MODEL LAW OF E-COMMERCE: A BRIEF

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) https://uncitral.un.org/en/texts/arbitration/modellaw/commercial_arbitration, 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 of 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 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 the technology used. This aims to accommodate 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 fulfil the same functions that certain notions, in the 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. 

Purpose The Model Law on Electronic Commerce (MLEC) purports to enable and facilitate commerce conducted using electronic means by providing national legislators with a set of internationally acceptable rules aimed at removing legal obstacles and increasing legal predictability for electronic commerce.

In particular, it is intended to overcome obstacles arising from statutory provisions that may not be varied contractually by providing equal treatment to paper-based and electronic information. Such equal treatment is essential for enabling the use of paperless communication,  thus fostering efficiency in international trade. 

Key Provisions General Provisions 

Article 2 of the Law provides six definitions, the most important one is “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 the 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 the 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 requirements 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) 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 handwritten 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 a 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 fulfil 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 means the ability to display the information where required. Article 9 specifies that the data messages cannot be denied admissibility in a 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  

1) 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).

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

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

4) 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 the control of the sender.  

5) The place of dispatch is the place of business and the time is when the acceptance enters the system of the addressee (Article 15).  

Specific provisions 

Articles 16 & 17 talks about the carriage of goods and transport documents. They enforce the ability to achieve carriage of goods by the means of data messages and fulfilment 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 for UNCITRAL in the future.