market by ensuring that Europe’s e-commerce entrepreneurs can take full advantage of a domestic market of more than 370 million consumers’.51

The E-Signature Directive is not meant to ‘affect rules and limits, contained in national or Community Law, governing the use of documents’.52

In 2011 a Common European Sales Law53 was proposed as a way of partially addressing differences between contract laws of Member States. The aim of the Proposal was to avoid the uncertainties of foreign laws in unfamiliar laws in unfamiliar states, giving the parties an option to resort to one

49 Directive 1999/93/EC of the European Parliament and of the Council of 13

December 1999 on a Community framework for electronic signatures.

50 Thurlow, W.H. (2001), ‘Electronic Contract in the United States and European

Union: Varying Approaches to the Elimination of Paper and Pen’ Electronic Journal

of Comparative Law, vol.5, no. 3, available at http://www.ejcl.org/53/abs53-1.html. 51 E-commerce: EU law boosting emerging sector, IP/03/1580, Brussels, 21st

November 2003, available online at: http://europa.eu/rapid/press-release_IP-03-1580_en.htm?locale=en.

52 EC Directive on Electronic Signatures, Directive 1999/93/EC of the European

Parliament and of the Council of 13 December 1999 on a Community framework for electronic signatures Article 1.

53 Proposal for a Regulation of the European Parliament and of the Council on a

Common European Sales Law, COM (2011) 635, 11.10.2011. The Proposal was withdrawn in 2015, with the following reason: “Modified proposal in order to fully unleash the potential of e-commerce in the Digital Single Market”.

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EU-wide sales law. Traders’ fear of contract law barriers was quoted in the proposal as the main reason for the initiative.54 The proposed Law would have had an optional nature: it would have been activated only if the parties specifically opted in. The law main aim was to be applied to cross-border contracts, between traders (parties who have habitual residences in different countries where at least one is a Member State), or between a trader and a consumer (either the consumer’s delivery address or billing address are located in a country other than the trader’s habitual residence and at least one of these is a Member State).

On 16 December 2014 the EU Commission presented its Work Programme for 2015 to the European Parliament. Sadly, given all the work which has gone into it and the positive and liberating effect it could have for small businesses trying to trade online across Europe, the existing proposal for a Common European Sales Law (CESL) is listed as item 60 in the Annex of withdrawn proposals. The reason given for the withdrawal is “Modified proposal in order to fully unleash the potential of e-commerce in the Digital Single Market”. It remains to be seen what the modified proposal will look like. The Commission committed to publishing "an amended proposal" to the CESL plans before the end of 2015 as part of its digital single market strategy, published in May 2015. The new proposals should have set "harmonised EU rules for online purchases of digital content" and allow businesses "to rely on their national laws based on a focused set of key mandatory EU contractual rights for domestic and cross-border online sales of tangible goods", the strategy said. In its digital strategy, the Commission said that the fact there are 28 different contract laws governing the sale of goods to consumers "discourages companies from cross-border trading and prevents consumers from benefitting from the most competitive offers and from the full range of online offers". It said "in a single market, companies

54 Proposal for a Regulation of the European Parliament and of the Council on a

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should be able to manage their sales under a common set of rules”.

The Commission explained that ‘In 2015, as part of the Digital Single Market Strategy, the Commission will aim to conclude ongoing inter-institutional negotiations on proposals such as the common European data protection reform and the Regulation on a Connected Continent. It will also propose new initiatives, legislative and non-legislative, to bring the Digital Single Market to the level of ambition needed to respond to the existing challenges. In this context, the Commission will notably complement the regulatory telecommunications environment, modernise EU legislation on copyright and on audio-visual media services, simplify the rules for consumers making online and digital purchases,

facilitate e-commerce, enhance cyber-security and

mainstream digitisation across policy areas.’ Although the exact nature of the new proposals remains to be seen, it is believed that the new rules will make online purchases by

consumers easier.55

Once the project for a Common European Sales Law was abandoned, the EU started to work on a number of Proposals for New digital single market contract law Directives, The proposed Directive on certain aspects concerning contracts for the supply of digital content (COM/2015/0634) and The proposed Directive on certain aspects concerning contracts for the online and distance sales of goods (COM/2015/0635). The new Proposals have, however, already raised many critics.

The proposals are in fact considered to be more invasive than the CESL would have been.

“The CESL would have been an optional instrument,

applying only where the parties opted to use it. It would have left Member States’ general contract laws otherwise

55 Norris, K., (2016), 'Common European Sales Law: A Missed Opportunity or

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untouched. The proposed Directives will require changes to Member States’ laws and, because they go for full harmonisation, will restrict the powers of Member States to

provide different remedies for non-conformity.”56

1.8 E-Commerce Regulatory Framework outside of EU

1.8.1 E-Commerce in the United States

As a free-market economy, the US in principle subscribes to a hands-off, minimalist approach to the regulation of commerce.57 However, the need for a coherent set of rules that would promote certainty, predictability and security, brought US authorities to action, in order to create an e-commerce legal framework.

US proposed and enacted legislations dealing with electronic contracting capabilities are heavily influenced by the UNCITRAL model law on E-Commerce.58

In 1997, the Clinton administration published “A Framework for Global Electronic Commerce”59 which emphasized the belief that the Internet should be market-driven and not regulated.

56 Clive, E., (2016), ‘The proposed new digital single market contract law

Directives’, available online at: http://www.epln.law.ed.ac.uk/2016/01/19/the-proposed-new-digital-single-market-contract-law-directives/.

57 Pappas, C.W. (2002), ‘Comparative US & EU Approaches to E-Commerce

Regulation: Jurisdiction, Electronic Contracts, Electronic Signatures and Taxation (The Holland and Hart Private International Law Award)’ Denver Journal of

International Law and Policy, vol.31, pp. 325, 327.

58 Boss, A.H. (1998), ‘Electronic Commerce and the Symbiotic Relationship

Between International and Domestic Law Reform’, Tulane Law Review, vol.72, pp.1931, 1933.

59 Clinton, W., (2006), ‘A Framework for Global Electronic Commerce’, in

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Five principles were to inform Internet Governance: - The private sector should lead

- Governments should avoid undue restrictions on electronic commerce

- Where governments do need to intervene, they should support and enforce a predictable, minimalist, consistent and simple legal environment for commerce - Governments should recognize the unique qualities of

the Internet

- Electronic commerce over the internet should be facilitated globally60

In the attempt to create a common legal framework within the different United States, the National Conference of Commissioners on Uniform State Laws and the American Law Institute have promulgated separate state uniform laws addressing e-signatures: the Uniform Computer Information Transaction Act (UCITA) and the Uniform Electronic Transaction Act.

The UCITA was approved by the NCCUSL on 29 July 1999 as an attempt to introduce a ‘Uniform Commercial Code’ for United States to follow.

As a model law, the UCITA provides a set of comprehensive rules for licensing computer information, and addresses issues such as digital signatures, electronic records and electronic agents.

It is apparent that the UCITA was intended to operate in a similar fashion to the UNCITRAL Model Law on E-commerce, through reliance on functional equivalency and avoiding specific technological requirements.61

60 Clinton, W.J. and Gore, A. (1997), ‘A Framework for Global Electronic

Commerce’ available online at: https://www.w3.org/TR/NOTE-framework-970706.

61 Thurlow, W.H., (2001), ‘Electronic Contract in the United States and European

Union: Varying Approaches to the Elimination of Paper and Pen’ Electronic Journal

of Comparative Law, vol.5, no. 3, available online at:

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However, the UCITA has only been signed and enacted by two states: Maryland and Virginia.62

Nevertheless, a resolution recommending approval of UCITA by the American Bar Association (ABA) has been withdrawn by the NCCUSL in 2003, indicating that UCITA lacks the consensus which is necessary for it to become a uniform law.

Like the UCITA, the UETA (Uniform Electronic Transactions Act, promulgated in July 1999) is also a model code, aimed to provide the United States with a set of uniform rules governing e-commerce transactions.

However, it differs from the UCITA in that it is addressed to electronic transactions generally, whereas the UCITA does not deal with the substantive issues involved with electronic contracts.63

The Main purpose of the UETA is to provide electronic transactions with the same legal effect as paper transactions without changing any applicable substantive laws.

The UETA was adopted by 47 states, the district of Columbia, Puerto Rico and the US Virgin Islands.64

The Electronic Signatures in Global and National Commerce Act (ESIGN Act) was signed by President Clinton on 30 June 2000, to promote consistency and certainty regarding the use of e-signatures in the United States.65

62ALA (American Library Association), (2006), ‘UCITA and Related Legislation in

Your State’, available online at:

http://www.ala.org/PrinterTemplate.cfm?Section=ucita&Template=/ContentManage ment/HTMLDisplay.cfm&ContentID=56873.

63 Nimmer, R.T. (2001), ‘Understanding Electronic Contracting: UCITA,

E-Signature, Federal State, and Foreign Regulations, 2001’, 649 PLI/PAT 15, 40 (Westlaw).

64 As of January 2017, see

http://electronicsignature.com/ueta-uniform-electronic-transactions-act/.

65 Gidari, A. and Morgan, J. (2000), ‘Internet Law and Policy, Update: Survey of

State Electronic and Digital Signature Legislative Initiatives’, available online at: www.ilpf.org.

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This act aims to regulate any transaction in interstate and foreign commerce. It provides a framework that is intended to facilitate transactions in electronic forms or includes an e-signature, which includes several key provisions concerning for example, its scope, validity, requirements for e-signatures, electronic contracts and electronic records or retention requirements for electronic contacts and goods.

1.8.2 E-Commerce in Asia (Singapore and China)

In Singapore, the Electronic Transactions Act (ETA) was adopted on 10 July 1988, with the purpose to “facilitate electronic communications and promote public confidence in the integrity and reliability of electronic records and electronic commerce”.66

China had to wait until 2005 for the Law of the People’s Republic of China on Electronic Signatures (Chinese Electronic Signatures Law) to come into effect.

The Chinese Electronic Signatures Law applies to parties who may stipulate their intention to use or not to use e-signature or data message. However, certain types of agreements such as those relating to personal relations, the transfer of real estate rights and interests, and public utility services cannot use electronic means, as prescribed by law.67

66 Singapore Electronic Transaction Act, (1988), article 3, available at Singapore

Statutes Online: http://statutes.agc.gov.sg/aol/home.w3p.

67 Chinese Electronic Signatures Law, Article 1, available online at:

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1.8.3 E-Commerce in Australia

To facilitate the development of e-commerce, the Australia Government adopted the Australian Electronic Transactions Act 199968 of the Commonwealth, based on the UNCITRAL Model Law, and the following year, the Uniform Electronic Transactions Bill 2000.69

The Electronic Transactions Act provides rules on legal recognition of electronic communications, the time and place of dispatch and receipt of messages, and the retention of electronic records.

The Uniform Electronic Transactions Bill, closely modelled on the Electronic Transaction Act is endorsed by the state and territory governments in cooperation with the Commonwealth government.70

68 Australian Electronic Transactions Act, No 162, 1999 available online at:

https://www.legislation.gov.au/Details/C2011C00445.

69 Uniform Electronic Transactions Bill 2000, available online at:

http://www.legislation.vic.gov.au/domino/web_notes/ldms/pubstatbook.nsf/f932b66 241ecf1b7ca256e92000e23be/F3176112F522DA6BCA256E5B00213E26/$FILE/00 -020a.pdf.