Electronic Communications Convention as enabling cross-border paperless trade Jin Ho KIM Legal Expert UNCITRAL Regional Centre for Asia and the Pacific 9 October 2016, Tokyo
Outline 1. UNCITRAL and its Regional Centre for Asia and the Pacific 2. UNCITRAL texts on electronic commerce 3. Fundamental legislative principles 4. e-cc: policy goals 5. e-cc: main provisions 6. e-cc relevance for paperless trade-global Trend, Regional and Country development 7. Current and Future work by UNCITRAL 1
UNCITRAL and its Regional Centre for Asia and the Pacific 2
When and why was UNCITRAL established? United Nations Commissions on International Trade Law (UNCITRAL) Established by United Nations General Assembly in 1966 Core legal body of the UN system in the field of private international trade/commercial law MANDATE: Progressive harmonization and modernization of international trade law by preparing and promoting the use of legislative instruments in key areas of commercial law 3
UNCITRAL RCAP The first Regional office of UNCITRAL, opened on 10 January 2012 Located in Incheon, Republic of Korea Covers 56 States of the Asia- Pacific region including Australia and New Zealand 4
UNCITRAL RCAP Technical Assistance VIET NAM Assisting CISG accession and related capacity building LAO PDR Arbitration & Contract Laws CHINA Parliamentary hearing and workshop on E-commerce. UNCITRAL and Beijing Normal University Joint Certificate Program MYANMAR Arbitration bill; Workshop on the 1958 NY Convention. With JICA PACIFIC ISLANDS STATES UNCITRAL South Pacific Seminar (CISG; NY Convention; E- commerce) 5
UNCITRAL texts on e-commerce 6
UNCITRAL texts 0n electronic commerce 7
Adopted by UNCITRAL on 12 June 1996 The UNCITRAL Model Law on Electronic Commerce (MLEC) is intended to enable the commercial use of modern means of communications and storage of information. The MLEC is based on the establishment of a functional equivalence in electronic media for paper-based concepts such as "writing", "signature" and "original". The MLEC also establishes rules for the formation and validity of contracts concluded electronically and for the attribution and retention of data messages. Enacting States: 67 States - Malaysia, Singapore, Brunei, China, India, UK, USA, Australia, New Zealand, Qatar, Republic of Korea etc 8
Adopted by UNCITRAL on 5 July 2001 The UNCITRAL Model Law on Electronic Signatures (MLES) aims at bringing additional legal certainty to the use of electronic signatures. The MLES establishes criteria of technical reliability for the equivalence between electronic and hand-written signatures. The MLES follows a technology-neutral approach, which avoids favouring the use of any specific technical product. The MLES establishes basic rules for assessing possible responsibilities and liabilities for the signatory, the relying p arty and trusted third parties intervening in the signature process. Enacting States: 32 States - China, India, Viet Nam, Thailand, Bhutan, UK, Qatar, Saudi Arabia etc. 9
Adopted by the General Assembly on 23 November 2005 The Electronic Communications Convention (e- CC) builds up on and updates the provisions of both Model Laws. The e-cc contributes to enabling paperless trade by, among others: 1) validating the legal status of electronic transactions by setting general functional equivalence requirements of writing, original and signature ; 2) preventing medium and technology discrimination; 3) enabling crossborder recognition of electronic signatures; 4) permitting the use of electronic means in alternative dispute resolution mechanisms The e-cc aims at enhancing legal certainty and commercial predictability where electronic communications are used across borders. The e-cc entered into force on 1 March 2013 10
(Continued) The e-cc entered into force on 1 March 2013 Parties to e-cc (7) - Singapore, Sri Lanka, Russian Federation, Congo, Dominican Republic, Honduras, Montenegro Signatories to e-cc (18) - China, Republic of Korea, Iran, Philippines, Saudi Arabia etc. Several other States have enacted its substantive provisions domestically - Australia, Viet Nam, Zambia, Ghana, Guatemala, Madagascar etc. 11
ECC MLEC MLES Comprehensive general framework for the use of electronic transactions 12
Fundamental legislative principles in e-commerce law 13
Fundamental principles (1) Non-discrimination A communication shall not be denied validity on the sole ground that it is in electronic form. Conclusion of contract (Writing, Signature) 14
Fundamental principles (2) Functional equivalence Purposes and functions of paper-based requirements may be satisfied with electronic communications, provided certain criteria are met. 15
Fundamental principles (3) Technological neutrality Equal treatment of different technologies (EDI, e-mail, Internet, instant messaging, fax, etc.) Email Instant Messaging SMS & MMS Future Technology 16
Party autonomy Parties should be free to choose: whether to use (or not) electronic communications; the technology and security level appropriate for their transactions. 17
e-cc: policy goals 18
Why an international convention? Facilitate the use of electronic communications across borders Eliminate formal requirements in treaties drafted before diffusion of electronic means, thus allowing trade partners to know in advance whether electronic contracts will be upheld abroad. Promote further uniformity Despite the success of the Model Laws, enactments have seen variations on the original texts, affecting predictability. Update and complement the provisions of the Model Laws New rules have emerged in recent years whose uniform adoption is desirable. Provide core legislation for countries not having yet adopted any Several countries have no or incomplete legislation on electronic commerce. 19
e-cc: main provisions 20
Core provisions Article 1 Scope of application Article 2 Exclusions Artilce 5 Interpretation Article 6 Location of the parties Article 8 Legal recognition of electronic communications Article 9 Form requirements Article 10 Time and place of dispatch and receipt of electronic communications Article 11 Invitations to make offers Article 12 Use of automated message systems for contract formations Article 14 Error in electronic communications Article 20 Communications exchanged under other international conventions 21
Article 1: Scope of application 1.This Convention applies to the use of electronic communications in connection with the formation or performance of a contract between parties whose places of business are in different States. 2.The fact that the parties have their places of business in different States is to be disregarded whenever this fact does not appear either from the contract or from any dealings between the parties or from information disclosed by the parties at any time before or at the conclusion of the contract. 3.Neither the nationality of the parties nor the civil or commercial character of the parties or of the contract is to be taken into consideration in determining the application of this Convention. 22
Article 2: Exclusions 1. The Convention does not apply to electronic communications relating to: (a) Contracts concluded for personal, family or household purposes; (b) (i) Transactions on a regulated exchange; (ii) foreign exchange transactions; (iii) inter-bank payment systems, inter-bank payment agreements or clearance and settlement systems relating to securities or other financial assets or instruments; (iv) the transfer of security rights in sale, loan or holding of or agreement to repurchase securities or other financial UNCITRAL assets United or instruments Nations Commission held on International with an Trade intermediary. Law 23
Article 2: Exclusions 2. This Convention does not apply to: o bills of exchange o promissory notes o consignment notes o bills of lading o warehouse receipts or o any transferable document or instrument that entitles the bearer or beneficiary to claim the delivery of goods or the payment of a sum of money 24
Article 5: Interpretation 1.In the interpretation of this Convention, regard is to be had to its international characteristic and to the need to promote uniformity in its application and the observance of good faith in international trade. 2.Questions concerning matters governed by this Convention which are not expressly settled in it are to be settled in conformity with the general principles on which it is based or, in the absence of such principles, in conformity with the law applicable by virtue of the rules of private international law. 25
Article 6: Location of the parties 1.For the purposes of the Convention, a party s place of business is presumed to be the location indicated by that party, unless another party demonstrates that the party making the indication does not have a place of business at that location. 2.If a party has not indicated a place of business and has more than one place of business, the place of business for the purposes of the Convention is that which has the closest relationship to the relevant contract. 3.If a natural person does not have a place of business, reference is to be made to the person s habitual residence. 26
Article 6: Location of the parties 4. A location is not a place of business merely because that is: (a) where equipment and technology supporting an information system used by a party in connection with the formation of a contract are located; or (b) where the information system may be accessed by other parties. 5. The sole fact that a party makes use of a domain name or electronic mail address connected to a specific country does not create a presumption that its place of business is located in that country. 27
Article 8: Legal recognition of electronic communications 1. A communication or contract shall not be denied legal validity or enforceability on the sole ground that it is in the form of an electronic communication. 2. Nothing in this Convention requires a party to use or accept electronic communications, but a party s agreement to do so may be inferred from the party s conduct. * Article 3: Party Autonomy The parties may exclude the application of this Convention or derogate from or vary the effect of any of its provisions. 28
2. Where the law requires that a communication or a contract should be in writing that requirement is met by an electronic communication if the information contained therein is accessible so as to be usable for subsequent reference. 3. Where the law requires that a communication or a contract should be signed by a party,[...] that requirement is met [ ] if: (a) (b) A method is used to identify the party and to indicate that party s intention in respect of the information [ ]; and The method used is either: (i) (ii) Article 9: Form requirements As reliable as appropriate for the purpose for which the electronic communication was generated or communicated, in the light of all the circumstances, including any relevant agreement; Proven in fact, by itself or together with further evidence, to have identified the party and indicated its intention in respect of the information. 29
4. Where the law requires that a communication or a contract should be made available or retained in its original form that requirement is met in relation to an electronic communication if: (a) There exists a reliable assurance as to the integrity of the information it contains from the time when it was first generated in its final form, as an electronic communication or otherwise; and (b) Where it is required that the information it contains be made available, that information is capable of being displayed to the person to whom it is to be made available. 5. For the purpose of paragraph 4(a): (a) (b) Article 9: Form requirements The criteria for assessing integrity shall be whether the information has remained complete and unaltered, apart from the addition of any endorsement and any change that arises in the normal course of communication, storage and display; and The standard of reliability required shall be assessed in the light of the purpose for which the information was generated and in the light of all the relevant circumstances. 30
Article 10: Time and place of dispatch and receipt 1. The time of dispatch of an electronic communication is the time when it leaves an information system under the control of the originator or of the party who sent it on behalf of the originator or, if the electronic communication has not left an information system under the control of the originator or of the party who sent it on behalf of the originator, the time when the electronic communication is received. 2. The time of receipt of an electronic communication is the time when it becomes capable of being retrieved by the addressee at an electronic address designated by the addressee. The time of receipt of an electronic communication at another electronic address of the addressee is the time when it becomes capable of being retrieved by the addressee at that address and the addressee becomes aware that the electronic communication has been sent to that address. 31
Article 11: Invitation to make offers A proposal to conclude a contract made through one or more electronic communications which is not addressed to one or more specific parties, but is generally accessible to parties making use of information systems, including proposals that make use of interactive applications for the placement of orders through such information systems, is to be considered as an invitation to make offers, unless it clearly indicates the intention of the party making the proposal to be bound in case of acceptance. 32
Article 12: Use of automated message systems A contract formed by the interaction of an automated message system and a natural person, or by the interaction of automated message systems, shall not be denied validity or enforceability on the sole ground that no natural person reviewed or intervened in each of the individual actions carried out by the automated message systems or the resulting contract. 33
Article 14: Error in electronic communications Where a natural person makes an input error in an electronic communication exchanged with the automated message system of another party and the system does not provide the person with an opportunity to correct the error, the Convention creates a right to withdraw the portion of the electronic communication in which the input error was made if: (a) The person notifies the other party of the error as soon as possible after having learned of the error and indicates that he or she made an error in the electronic communication; and (b) The person has not used or received any material benefit or value from the goods or services, if any, received from the other party. 34
o o o Article 20: Communications exchanged under other International Conventions International conventions expressly covered: Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958); [ ] United Nations Convention on Contracts for the International Sale of Goods (Vienna, 11 April 1980); [ ] The Electronic Communications Convention automatically applies to electronic communications in connection with the formation or performance of a contract to which any other international convention, treaty or agreement applies, unless the State has excluded this possibility. Contracting States may further extend or limit the application of the Convention by individual declarations, even if automatic extensive application has been excluded. 35
e-cc relevance for paperless trade - Global trends, Regional development and Country development 36
e-cc relevance for paperless trade The e-cc creates the legal framework to promote B2B exchanges. It ensures that fundamental principles of e-commerce law are recognised. It helps in harmonising domestic legislation. Against that framework, it will be easier to establish legal interoperability also for B2G and G2G transactions. For instance, it sets the conditions for recognition of foreign electronic signatures This also fulfils legal requirements contained in FTAs. 37
Global trends WTO Trade Facilitation Agreement (December 2013) endeavour to establish or maintain a single window, enabling traders to submit documentation and/or data requirements for importation, exportation, or transit of goods through a single entry point to the participating authorities or agencies. The 6th APEC E-Commerce Business Alliance Forum (June 2016) encouraging the provision of an enabling legal environment based on international and regional law and other legal instruments that support cross-border e-commerce and paperless trade 38
Regional developments the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific (19 May 2016) Encouraging the adoption of relevant international legal instruments concluded by United Nations bodies and other international organizations (Article 10.1) UNCITRAL Secretariat had participated in the preparation of Frame Agreement from an early stage to ensure consistency with Open for signature on 1 October 2016 39
Regional developments the Protocol on the Legal Framework to implement the ASEAN Single Window (20 December 2006) /ASEAN Economic Community paperless trade facilitation Plan of Action between ASEAN and UN (2016-2020) Continue capacity development assistance to ASEAN Member States in trade facilitation, paperless trade, and implementation of the ASEAN Single Window, including through collaboration with the UN Network of Experts on Paperless Trade and Transport in Asia and the Pacific (UNNExT) 40
Regional developments the Trans-Pacific Partnership Agreement (Feb 2016) Each Party shall maintain a legal framework governing electronic transactions consistent with the principles of the e-cc (Article 14.5). Singapore, Brunei, New Zealand, Chile, United States, Australia, Peru, Vietnam, Malaysia, Mexico, Cananda, Japan recently signed on 4 February 2016 41
the Country developments USA- President Obama submission to Senate for consent for accession (Feb 2016) China- Working towards ratification of e-cc together with electronic commerce law revisions Australia, Viet Nam- domestic legislation ready for accession Brunei Darussalam, Thailand- interest in accession Singapore- already an e-cc contracting State Republic of Korea, Fiji- in pursuit of e-cc ratification Russian Federation - already an e-cc contracting State 42
Current and Future work of UNCITRAL Working Group IV 43
Current work 0f UNCITRAL Working Group IV Preparation of draft Model Law on Electronic Transferable Records (ETR) and the accompanying explanatory note (since 2011) Next session: New York, 24-28 April 2017 Scope: Electronic equivalent of transferable document or instrument (promissory note, cheques, bills of lading, warehouse receipts ) Definition: an electronic record that complies with the requirement of Article 9. - containing the information required to be contained in a transferable document or instrument - reliable method: identification, subject to control, integrity 44
Structure of a draft of ML on ETR Section 1. General (Article 1-5) Article 1. Scope of application Article 2. Definitions Article 3. Interpretation Article 4. Party autonomy [and privity of contract] Article 5. Information requirements Section 2. Provisions on electronic transactions (Article 6-8) Article 6. Legal recognition of an ETR Article 7. Writing Article 8. Signature Section 3. Use of electronic transferable records (Article 9-19) Article 9. Transferable document or instrument Artilce 10. Control 45
Structure of a draft of ML on ETR (cont d) Article 11. General reliability standard Article 12. Indication of time and place in electronic transferable records Article 13. Determination of place of business Article 14. Issuance of multiple originals Article 15. Additional information in ETR Artilce 16. Endorsement Article 17. Amendment Article 18. Replacement of a transferable document or instrument with ETR Article 19. Replacement of ETR with a transferable document or instrument Section 4. Cross-border recognition of ETR (Article 20) Article 20 Non-discrimination of foreign ETR 46
Future work of UNCITRAL Working Group IV While completing the work on electronic transferable records, continue to update and conduct preparatory work on cloud computing identity management & trust services mobile devices (m-commerce) single windows By organizing, co-organizing or participating in colloquia, workshops and other meetings within available resources 47
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