I.A Electronic transactions law: general principles

Electronic transactions are transactions of a commercial or non-commercial nature that take place through electronic means, i.e. by exchanging data messages. “Data message” means information generated, sent, received or stored by electronic, optical or similar means (Model Law on Electronic Commerce 1996 - MLEC Article 2(a)). Examples of electronic means include e-mail, messaging, electronic data interchange (EDI), short message system (SMS) and fax.

National law may accord full or partial legal validity to electronic transactions. This may happen because of a law, regulation or other written legislative text, through judicial decisions or by application of general legal principles.

Article 5 MLEC establishes legal recognition on the basis of the principle of non-discrimination against the use of electronic means.

Legislation based on the same approach as the uniform model may differ in the language used.

Other laws take a different approach, recognizing only those electronic transactions that comply with certain requirements.

In several countries, legislation dealing with electronic transactions (often called Electronic Transactions, Electronic Commerce or Electronic Signatures Law) is based on uniform law, i.e. on model legislation that has been prepared by an international body. Uniform law, which may include international standards with or without direct legal effect, can be global or regional. The UNCITRAL Model Laws are examples of global uniform law.

Adoption of model laws indicates the desire of the country to harmonize its laws with those of other countries, which facilitates cross-border electronic exchanges. UNCITRAL legal texts on electronic transactions such as the MLEC and the Model Law on Electronic Signatures 2001 (MLES) are examples of laws that are being widely adopted by countries to achieve global harmonization.

Laws on electronic transactions may be neutral or specific about the electronic technology to be used in order for them to be recognized as legally valid. “Technology neutral” laws do not prescribe or favour the use of any particular technology, method or product for electronic transaction.

In contrast, “technology specific” laws recognize only those electronic transactions that use a specific technology, method or product – for instance, transactions signed with PKI-based digital signatures, or PKI-based digital signatures originating in the country of origin or from service providers that are licensed by an oversight authority.

Normally, technology neutral laws do not contain an explicit label with this characterization. Rather, it is the whole law that is drafted in a technology neutral manner.

Technology specific requirements may apply to all types of electronic transactions.

Alternatively, technology specific requirements may apply only to some transactions, such as those exchanged in a certain field (for example, banking) or with certain participants (for example, government and other public agencies). Such requirements may be imposed because security or reliability are considered especially important. In those cases, there may be a law of general application that enables the use of information in electronic form under technology neutral standards, while electronic transactions in certain fields or with special form requirements need to use specified technology.

The law may adopt a “functional equivalence“ approach to give electronic communications the same legal effect as paper-based documents. The principle of functional equivalence establishes that, when certain conditions are met, the legal value of electronic communications is equivalent to that of paper-based documents because they satisfy the same policy function as the paper. This approach allows a legal system not to alter its traditional rules about paper-based documents. It also avoids creating a special legal regime for electronic communications (a so-called “dual regime” approach).

UNCITRAL texts rely on a functional equivalence approach to determine how the purposes and functions of paper-based documents can be fulfilled by electronic communications. For example, the requirement of a document “in writing” aims at making the information contained in that document available beyond the moment of the transaction.

Some national laws contain provisions on the legal status of contracts made and performed by electronic means. These provisions aim to ensure that the electronic form of a contract is not in itself a reason to invalidate it. Other legal systems have decided that validating electronic communications will validate contracts in electronic form without mentioning them specifically.

Moreover, laws can contain other provisions that do not modify the general law of contract but clarify how it can be applied in a digital environment. For instance, they can determine the time of dispatch and receipt of offer, acceptance and other contract-related communications, or they can confirm the validity of the use of automated agents in contract formation and performance. This is the approach taken in UNCITRAL texts, where the rules on electronic contracts are found especially in the MLEC and the Convention on the Use of Electronic Communications in International Contracts 2005 (ECC).

As a general rule, therefore, provisions on electronic contracts do not alter the substantive law of contract, whether the law is technology neutral or technology specific.

By definition, trade is paperless if electronic communications are used, so no special rules may be thought to be required for trade once e-communications themselves are validated. However, a large part of paperless trade involves public entities, whether customs authorities or other regulatory agencies protecting the integrity of the national economy and environment. As noted, electronic communications exchanged with public entities may be subject to special requirements.

Accordingly, States may decide to apply general electronic transactions law (ETL) also to paperless trade or may decide to establish a special legal regime for it. The first approach has the advantage of facilitating the exchange of information between private and public sectors, promoting technical as well as legal interoperability. The second approach may be seen as more secure and better suited for the management of a border operations such as a “single window”.

Often, States decide to introduce safeguards in addition to the general ETL applying to paperless trade. It is then important to minimize occasions in which the special requirements hinder the flow of trade-related data.

For instance, section 25 of the Electronic Transactions Act 2010 (Cap. 88) of Singapore extends the application of the Act to the use of electronic records by public agencies in that country. Note subsection (2), with relatively restrictive provisions for some cases.

The provision is operationalised in the Singapore Customs Act 2004 (Cap. 70).

It is also important to bear in mind the relevant provisions of evidence law. (Electronic evidence is discussed below in part I.E.4.) In the case of Singapore, those are found in the Evidence Act 1997 (Cap. 97).

For information on other States, see the Asia-Pacific Economic Cooperation (APEC) publication Review on Regulations and Policies for E-Port and Single Window in APEC Economies (2016), available at http://www.apmenet.org/wp-content/uploads/2016/07/Review-on-Regulations-and-Policies-for-E-Port-and-Single-Window-in-APEC-Economies.pdf

Even if the law has a technology neutral approach that applies to both private and public sector, special requirements may arise for the use in electronic form of certain types of commercial and trade-related documents.

In particular, the law, including administrative regulations, may set out special requirements for the submission to a single window of documents that are particularly relevant for paperless trade such as manifests, certificates of origin, invoices and phytosanitary certificates. The special requirements may apply to certain kinds of documents only when they will be exchanged across borders.

Certain commercial documents are transferable, i.e. they incorporate the entitlement to the delivery of goods that they describe (for example, bills of lading, warehouse receipt) or the payment of money (for example, checks, promissory notes). Bills of lading are particularly relevant for paperless trade facilitation and for logistics. Other transferable documents relate to financing and are relevant for national trade platforms.

Because of their need for special features, notably non-duplication and control (“possession” when on paper), the law requires special rules for their use in electronic form. UNCITRAL has prepared the Model Law on Electronic Transferable Records 2017 (MLETR) to deal with those documents in line with UNCITRAL principles of technology neutrality and functional equivalence.

In certain jurisdictions, special legal regimes exist to enable the use of specific types of electronic transferable records. For example, article 862 of the revised Commercial Act 2016 of Republic of Korea gives legal validity to electronic bills of lading complying with certain requirements.

The related Regulation on the Implementation of the Provisions of the Commercial Act Regarding Electronic Bills of Lading provides details on how electronic bills of lading should be managed and on the requirements by which a registry agency may be licensed.